TaxTMI 
TaxTMI 
2015 (9) TMI 897
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....amount of Rs. 15,18,65,460 on account of recoveries of under- utilised dedicated human resources. 2. The Appellant prays that the JCIT be directed not to reduce from the profits of the business eligible for deduction under Section 10A/10B of the Act the amount of Rs. 15,18,65,460 on account of recoveries of under-utilised dedicated human resources. II 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the action of the JCIT in reducing from the profits of the business eligible for deduction under Section 10A/10B of the Act an amount of Rs. 9,71,653 out of Rs. 5,00,44,259 in respect of recovery of Global Recruitment Cell (GRC) cost. 2. The Appellant prays that the JCIT be directed not to reduce from the profits of the business eligible for deduction under Section 10A/10B the amount of Rs. 9,71,653 out of Rs. 5,00,44,259 in respect of recovery of GRC cost. III 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in not concluding that the provisions of Section 10A(7) of the Act were incorrectly invoked by the JCIT after holding that general observations cannot be made with regard to the profit margins sho....
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....od. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing not to exclude Rs. 15,18,65,460/- being recovery of under utilized human resources and other cost recoveries from -the profit of business for the purpose of allowing deduction u/s. 10A/10B of the Act." ITA No.1069/Mum/2008, Assessment Year-2004-05(Appeal by the assessee): "I 1. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) XXV, Mumbai ('the CIT(A)') legally erred in upholding the action of the Addl. Commissioner of Income Tax, Range 8(3), Mumbai (the Addl.CIT). In reducing the profits of the business eligible for deduction under section 10A/ 10B/ 80HHE of the Act an amount of Rs. 16,90,05,755 on account of recoveries of under-utilised dedicated human resources. 2.The Appellant prays that the Addl.CIT be directed not to reduce from the profits of the business eligible for deduction under section 10A/10B/80HHEof the Act the amount of Rs. 16,90,05,755 on account of recoveries of under-utilised dedicated human resources. 11 Without prejudice to the above, 1 On the facts and in the circumstances of the case, the l....
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....ds of Appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing." ITA No.2263/Mum/2008, Assessment Year-2004-05(Appeal by the AO): 1. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the A.O to restrict the disallowance to Rs. 5,68,902/- and delete the disallowance of Rs. 5,78, 98, 970/-for the purpose of calculation of eligible profit for deduction u/s.10A/10B/ 80HHE, without appreciating the facts of the case. 2. "On the facts and in the circumstances of the case and in law, the CIT(A)erred in directing the A.O to recalculate the deduction u/s.10A/10B/80HHE by reducing recoveries of Rs. 21, 41, 55, 334/-from the eligible profits of Rs. 132,15,55,067/-without appreciating the facts of the case." 3. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in directing the A.O to allow deduction u/s.l0A & 10B on interest income of Rs. 3,06,63,052/-being interest of EEFC account and deposit with bank as margin money, without appreciating the facts of the case." ITA No.7391/Mum/2010-AY.2006-07(Appeal by the AO): "1.On the facts ....
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....o restrict the addition to Rs. 14,337/-. 4. The Appellant craves leave to add to, alter, or withdraw all or any of the above Grounds of Appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. ITA/6742/Mum/2011.AY.,2007-08(AO's appeal) "1.On the facts and in the circumstances of the case and in law, the CIT(A) erred in allowing interest income of Rs. 11,90,24,116/- as profits eligible for deduction u/s.10A 10B though the same were not derived from export of computer software without appreciating the facts of the case." 2.On the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating the ratio of the judgement of the Hon'ble Apex Court in the case of Liberty India Limited vs. CIT 317ITR 218, wherein it is held that certain income may constitute profit from business under section 28, but it cannot be construed as profits derived from Industrial Undertaking and the decision of the Hon'ble ITA T, 'E' Bench, Mumbai in the case of Tricom India Limited vs. ACIT 36 SOT 302, wherein it is held that interest income is not eligible for deduction u/s.10A 10B.....
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....purpose of deduction u/s. 80A of the Act.During the course of hearing before us the representatives of both the sides agreed that the issue was decided in favour of the assessee by the order of the Tribunal delivered in assessee's own case for AY.02-03(ITA/3859/ & 3534/M/06 dt.6.1.09),that in the appeal filed by the Department before the Hon'ble Bombay High Court against the order of the Tribunal for AY.02-03(ITA-L-1440 of 2009)the ground about reimbursement of cost was not raised,that the Hon'ble High Court had dismissed the appeal filed by the Department for AY.02-03,vide its order dated 22.7.2009. 2.1.We find that the Tribunal had,while adjudicating the issue in the AY.2002-03,decided the matter as under: "11 We have heard the rival submissions and considered them carefully.After considering the submissions and perusing the relevant material on record,we find that the claim of the assessee is allowable.The AO disallowed the claim of the assessee on the reasons that receipt of Rs. 18, 91, 72,279/- are of revenue in nature and they are not entitled for exemption u/s 10A of the Act because these receipts were not derived by the undertaking from the export of computer ....
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....ouped was a part of the expenses. In the present case also, the company did not recover anything more than the expenditure actually incurred. Further, the expenses so recovered were inextricably related to the execution of projects of Syntel Inc/Syntel Europe. The facts of the present case are similar to the facts of the case of Dunlop Rubber Company Ltd. Therefore, in view of the decision of the Hon'ble Calcutta High Court it has to be held that the receipts on account of reimbursement are nothing but reduction of expenses incurred by the assessee on the project executed on behalf of the Syntel Inc. /Syntel Europe as per clauses of the agreement. 12.1 Similar view has been taken by the Mumbai Tribunal In the case of Zuari Agro Chemicals and various other decisions relied upon by the assessee before the CIT(A). The ratio of some of the decisions have been discussed by the CIT(A) and also reproduced somewhere above in this order are in support of the case of the assessee. The assessee has not availed any double benefit once by way of incurring expenses and once by way of getting exemption u/s. 10A. Whatever the expenses were incurred by the assessee,part of which was reimburs....
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....sposed in favour of the assessee by which it has been held that the assessee is entitled to exemption on account of reimbursement of expenses.The CIT(A) himself, at page 68 of his order has given the following findings: "... I agree with the AR's submissions that had it been the intention of legislature to comare the profit of an assessee with the average profit of the industry legislature would have used the word äverage profits"instead of words presently used Ördinary Profits". If at all the margin of profit or gain is to be compared with profit or gain of other players in the same industry, such comaprison cannot be made with average profit margin of the same industry. This is because, the average would necessarily be depressed by taking into account the lower profits made by some of the other players. In the case of appellant AR has given various reasons as to how and why its profit margins are better than the industry average. Appellant is having 100% export turnover and it has no interest cost. AR has also stated that its depreciation cost is also low as the appellant company has set up the unit as back as in 1995. AR/appellant has also justified its better margi....
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.... find that this issue is also covered in favour of the assessee by the decision of the Tribunal in assessee's own case for the AYrs. 99-2000 and 2000-01 wherein it has been held to have a direct nexus with the business and development of export of software. Respectfully following the decisions of the coordinate bench, these grounds of the assessee are allowed. Respectfully following the above order of the Tribunal and considering the fact-that the appeal filed by the Department with regard to eligibility of 10A/10B deduction,before the Hon'ble High Court,has been dismissed-we decide the issue in favour of the assessee. 6.Last ground of appeal is about foreign exchange loss on sales/debtors, balance in EFFC account and its treatment while computing deduction u/s. 10A of the Act. 6.1.During the assessment proceedings the AO found that the assessee had computed business profit for the year under appeal after debiting exchange loss of about Rs. 6.51 crores in the P&L account and after reducing the export turnover amount by Rs. 6,51,30,323/-. In the earlier year the AO had not accepted the similar position when there was gain because of exchange rate.The assessee, before the FA....
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.... of computer software without appreciating the facts of the case. 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not allowing set off of losses before computing deduction u/s. 10A/10B of Rs. 72,22,846/- without appreciating the facts of the case." 3.With reference to ground No. 1 the learned D.R. has submitted the CIT(A) has erred in granting deduction under section 10A on the amount of expenditure reimbursement as it has no direct nexus with the assessee export activity and it being an independent concern of the assessee following the principles laid down by the Hon'ble Supreme Court in the case of Liberty India 317 ITR 218 (SC) the amount cannot be considered as derived from the export activity for the purpose of section 10A/10B. It was further submitted that receipts are not part of the export activity and received by way of reimbursement of expenditure incurred for sister concern, which is not the main activity of the assessee. He referred to the agreement with the group concern and submitted that the amount cannot be allowed as deduction as the profit generated out of the cost cutting also should be considered as having no first ....
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....mined by the Addl. CIT (Transfer Pricing-II), Mumbai. It is seen from the order u/s. 92CA(3) of the Act of the above assessment year passed by the Addl. CIT, Mumbai that the AO [Transfer Pricing-II] has observed that the basis of allocation, that is time spent for the respective entity was fair and, therefore, she accepted the recovery made by the appellant in this regard. In view of the above, my predecessor has held that there is no profit or markup on the aforesaid recoveries and, therefore, same cannot be treated as income. As regards other cost reimbursements, my predecessor has also observed that the same represents amount spent for and on behalf of M/s. Syntel Inc. and other entities. These expenses are under various heads. The cost incurred on behalf of M/s. Syntel Inc. and other entities are tracked separately and recovered at the end of the month from the respective entities on actual basis without any markup. In view of the detailed examination of facts, my predecessor had decided this ground in favour of the appellant for A.Y. 2002-03. During the course of appellate proceedings, the appellant has also filed the copy of the order of ITAT, E-bench in ITA No. 3534/Mum/06 d....
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.... exclude Rs. 15,18,65,460/- being recovery of underutilised human resources and other cost recoveries from the profit of business for the purpose of allowing deduction u/s. 10A/10B of the Act. 9.1.While deciding the ground no.1,filed by the AO for the year under appeal,we have decided the issue in favour of the assessee.Following the orders of the Tribunal for AY.2002-03 (supra),on the issue before us,we dismiss ground no.3 raised by the AO. ITA No.1069/Mum/2008, AY.-2004-05: 10.Following our order on the issues of under-utilised dedicated human resources,GRC cost and the eligibility of interest income for claiming deduction u/s.10A/10B of the Act,for the AY. 2003 -04,we decide grounds no.1-3,raised by the assessee for the year under appeal,in its favour.Last ground of appeal is allowed for statistical purposes,following our order for the AY.2003-04. ITA No.2263/Mum/2008, AY.-2004-05: 11.First two grounds of appeal are about disallowance to be calculated for deduction u/s.10A/ 10B/80HHE of the Act.While deciding the first ground of appeal of the appeal filed by the AO for the AY.2003-04,we have followed the order of the Tribunal on the identical issue decided by it f....