TaxTMI 
TaxTMI 
2011 (12) TMI 377
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....'the Act'). 1.2 That the learned CIT(A) has failed to appreciate that the proceedings initiated by the Assessing Officer under section 148 of the Act and the impugned order passed under the appeal is based upon mere change of opinion. 1.3 That the learned CIT(A) has erred in holding that the reopening the case under section 147 of the Act is only procedural and covered under the deeming provisions of Explanation 2(c)(iv) of section 147 of the Act. 2.1 That the learned CIT(A) has erred in not directing the Assessing Officer to allow deduction under section 10A of the Act, on the entire profits of the undertaking registered with the Software Technology Park of India (,STPI') authorities. 2.2 That the learned CIT(A) has erred in not holding that the loss from the non-STPI business will not be adjusted against the profits of the STPI units before allowing the deduction under section 10A of the Act. 2.3 That the learned CIT(A) has erred in not holding that the brought forward business losses of the Assessment Year 2001-02 will not be adjusted against the profits of the said year under appeal before allowing the deduction under section 10A of the A....
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....ive at the total income for allowing deduction u/s. 10A. Therefore the AO issued notice u/s. 147 r.w. sec. 148 of the Act to the assessee on 18.8.2006 on account of escaped income. The AO did not accept this contention of the assessee that the proceedings were based on change of opinion by observing that there was no change of opinion but because of procedural mistake in computation of total income based on the facts of the case, hence the AO was well within the purview of section 147 r.w. sec. 148 of the Act. The AO framed the assessment at an income of Rs.2,56,47,837 which was adjusted against the brought forward business losses, but he did not allow the benefit to the assessee to carry forward of loss from non-STP units. The assessee carried the matter to the ld. CIT(A), who confirmed the action of the AO. Now the assessee is in appeal. 6. The ld. counsel for the assessee submitted that section 10A of the Act is a complete code in itself and therefore deduction under this section is allowable on the profits for the year arising to the undertaking before setting off of the loss from other units or brought forward lossess of the earlier years. It was further stated that de....
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....tial question of law is answered in favour of the assessees and against the Revenue." 9. From the above judgment of Hon'ble jurisdictional High Court, it is crystal clear that the income of the unit eligible for deduction u/s. 10A of the Act is to be excluded at source itself before arriving at the gross total income, therefore the loss of non-10A unit cannot be set off against the income of section 10A unit for carry forward of loss u/s. 72 of the Act. Therefore by keeping in view the ratio laid down by the Hon'ble jurisdictional High Court, we set aside the impugned order of the ld. CIT(A) and the AO is directed to allow the benefit of carry forward of loss of non- STP unit. In other words, the loss of non-STP units cannot be adjusted against the profit of STP units, so it is to be allowed to be carried forward in subsequent years in accordance with law. 10. Vide ground Nos. 3.1 and 3.2, the grievance of the assessee relates to disallowance of additional liability arising due to exchange fluctuation. 11. The facts related to this issue in brief are that the AO during the assessment proceedings observed that the assessee had claimed deduction of Rs.2,46,58,....
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.... ld. counsel for the assessee was that the expenditure incurred for restrictive covenant in the preceding year has been allowed and it was only the exchange fluctuation variation which was claimed as revenue expenditure in the year under consideration. Therefore it was allowable as revenue expenditure. From the material available on record, this fact is not verifiable as to whether the expenditure incurred in the earlier year was considered as revenue expenditure by the department and the claim of the assessee was allowed and this year only the exchange fluctuation variation was claimed, so we deem it appropriate to set aside this issue to the file of the Assessing Officer to be decided afresh in accordance with law, after providing due and reasonable opportunity of being heard to the assessee. The Assessing Officer is also directed to consider the ratio laid down by the Hon'ble Supreme Court in the case of Radhasaomi Satsang v. CIT (1992) 193 ITR 321, which was heavily relied by the ld. counsel for the assessee during the course of hearing. 16. Vide ground Nos. 4.1 and 4.2, the grievance of the assessee relates to the reduction of telecommunication expenses from export tur....
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....ide India. These receipts can only be received by the assessee as reimbursement of such expenses incurred by him. Mere reimbursement of expenses cannot have an element of turnover. It is only in recognition of this position that in the definition of "export turnover" in section 10B, the aforesaid two items have been directed to be excluded. Secondly, the definition of export turnover contemplates that the amount received by the assessee in convertible foreign exchange should represent "consideration" in respect of the export. Any reimbursement of the two items of expenses mentioned in the definition can under no circumstances be considered to represent "consideration" for the export of the computer software or articles or things. Thus, the expression "total turnover" which is not defined in section 10B should also be interpreted in the same manner. Thus, the two items of expenses referred to in the definition of "export turnover" cannot form part of the total turnover since the receipts by way of recovery of such expenses cannot be said to represent consideration for the goods exported since total turnover is nothing but the aggregate of the domestic turnover and the export turnove....