THE COMMISSIONER OF INCOME TAX vs. M/S A.V.THOMAS LEATHERS AND

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TCA/30/2016HC Madras2026/MHC/434228 October 2026Bench: Honourable Dr.Justice ANITA SUMANTH4 pages
AI SummaryDismissed

What did the High Court hold?

Both the appellant (revenue) and the respondent (assessee) acceded to the position that the issues raised in the appeal were covered by the Supreme Court's decision in Commissioner of Income-Tax, Central – III v HCL Technologies Limited. Consequently, the substantial questions of law were answered in favour of the assessee and against the revenue. The High Court found no reason to deviate from the established precedent set by the Supreme Court. The reasoning is that the Supreme Court's ruling clarifies the computation of export turnover and total turnover for Section 10A deductions, specifically addressing the inclusion or exclusion of expenses like freight and insurance. The ratio decidendi is that where such expenses are incurred for earning the export turnover, they should be excluded from both export turnover and total turnover for the purpose of calculating the deduction under Section 10A, as per the Supreme Court's interpretation of the Act and its explanations. The appeal was dismissed.

What were the facts?

The Commissioner of Income Tax, Chennai (appellant/revenue) filed an appeal under Section 260-A of the Income Tax Act, 1961, against the order of the Income-Tax Appellate Tribunal (ITAT), Madras ‘D’ Bench, Chennai. The ITAT's order, dated 08.05.2015 in ITA No. 2170/Mds/2013, pertained to assessment year 2009-10. The appeal challenged the ITAT's direction to the Assessing Officer to recompute the assessee's income. The assessee is M/s A.V. Thomas Leathers and Allied Products Ltd. The dispute revolves around the computation of deduction under Section 10A of the Income Tax Act, specifically concerning the exclusion of freight and insurance expenses from export turnover and total turnover.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Tribunal was right in directing the Assessing Officer to recompute the income by excluding freight and insurance expenses from both export turnover and total turnover while computing deduction under Section 10A of the Income Tax Act, in light of the decision in Sak Foft? 2. Is the finding of the Tribunal not bad, especially when Explanation 2(iv) to Section 10A clearly states that 'Export Turnover' would not include freight, telecommunication charges attributable to delivery outside India, or expenses incurred in foreign exchange while computing deduction under Section 10A? Assessee's Contention: The assessee argued that the Tribunal's direction to exclude freight and insurance expenses from both export and total turnover for Section 10A deduction is correct, citing the Supreme Court judgment in Commissioner of Income-Tax, Central – III v HCL Technologies Limited. The assessee also relied on Explanation 2(iv) to Section 10A, which defines export turnover and excludes such expenses. Revenue's Contention: The revenue's contention is implicitly that the Tribunal erred in its direction, as evidenced by their appeal. However, the judgment records that the revenue acceded to the position that the issue was covered by the Supreme Court judgment in Commissioner of Income-Tax, Central – III v HCL Technologies Limited.

Which sections of the Income-tax Act were involved?

Section 10A,Section 260-A

AI-generated summary — verify with the full judgment below

2026:MHC:4342 TCA No. 30 of 2016 __________ Page 1 of 4 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28-10-2026 CORAM THE HON'BLE DR.JUSTICE ANITA SUMANTH AND THE HON'BLE MR.JUSTICE S.KARTHIKEYAN TCA No. 30 of 2016 CNR: {HCMA010940482016} The Commissioner Of Income Tax Chennai ..Appellant(s) Vs M/s A.V.Thomas Leathers and Allied Products Ltd, 22, Marshalls Road, Egmore, Chennai 600 008 ..Respondent(s) Appeal filed under Section 260-A of the Income-Tax Act, 1961 against the order of the Income-Tax Appellate Tribunal, Madras ‘D’ Bench Chennai dated 08.05.2015 in ITA No. 2170/Mds/2013 for assessment year 2009 – 10. For Appellant(s): Mrs.V.Pushpa Senior Standing Counsel For Respondent(s): Ms.SAMYUKTHA BANUSEKAR for Mr.R.SIVARAMAN JUDGMENT (Delivered by Dr.Anita Sumanth, J.) The substantial questions arising for consideration on 01.02.2016 in this appeal is as follows:- (i) Whether on the facts and circumstances of the case, the Tribunal was right in directing the Assessing Officer to https://www.mhc.tn.gov.in/judis ( Uploaded on: 28/10/2026 07:49:03 pm ) 2026:MHC:4342 TCA No. 30 of 2016 __________ Page 2 of 4 recompute the income in the light of the decision of the Special Bench in the case of Sak Foft by excluding the freight and insurance expenses both from the export turnover and also from the total turnover while computing deduction under Section 10A of the Income Tax Act ? and (ii) Is not the finding of the Tribunal bad especially when Explanation 2(iv). to Section 10A defines the word 'Export - Turnover' whereby it had been clearly stated that it would not include freight, telecommunication charges attributable to the delivery of the articles or things or computer software outside India or expenses, if any, incurred in foreign exchange while computing deduction under Section 10A of the Income Tax Act? 2. Both Mrs.V.Pushpa, learned Senior Standing Counsel appearing for appellant and Ms.Samyuktha Banusekar, learned counsel appearing for respondent / assessee accede to the position that the issues has been covered by the judgment of the Supreme Court in Commissioner of Income-Tax, Central – III v HCL Technologies Limited1. Hence the substantial questions are answered in favour of the assessee and adverse to the revenue. 3. This Tax Case (Appeal) is dismissed. No costs. (A.S.M, J.) (S.K, J.) 28-10-2026 Index: Yes/No Speaking order Neutral Citation: Yes ssm 1404 ITR 719 (SC) https://www.mhc.tn.gov.in/judis ( Uploaded on: 28/10/2026 07:49:03 pm ) 2026:MHC:4342 TCA No. 30 of 2016 __________ Page 3 of 4 To 1. The Commissioner Of Income Tax, Chennai. 2. The Income-Tax Appellate Tribunal, Madras ‘D’ Bench, Chennai. https://www.mhc.tn.gov.in/judis ( Uploaded on: 28/10/2026 07:49:03 pm ) 2026:MHC:4342 TCA No. 30 of 2016 __________ Page 4 of 4 DR.ANITA SUMANTH, J. AND S.KARTHIKEYAN, J. ssm TCA No. 30 of 2016 28-10-2026 https://www.mhc.tn.gov.in/judis ( Uploaded on: 28/10/2026 07:49:03 pm )

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