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Income Tax Appellate Tribunal, “SMC-A” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV
O R D E R Per Sunil Kumar Yadav, Judicial Member This appeal is preferred by the assessee against the order of CIT(A), interalia, on the following grounds:
1. Order of the learned Commissioner of Income-tax Appeals (CIT(A)), passed under section 250 of the Act in so far as it is against the Appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case.
2. The learned CIT(A) has erred in upholding the order of the ITO by treating the expenditure incurred in foreign currency for providing technical services outside India as attributable to delivery of article or thing outside India and reducing it from Turnover for purpose of calculating exemption u/s 10AA, which is bad in law.
3. The learned CIT(A) has erred in upholding the erroneous addition made by the AO excluding the Telecommunication charges, Insurance charges and Travelling expenses from the Turnover for purpose of calculating exemption u/s 10AA which is bad in law.
4. The Learned CIT (A) has erred in dismissing the below grounds without commenting or pass a speaking order: a) treating the Singapore and UAE Branch Expenses incurred for Salaries, Office Rent, Guest House Rent, Local travel and conveyance charges and Bank Charges as expenditure incurred for providing technical services and limiting the exemption u/s. 10AA. (b) treating the expenditure incurred in foreign currency for purchase of Computer software as expenditure incurred for providing technical services whereas the same is bundled with the final product and sold to the customers.
5. The Learned CIT(A) has erred in dismissing ground for excluding amounts disallowed in the Tax computation u/s 40(a)(ia) while calculating profit of the Cochin unit in determining the Exemption u/s 10AA by treating the same as infractuous stating that there is no disallowance made u/s 40(a)(ia) amounting to Rs.1,79,516/- without understanding the ground raised and without seeking further clarification from the Appellate.
The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
The learned counsel for the assessee has invited our attention that while computing the deduction under section 10AA of the Act, the AO has reduced certain expenses incurred out of India though towards the export activities, but CIT(A) has not adjudicated the issue of exclusion of these expenses from the export turnover. He rather adjudicated the issue following the judgment of jurisdictional High Court in the case of Tata Elxsi Ltd., 349 ITR 98 and held that whatever expenses are reduced from the export turnover, the same should also be reduced from the total turnover. The learned counsel for the assessee further invited our attention to the fact that claim of the issues that these expenses incurred should not be reduced from the export turnover in the light of various judicial pronouncements but the CIT(A) without adjudicating this issue decided the alternative arguments following the judgment of jurisdictional High Court in the case of Tata Elxsi Ltd (supra). The learned counsel for the assessee further contended that in the light of these facts, the matter may be restored back for the adjudication on the ground relating to exclusion of the expenses from the export turnover.
The learned DR placed reliance upon the order of the CIT(A).
Having carefully examined the order of the CIT(A) in the light of rival submissions, I find that CIT(A) has decided the issue in the light of judgment of the jurisdictional High Court in the case of Tata Elxsi (supra) and held that whatever expenses are reduced from the export turnover, the same may also be reduced from the total turnover.
On the careful perusal of the order of the CIT(A), the CIT(A) has not examined the argument of the assessee for the exclusion of the incurred expenses from the export turnover. Therefore, I am of the view that since the CIT has not adjudicated the issue, matter should be restored back to his file with a direction to examine the issue of exclusion of the impugned expenses i.e., telecommunication charges, insurance charges, travelling expenses incurred in foreign currency, etc., from the export turnover. In the light of the arguments of the assessee, all these expenses were incurred towards the export activities of the assessee. I order accordingly.
In the result, appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on November, 2017.