TaxTMI 
TaxTMI 
2015 (3) TMI 933
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....ut assessed by the AO and confirmed by the Ld. CIT(A) under the head "Income from House Property" thereby denying the claim for depreciation on the same. 5.1. The assessee is in the business of software development. While scrutinizing the return of income for the year under consideration, the Assessing Officer noticed that the assessee has received Rs. 1,37,26,637/- towards lease rental from two companies out of which one company is subsidiary of assessee company. The assessee was asked as to why lease rent received of Rs. 1.37 crores be not assessed as Income from House Property. The assessee filed a detailed reply claiming that the assessee has leased out the part of the office building, since there was surplus area in the said building, which was not immediately required by the company for its own use, the same was leased out with a view to ensure the effected utilization of the business assets and to ensure an income stream from the use of the said office buildings. In support, the assessee relied upon certain judicial decisions. 5.2. The explanation of the assessee was not accepted by the AO. Relying upon the object clause in the Memorandum of Association of the assessee, th....
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....he case in hand, the let out was not temporary , more so the leased out premises were never got vacated but were sold subsequently therefore the decision of the Hon'ble Supreme Court do not support the case of the assessee. The assessee has also not submitted the copy of lease agreement neither before the Revenue authorities nor before us. 9.1. The Ld. Counsel for the assessee reiterated its alternative claim that the income should be taxed under the head 'Other Sources'. It is the say of the Ld. Counsel that the Ld. CIT(A) has himself contradicted his own evaluation of facts. On the one hand, the Ld. CIT(A) has observed that the provisions of Sec. 56(2)(iii) are applicable where the machinery, plant or furniture are let out alongwith building and letting out of building is inseparable from the letting out of said machinery, plant or furniture and on the other hand the Ld. CIT(A) observed that there was no machinery or plant which were let out alongwith the building. The Ld. Counsel further stated that the Ld. CIT(A) has dismissed the claim of depreciation holding that the items like UPS, Plant and machinery and furniture and fixtures are part of the business premises let out. The....
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....t the said charges/bill amount include delivery costs. According to the AO, unless and until assessee delivers said product/software to the foreign buyer, the said buyers is not going to pay bills raised by the assessee. The AO was of the firm belief that even if no separate charges are charged by the assessee, it does not mean that same are not included within invoice. The AO finally computed the deduction allowable u/s. 10A and computed the disallowance at Rs. 14.80 lakhs. 15. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A). The Ld. CIT(A) observed that the AO has made adjustment on account of expenses attributable to the delivery of computer software outside India and expenses incurred in foreign currency for providing technical services outside India. 15.1. In so far as the expenses attributable to the delivery of computer software are concerned, it was explained before the Ld. CIT(A) that the sale of software packages and services pertains solely to production and development of computer, software and there were no freight, telecommunication charges and insurance included in either export turnover or the total turnover. After considering the facts an....
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....of articles or things or computer software received in, or brought into, India by the assessee in convertible foreign exchange in accordance with subsection (3), but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India." 17. It is the say of the Ld. Counsel that the assessee has not recovered any of the expenses nor these expenses were reimbursable by the foreign party. Further, the Ld. Counsel pointed out that the second limb of clause (iv) to Explanation-2 is independent and the issue has been decided in favour of the assessee by the Tribunal in assessee's own case in ITA No. 3464/M/08 for A.Y. 2003-04. 18. The Ld. Departmental Representative strongly supported the findings of the lower authorities. 19. We have carefully perused the orders of the authorities below. It is an undisputed fact that there is no specific finding in so far as the recoveries of expenditure by the assessee from its foreign parties are concerned. It is also not the case of the AO that the invoice amount i....
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....freight, telecommunication charges or insurance charges attributable to the delivery of the software outside India. The other expenditure which can be reduced is the expenditure incurred in foreign exchange in providing the technical services outside India. The nature of the expenditure incurred by the assessee is not in the nature of technical expenditure for providing the technical services outside India. Therefore, the assessee has correctly not reduced the same from the export turnover While computing the deduction u/s. 1OA of the Act. This view is also fortified by the decision of the ITAT Bangalore in the case of Infosys Technologies P. Ltd. (supra) and also ITAT, Hyderabad in the case of Patni Telecom (P.) Ltd. (supra). Further these decisions also were already delivered when the assessment order was passed on 20.03.2006 and the view adopted by the Assessing Officer is inconsonance with the said decision as held by the Hon'ble Supreme Court in the case of Max India Ltd. (supra) and Malabar Industrial Co. (supra). When two different views existed when the commissioner was passing the order, it had to be taken into account and the commissioner has no jurisdictional power to re....
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.... Act. Only those expenses which are incurred in foreign exchange in providing technical services outside India are required to be reduced. Considering the facts of the case in hand, in the light of the decision of the Tribunal discussed hereinabove, we set aside the findings of the Ld. CIT(A) and direct the AO to allow the claim of deduction u/s. 10A as computed by the assessee. Ground No. 4,5 & 6 are accordingly allowed. 23. Ground No. 7 & 8 relate to the claim of deduction u/s. 10A on the profits in respect of Units I & II by claiming that the loss of Unit-III be set off against the income computed under the head "Profits & Gains of Business or Profession". 24. It is the claim of the assessee that the loss of one eligible unit cannot be set off against the profits of other two eligible units. At the very outset, the Ld. Counsel for the assessee stated that the issues involved in ground Nos. 7 & 8 are squarely covered in favour of the assessee and against the Revenue by the decision of the Hon'ble Bombay High Court in the case of Hindustan Unilever Ltd. Vs DCIT & Another 325 ITR 102. 25. The Ld. DR could not bring any distinguishing decision in favour of the Revenue. 26. We ha....