9911796707
TMI Blog2019 (12) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... the above grounds may be reversed and that of the Assessing Officer be restored. 4. The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal. 3. The learned DR of the Revenue supported the assessment order whereas the learned AR for the assessee supported the order of the CIT(A). He also submitted that this issue is squarely covered in favour of the assessee by the Tribunal order in assessee's own case for Assessment Year 2004-05 in ITA No. 1736/Bang/2013 dated 11.10.2013. It was submitted that copy of this tribunal order is available on pages 801 to 820 of the Paper Book and the relevant page is page 809 of the Paper Book. 4. We have considered the rival submissions. In this regard, we find that it is noted by the AO on page Nos.2 and 3 of the assessment order that the assessee's explanation revolves around the argument that the software expenses were incurred to acquire right to access to use software for a limited duration and the payment represent the payment for the use of copyright. In the light of these facts of the present case, we examine the applicability of the Tribunal order cited by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from export turnover under the caption 'sale proceeds received in kind' 3. The learned assessing officer has erred in reducing a sum of Rs. 1,57,14,000/- from the figure of export turnover for the reason that the above amount represents sale proceeds received in kind and the Id. CIT(A) has erred in confirming the action of the Id. AO. The above sum and the transaction happened during FY 2003-04 relevant to AY 2004-05 and has no relevance for the year under consideration. On facts and in the circumstances of the case and law applicable, the above amount should not be reduced from export turnover in computing deduction under section 10A. Export sale proceeds realised late reduced from export turnover 4. The learned assessing officer has erred in excluding export sale proceeds realized after 6 months from the end of relevant previous year amounting to Rs. 1,35,83,760/- from the figure of export turnover in computing deduction under section 10A and the learned CIT(A) has erred in confirming the action of the learned AO. Expenses incurred in foreign currency reduced from export turnover 5. The learned assessing officer has erred in excluding expenditure incurred in fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 453, copy available on pages 570 to 584 of the Paper Book. Our attention was drawn to para Nos.31 and 37 of this judgment and it was pointed out that it was held by Hon'ble Karnataka High Court in this case that the assessee is entitled to 100% exemption/deduction under section 10A of the IT Act in respect of interest income earned by it on the deposits made by it with the banks in the ordinary course of business and also interest earned by it from the staff loans and such interest income would not be taxable as income from other sources under section 56 of the IT Act. 8. It was pointed out that it is also held by the Hon'ble Karnataka High Court in para 37 of the judgment that the incidental activity of parking of surplus funds with the banks or advancing of staff loans by such special category of assessee covered under sections 10A or 10B of the IT Act is integral part of their export business activity. When our attention was drawn to this finding of Hon'ble court, it was observed by the Bench that this fact has to be examined by the AO as to whether loan to subsidiary company of on which interest income of Rs. 27.80 lakhs was earned by the assessee company were given by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile computing deduction. The assessment came to be completed by the order dated 28-3-2001. Aggrieved by the said order the assessee preferred an appeal to the Commissioner of Income-Tax (Appeals). The Commissioner granted relief on some counts and rejected on other grounds. Aggrieved by the same, the Revenue as well as the assessee preferred independent appeals before the Tribunal. The appeal preferred by the Revenue was dismissed and the appeal preferred by the assessee was allowed. Aggrieved by the said order, the Revenue has preferred two appeals against the order dismissing their appeal as well as the order partly allowing the assessee's appeal. 3. The 1st substantial question of law which arises for consideration reads as under:- " 1) Whether Tribunal was correct in holding that income from sale of scrap i7ewspaper, stationery and battery etc., should be treated as profits and gains from exports and deduction under Section 10,4 of the Act should be allowed?" This question also arose for consideration in the assessee's appeal in ITA No.507/2002 disposed off on 25th August, 2010, where it was held that the assessee was entitled to deductions as income derived there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... staff advances are given by the assessee in ordinary course of business, then on resultant interest income earned by the assessee, deduction should be allowed under section 10A. Regarding the second aspect in respect of deemed income under section 41(1) of the IT Act, 1961, amounting to Rs. 107,62,841/-, we allow the claim of the assessee by following the judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Wipro Ltd., (supra). 13. Regarding ground No.3, learned AR of the assessee submitted that as per note No.3 (i) of the audited accounts for the year ended 31.03.2004, it was reported that the company entered into agreement for services rendered to one of its customers where the customer has agreed to settle the consideration by transferring certain software programmes and annual maintenance services amounting to Rs. 157.14 Crores and the assessee company had considered these transactions to be a non-monetary exchange. Thereafter, he submitted that on pages 94 to 128 of the Paper Book is the audit report along with audited statements of accounts for the present year ended 31.03.2005 and in particular, our attention was drawn to page 116 of the Paper Book and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was realised on 19.01.2007 and the second invoice of Rs. 461,760/- was realised on 19.12.2005 and these invoices are dated 31.03.2005 and 30.03.2005 respectively. Thereafter, he submitted that on pages 257 to 273 of the Paper Book is a rejoinder filed with CIT(A) on 21.07.2009 and in particular, our attention was drawn to para No.3.3 and 3.4 of this submission available on pages 261 and 262 of the Paper Book. It was pointed out that before the learned CIT(A), it was submitted that as per RBI's Master Circular No.9.2006-07 dated 01.07.2006 and Circular No.50 dated 03.06.2008 and Circular No.70 dated 30.06.2009, it was prescribed by RBI that unit set up under STPI Schemes are permitted to realize value of export proceeds within a period of 12 months from the date of export in respect of exports made on or after 01.09.2004. It was also pointed out that this was explained before the CIT(A) that these two invoices were realized within 12 months of export and therefore, in view of this Master Circular of RBI, this amount should not be reduced from the figure of export turnover but in para 22 of the order of the CIT(A), he decided this issue without considering this Master Circular of RB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal against this order of CIT(A), in the present year also, the claim of brokerage should be allowed. The learned DR for the Revenue supported the order of the CIT(A). 19. We have considered the rival submissions. We find that in Assessment Year 2004-05 in para 7.1 of his order, it is noted by the learned CIT(A) that the actual brokerage is only Rs. 420,632/- but the AO has disallowed Rs. 19.70 lakhs by mistake and this amount was incurred on employees referral bonus and only this is the finding given by the learned CIT(A) that this employee's referral bonus is an expenditure incurred in connection with the business and the same is therefore allowable and there is no finding by the learned CIT(A) in that year regarding brokerage charges and hence, the order of the CIT(A) for Assessment Year 2004-05 has no relevance in the present year. We find that in para Nos.29 and 30 of his order, it is noted by the learned CIT(A) that it was explained by the assessee before him that the assessee has incurred this amount as brokerage charges for securing residential accommodation for its employees but no documentary evidence has been furnished by the assessee to support his claim. Before us ..... X X X X Extracts X X X X X X X X Extracts X X X X
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