Taxpayer wins multiple deductions: export turnover computation, section 10A benefits, and RAM purchase costs treated as revenue expenditure

ITAT Chennai ruled on multiple tax deductions for an assessee. The tribunal directed exclusion of help desk service charges and travelling expenses from export turnover for section 10A deduction computation, following Sak Soft Ltd precedent. Section 10A deduction was allowed despite voluntary disallowances under section 43B, following Gem Plus Jewellery precedent. RAM purchase costs were treated as revenue expenditure rather than capital, following APL India precedent. Interest on delayed service tax payment was allowed as compensatory revenue expenditure per Messee Dusseldorf precedent, while PF contribution disallowance was upheld. The reimbursement of salary costs to GTE-OC was remanded to AO pending SC decision on related AAR proceedings.

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Issues involved:
1. Exclusion of foreign currency expenditure from export turnover for deduction under section 10A of the Act.
2. Denial of deductions under section 10A in respect of voluntary disallowances under section 43B of the Act.
3. Disallowance of expenditure on purchase of Random Access Memory Cards for computer equipment.
4. Disallowance of interest expenditure on delayed remittance of taxes and provident fund.
5. Disallowance of reimbursement of salary cost of seconded employees to GTE-OC.

Analysis:
1. The appellant challenged the exclusion of foreign currency expenditure from export turnover for deduction under section 10A of the Act. The issue was resolved by referring to a decision by the Hon'ble ITAT Special Bench in a similar case. The Tribunal directed the AO to reduce the excluded expenses from both export turnover and total turnover for computing the deduction under section 10A, partially allowing the appellant's appeal.
2. The appellant contested the denial of deductions under section 10A for voluntary disallowances under section 43B of the Act. Citing a decision by the Hon'ble Bombay High Court, the Tribunal directed the AO to grant the appellant the benefit of deduction under section 10A by including the voluntary disallowances made under section 43B. This issue was allowed in favor of the appellant.
3. The appellant disputed the disallowance of expenditure on the purchase of Random Access Memory Cards for computer equipment. Referring to a decision by the Hon'ble ITAT Mumbai Benches, the Tribunal directed the AO to grant the benefit of revenue expenditure for the purchase of Memory Cards, as they were considered spare parts essential for business operations. This issue was allowed in favor of the appellant.
4. The appellant challenged the disallowance of interest expenditure on delayed remittance of taxes and provident fund. Citing a decision by the Hon'ble ITAT Delhi Bench, the Tribunal allowed the deduction of interest paid on delayed service tax payment as compensatory in nature. However, the disallowance of PF Contribution was upheld as it was not pressed by the appellant.
5. The appellant contested the disallowance of reimbursement of salary cost of seconded employees to GTE-OC. Due to pending issues related to technical services and TDS, the Tribunal restored the matter to the AO for re-adjudication after awaiting the final decision. This issue was partly allowed for statistical purposes.

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