TMI Blog2021 (1) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the assessee is an expot house, there was no question of earning any foreign exchange. Therefore, when the fluctuation in foreign exchange rate was solely relatable to the export business of the assessee and the higher Rupee value was earned by virtue of such exports carried out by the assessee, there is no reason why the benefit of Section 10(A) should not be allowed to the assessee. Foreign Currency Expenditure and Communication Charges - HELD THAT:- The same are covered by a decision of this Court in CIT v. M/s. Zylog Systems Limited [ 2020 (3) TMI 181 - MADRAS HIGH COURT ] wherein, it was held that such expenditure incurred by the Assessee in foreign currency will also be includible in the definition of 'export turnover' for the purpose of computing deduction under Section 10B of the Act. Set off of brought forward losses before allowing tax holiday deduction is covered by the decision in CIT v. M/s. Yokogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT ] - From a reading of the relevant provisions of Section 10A it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from export turnover for computing tax holdiay deduction TCA No.84 of 2017 ( SQL 1 2 ) and TCA No.86 of 2017 ( SQL 1 2 ) Covered in favour of the Assessee by the order of this Hon'ble Court in TCA No.312 of 2011 in the case of Zylog Systems 4 Set off of brought forward losses before allowing tax holdiay deduction TCA No.86 of 2017 ( SQL 3 ) Covered in favour of the Assessee by the order of the Supreme Court in the case of Yokogawa India Ltd. and the order of this Hon'ble High Court in TCA No.228 of 2011 in the case of M/s. Comstar and TCA No.115 of 2016 in the case of M/s. Visual Graphics 4. The questions of law raised in all the appeals are quoted below: TCA No.83 of 2017 - Assessment Year 2002-03 (1) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the deduction under Section 10A in respect of provisions written back are to be allowed? (2) Is not the finding of the Tribunal bad since provisions written back included in the claim for deduction under Section 10A was not derived by an undertaking f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case, the Tribunal was correct in holding that the communication charges are to be excluded both from the total turnover and the Export turnover while computing deduction under Section 10A especially when the explanation clearly stipulates that in the case of Export turnover alone it is to be deducted? (2) Is not the finding of the Tribunal bad, especially when Section 10A postulate that the expenditure incurred in foreign exchange in providing technical services outside India has to be reduced from the export turnover only and not from the total turnover? (3) Whether the Tribunal was right in holding that the benefit of deduction under Section 10A could be allowed before setting off of brought forward losses? 5. The relevant extract of the judgments by which the aforesaid issues and questions are covered are also quoted below for ready reference. 6. As regards substantial questions of law relating to deduction under Section 10A in respect of provisions written back towards link charges and annual day expenses and the said claim was not derived by an undertaking from the export of article or thing or computer software, the same is covered by the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of computing deduction under Section 10B of the Act. 9. As far as the substantial question of law with regard to Set off of brought forward losses before allowing tax holiday deduction is concerned, the same is covered by the decision in CIT v. M/s. Yokogawa India Ltd. [(2016) TaxCorp (DT) 67973 (SC)] , the relevant portion of the same is quoted below: 15. Sub-section (4) of Section 10A which provides for pro rata exemption, necessarily involving deduction of the profits arising out of domestic sales, is one instance of deduction provided by the amendment. Profits of an eligible unit pertaining to domestic sales would have to enter into the computation under the head profits and gains from business in Chapter IV and denied the benefit of deduction. The provisions of Sub-section (6) of Section 10A, as amended by the Finance Act of 2003, granting the benefit of adjustment of losses and unabsorbed depreciation etc. commencing from the year 2001-02 on completion of the period of tax holiday also virtually works as a deduction which has to be worked out at a future point of time, namely, after the expiry of period of tax holiday. The absence of any reference to deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature for application. The deductions under Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income . The somewhat discordant use of the expression total income of the assessee in Section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression total income of the assessee in Section 10A as total income of the undertaking . 18. For the aforesaid reasons we answer the appeals and the questions arising therein, as formulated at the outset of this order, by holding that though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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