Tribunal grants deductions for unbilled revenue and subcontracted work under Section 10A, overturning CIT(A) decision.

The tribunal directed the Assessing Officer (AO) to include unbilled revenue in the export turnover for deduction under section 10A, citing precedents and consistent practice. Additionally, the tribunal allowed the deduction for revenue earned from onsite work subcontracted to an associated enterprise, emphasizing that such income is part of the net profit eligible for section 10A deduction, overturning the CIT(A)'s decision.

---

---

Issues:
1. Exclusion of unbilled revenue from export turnover for deduction under section 10A.
2. Exclusion of revenue earned from onsite work subcontracted to associated enterprise for deduction under section 10A.

Issue 1: Exclusion of unbilled revenue from export turnover for deduction under section 10A:
The assessee appealed against the CIT(A)'s decision to exclude unbilled revenue from the export turnover while computing deduction under section 10A. The AO observed unbilled revenue in the balance sheet and excluded it from the export turnover, reducing the deduction under section 10A. The CIT(A) affirmed this decision without detailed findings. The assessee argued that unbilled revenue represented work done but not billed due to pending milestones, following accounting standards. They cited precedents where unbilled revenue was included in both total and export turnover for section 10A deduction. The DR supported the AO and CIT(A) decisions. The tribunal noted the consistent practice of including unbilled revenue in turnover and export turnover for section 10A, following precedents. They directed the AO to include unbilled revenue in the export turnover for deduction under section 10A.

Issue 2: Exclusion of revenue earned from onsite work subcontracted to associated enterprise for deduction under section 10A:
The AO excluded revenue earned from onsite work subcontracted to an associated enterprise from the deduction under section 10A. The CIT(A) dismissed the appeal, citing the assessee's failure to challenge the order of the Principal CIT under section 263. The assessee referred to a Karnataka High Court decision supporting the inclusion of such income for section 10A deduction. The tribunal found that the profit from subcontracting operations to AEs onsite is part of the net profit for section 10A deduction, as per the Karnataka High Court decision. They set aside the CIT(A) order and directed the AO to allow the deduction for the subcontracting amount.

This detailed analysis covers the issues of exclusion of unbilled revenue and revenue earned from onsite work subcontracted to an associated enterprise for deduction under section 10A, providing a comprehensive overview of the tribunal's decision and the arguments presented by the parties involved.

---