Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: HON’BLE SHRI MAHAVIR SINGH, VP & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal is a recalled matter for the limited purpose of adjudication of ground no.5. The appeal was disposed by the Tribunal vide order dated 13/05/2019. However, vide MA No.296/Chny/2019, it was noted that Ground No.5 of the appeal remained to be adjduciated and accrodingly, the order was recalled for the limited purpose of adjudication of Ground No.5. The same read as under: -
5) The CIT(A) erred in not deducting the exchange rate loss on export of software while computing the 'total turnover' for the purpose of deduction U/s.10A, thereby creating a disparity between the numerator and the denominator and violating the provisions of the IT Act.
The Ld. AR has tabulated the dispute as under: - Table showing computation of Export Turn Over Sl.No. Particulars As per ITO As per Assessee Remarks 1 Export Turn Over 61,64,32,670 2 Add Exchange Gain 29,34,378 3 Less Exchange Loss -32,45,213 Adjusted in Numerator 4 (1+2+3) Export Turnover as returned 61,61,21,835 61,61,21,835 Exclusions Adjusted in Numerator 5 Less Telecommunication Charges -30,30,085 -30,30,085 Adjusted in Numerator 6 Less Expenses in Foreign Ex. -74,20,200 -74,20,200 7 (4-5-6) Export Turnover Determined 60,56,71,551 60,56,71,551
Table showing computation of Total Turn Over Sl.No. Particulars As per ITO As per Assessee Remarks 1 Export Turn Over 61,64,32,670 2 Add Exchange Gain 29,34,378 3 Add Local Turnover 3,43,32,247 4 (1+2+3) Total Turnover 65,36,99,295 65,36,99,295
5 Expenses incurred in Foreign -74,20,200 Allowed vide order dated 13.05.2019 Currency 6 Telecommunication Charges -30,30,085 Allowed vide order dated 13.05.2019 7 Exchange Rate Loss -32,45,213 Ground 5 of Pending Adjudication Total Turn Over to be determined applying 64,00,03,798 principles of HCL The limited submissions of Ld. AR are that while computing deduction u/s 10A, since foreign exchange loss of Rs.32.45 Lacs has been adjusted while computing export turnover which form part of numerator, the same should also be deducted while computing total turnover which form part of the denominator.
We find that this issue is covered by the decision of Hon’ble Apex Court in CIT V/s HCL Technologies Ltd. (404 ITR 719) wherein it has been held that when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Therefore, such deduction shall be allowed from the total turnover in same proportion as well. Drawing analogy from the same, we would hold that since foreign exchange loss of Rs.32.45 Lacs has been adjusted while computing export turnover which form part of numerator, the same should also be deducted while computing total turnover which form part of the denominator. We order so.
Ground No.5 of the appeal stand allowed. The appeal filed by the assessee stand allowed. Order pronounced on 12th October, 2021.
Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) उपा�� / Vice President लेखा सद� / Accountant Member चे4ई Chennai; िदनांक Dated : 12/10/2021 TLN आदेश की 4ितिलिप अ6ेिषत/Copy of the Order forwarded to : अपीलाथ$/ The Appellant 1. '(थ$/ The Respondent 2. आयकरआयु;(अपील) / The CIT(A) 3. आयकरआयु;/ CIT– concerned 4. िवभागीय'ितिनिध, आयकरअपीलीयअिधकरण, चे4ई / DR, ITAT, Chennai 5. गाड@फाईल / Guard File 6.