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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI N.V. VASUDEVAN & SHRI ABRAHAM P. GEORGE
Per N.V. Vasudevan, Judicial Member
This appeal by the revenue is against the order dated 23.02.2015 of the CIT(Appeals)-I, Bangalore relating to assessment year 2010-11.
The only issue that arises for consideration in this appeal is as to whether the CIT(Appeals) was justified in directing the AO to exclude the revenue from deputation of staff and other foreign currency expenses attributable to delivery of software outside India from the total turnover also while computing deduction u/s. 10A of the Act.
According to the AO, as per the definition of export turnover given in clause (iv) to Explanation 2, the above income/expenses are expenses incurred for freight attributable to the delivery of the product or software outside India and should be reduced from the export turnover. However, the provisions of section 10A do not provide for exclusion of such expenditure from total turnover. In the absence of a definition for total turnover in section 10A, the normal definition of total turnover has to be adopted and as such the expenses which are reduced from the export turnover in accordance with the specific definition cannot be reduced from the total turnover.
On appeal by the assessee, the CIT(Appeals) following the decision of the Hon’ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd., 349 ITR 98 (Karn), held that whatever is excluded from the export turnover, has also to be excluded from the total turnover.
Aggrieved by the order of the CIT(Appeals), the revenue is in appeal before the Tribunal.
The only grievance of the Revenue is that the decision of Hon'ble High Court of Karnataka in Tata Elxsi (supra) has not attained finality and a SLP by the department is pending before the Hon'ble Supreme Court. We are of the view that as of today, law declared by the Hon'ble High Court of Karnataka which is the jurisdictional High Court is binding on us. We therefore hold that the order of CIT(A) does not call for any interference and accordingly the same is confirmed.
In the result, the appeal by the Revenue is dismissed.
Pronounced in the open court on this 30th day of July, 2015.