TaxTMI 
TaxTMI 
2010 (6) TMI 525
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....2) above, and on the facts and in the circumstances of the case and in law, the learned CIT(A) has legally erred in holding that the ACIT has not applied his mind in verifying the claim of deduction u/s 10A of the Act made by the appellant. 4. Without prejudice to grounds (1) and (2) above and on the facts and in the circumstances of the case and in law, the learned CIT(A) has legally erred in rejecting appellant's contention that reimbursement of expenses cannot be considered to be a part of total turnover of the business. 5. Without prejudice to ground (1), (2) and (4) above, on the facts and in the circumstances of the case and in law, the learned CIT(A) has legally erred in rejecting the plea of the appellant that if any expenses is reduced from the export turnover, such sum should also be reduced from the total turnover of the undertaking for the purpose of computing deduction under section 10A of the Act. 2. Briefly stated, the relevant material facts are as follows. The assessee is mainly engaged in the business of rendering rating, advisory, and research and information services, and the assessee also has a unit registered under the software technology park sc....
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....rtible foreign exchange, in respect of freight, travel, professional fees, telecommunication charges, insurance attributable to the delivery of the articles or things or computer software outside India, expenses, if any, incurred in foreign exchange in providing technical services outside India, onsite development of software outside India, and other matters. The assessee was also called upon to show cause as to why "adjustment in export turnover should not be made, and reworking of deduction admissible under section 10A should not be carried out" and "as to why the assessment made by the Assessing Officer should not be set aside to that extent". The details of expenses incurred in foreign exchange were duly filed before the Commissioner, but the Commission wanted to peruse 'the evidence to show as to which expenses pertained to which unit'. However, when assessee wanted further time to compile the said information, the assessee was declined further time on the ground that 'proceedings under section 263 were getting barred by limitation'. 4. On these facts, learned Commissioner observed that "the fact remains that the Assessing Officer has not absolutely applied....
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....ng heard to the assessee before passing the fresh order. 5. The assessee is aggrieved of the order so passed by the learned Commissioner, and is in appeal before us. 6. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 7. We have noted that the justification for assumption of jurisdiction under section 263 has been that the Assessing Officer did not apply his mind to "ascertain the nature of expenses incurred in foreign exchange and the relevance of such expense in enabling delivery of articles or things or computer software outside India or in providing technical services outside India" and the learned Commissioner has relied upon Hon'ble Supreme Court's judgments in the cases of Rampyari Devi Sarogi (supra) of Tara Devi Agarwal (supra) for the said purpose. 8. In Tara Devi Agarwal's case (supra), as noted by the Hon'ble Supreme Court in the order itself, in which "the ITO, while remarking that the source of income of the assessee during the accounting year was income from speculation and interest on investments stated that neither the assessee was abl....
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..... There can be no quarrel with the proposition that when an Assessing Officer remains passive on the facts which call for further enquiry, such an inertia on the part of the Assessing Officer does vitiate the assessment order and renders it erroneous and prejudicial to the interests of the revenue, but then it does not mean that the Assessing Officer's not putting everything stated in the income test return to the rigorous tests of investigation, no matter how desirable it must be from the point of view of a circumspect revenue officer, can render the assessment order erroneous or prejudicial to the interest of the revenue. The test must lie in whether the facts stated in the return and the document would provoke doubt in a reasonable mind and whether a reasonable person must have examined the matter further. The question then arises whether not examining the foreign exchange expenses, from the point of view of their relevance in delivery of software outside India, would lead to the order being erroneous and prejudicial to the interest of the revenue. The claim of the assessee has been that the reimbursements have been made on actual basis, without any involvement of....