M/S.WRENCH SOLUTIONS PVT LTD.,BANGALORE vs. ITO WARD-12(2), BANGALORE
What did the Tribunal hold?
The CIT(A) did not examine the assessee's argument regarding the exclusion of certain expenses from export turnover. Therefore, the matter was restored to the CIT(A) for adjudication on this specific issue.
What were the facts?
The assessee claimed deduction under Section 10AA for export turnover. The AO reduced certain foreign currency expenses from turnover, and the CIT(A) upheld this based on a High Court judgment. The assessee argued these expenses should not be reduced from export turnover.
What were the issues?
Whether foreign currency expenses incurred for export activities should be reduced from export turnover for calculating Section 10AA deduction. Whether the CIT(A) properly adjudicated all grounds raised by the assessee.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(1)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- CIT v. Tata Elxsi Ltd.818 citing349 ITR 98 · 2012 · HC
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.
More judgments on Section 10AA
- Quantium Analytics Private Limited… vs Income Tax Officer, Ward 16(3), HyderabadITA 1336/HYD/2024[2021-22]Status: Disposed30 Sept 2026AY 2021-22
- Ab Knowledge Systems, Pune vs DCIT, PuneITA 92/PUN/2026[2020-21]Status: Disposed25 Sept 2026AY 2020-21
- ACIT-Circle-4(1)(1), Bangalore vs Eygbs(India) Private Limited, BangaloreITA 1886/BANG/2024[2012-13]Status: Disposed21 Sept 2026AY 2012-13
- ACIT 15(1)(2), Mumbai vs Galaxy Surfactants Limited, MumbaiITA 6984/MUM/2025[2011-2012]Status: Disposed15 Sept 2026AY 2011-2012
- Genpact Infrastructure (Hyderabad) Pvt… vs ITO, New DelhiITA 2055/DEL/2015[2009-10]Status: Disposed9 Sept 2026AY 2009-10
Recent GST High Court judgments
Search GST case law →- Sukant Kumar vs. Union Of INDIA And 6 OthersAllahabad · 21 Oct 2026
- M/S New Sana Brick Field vs. Union Of INDIA And 4 OthersAllahabad · 21 Oct 2026
- M/S Shivam Tiles House vs. State Of U.P. And AnotherAllahabad · 21 Oct 2026
- Vinay Singh vs. Union Of INDIAAllahabad · 21 Oct 2026
- M/S Aaradhyam Infrabuilders PVT LTD vs. State Of U.P. And AnotherAllahabad · 21 Oct 2026
