Appeal partly allowed, exclusion of certain expenses for profit computation under IT Act The appeal was partly allowed, with the grounds related to telecommunication cost and technical services fee not pressed during the hearing. It was ...
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Appeal partly allowed, exclusion of certain expenses for profit computation under IT Act
The appeal was partly allowed, with the grounds related to telecommunication cost and technical services fee not pressed during the hearing. It was decided that expenses excluded from export turnover should also be excluded from total turnover for computing eligible profit u/s 10A of the IT Act. The delay of 165 days in filing the appeal was condoned due to the transfer of the Finance Manager, and the appeal was decided on its merits.
Issues involved: Appeal against CIT (A) order regarding telecommunication cost, technical services fee, total turnover for computing eligible profits u/s 10A.
Telecommunication cost: Assessee contended that cost attributable to delivery of goods outside India should not be estimated at 40% of total cost without basis. Learned AR did not press this ground during the hearing.
Technical services fee: Assessee argued that fee paid was not for services rendered outside India as software development was done in India. The reduction in export turnover due to this fee should be deleted. Learned AR did not press this ground during the hearing.
Total turnover for eligible profits: Assessee raised concern over the adoption of total turnover for computing eligible profits u/s 10A. The appeal was partly allowed, and it was upheld that if expenses are excluded from export turnover, they should also be excluded from total turnover for computing eligible profit u/s 10A of the IT Act.
Condonation of delay: Delay of 165 days in filing the appeal was attributed to the transfer of the Finance Manager of the company. The delay was condoned in the interest of justice, and the appeal was decided on merits.
Conclusion: The appeal was partly allowed, with the grounds related to telecommunication cost and technical services fee not pressed during the hearing. It was decided that expenses excluded from export turnover should also be excluded from total turnover for computing eligible profit u/s 10A of the IT Act.
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