TaxTMI 
TaxTMI 
2016 (11) TMI 1554
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....eration of the facts and circumstances of the case and perusal of the papers on record and the orders of the authorities below as well as the case laws cited, we hold as follows. 5.1. First we take-up assessee's appeal. The grounds of appeal reads as follows : "In the fact and the circumstances of case, and in law, the learned Commissioner of Income-tax (Appeals) - V, Hyderabad, erred: 1. In respect of unbilled revenue of Rs. 9,55,76,699. a) In confirming that said amount is required to be included in the total turnover for the purpose of computing deduction under section.10A b) Without prejudice to above, if the amount of unbilled revenue is included in the total turnover, in not directing that to the extent of subsequent realization, the realized amount ought to be included in the export turnover for the purpose of computing deduction under section 10A. c) In not appreciating that while computing deduction u/s 10A, unbilled revenue was not considered even in export turnover by the appellant. d) In concluding that the appellant has included imaginary sales and imaginary profits to claim higher deduction under section 10A 2. In respect of charging of interest under s....
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.... can be shown as reduction from total expenditure instead of including the amount in total turnover. In any case, this amount is included in the billing of subsequent year and is included in the turnover of next year. If this amount is included in the turnover of the current year. In the next year it will be again included in the turnover of that year and thus the same amount will be considered in the turnover twice. In view of above submissions, it is submitted that the amount of Rs. 9,55,76,699 (Rs.8,23,48,491 + Rs. 1,32,28.208) is not required to be included in the total turnover for the purpose of computing deduction under section 10A for AY 2007-08. Without prejudice to above submissions, it is further submitted that this amount is included in the billings of next year to the extent of Rs. 8,67,88.581. The details of the same are submitted herewith with a request that if this amount is included in the total turnover then the same should be included in export turnover also since the amount is in respect of export sales only and is also realized and brought into India." 6.1. These submissions were rejected by the Assessing Officer. When the matter travelled before the Ld. CIT....
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....ted an error in giving a finding that, unbilled amount should be part of total turnover but cannot be part of export turnover. 9.1. We also find that the assessee in this case has included unbilled revenues in its total turnover in its annual accounts. So to claim otherwise, while computing deduction under section 10A of the Act in our view is not correct. Under these circumstances, the correct position would be to include this unbilled amount, both in total turnover as well as in export turnover. The assessee has specifically submitted that unbilled turnover was subsequently billed and substantial amount has been realised in the immediately subsequent year, within the statutory period permitted for claim of exemption under section 10A of the Act. All the details were filed both before the Assessing Officer and the Ld. CIT(A). Both these authorities ignored these submissions. Assessing Officer as well as the CIT(A) should have considered these details and granted relief on the amount of foreign exchange realised by the assessee within the stipulated period as per law. Any how, we do not direct the Assessing Officer to do so in view of our finding in the next paragraphs. 9.2. One ....
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....as was done in the case of Section 80HHC wherein in the legislature was clear at explanation (baa) to sub-section 4C. 4. The CIT(A) ought to have observed that section 43B and 40a(ia) are penal in nature for violating specified time limits in payment of statutory liabilities. 5. Any other ground that may be urged at the time of hearing before the Hon'ble ITAT." 13. Ground No.1 is general in nature. Ground Nos.2 and 3 are covered in favour of the assessee by the order of the Hon'ble jurisdictional High Court in the case of CIT (Central), Hyderabad vs. M/s. Aurobindo Pharma Ltd., Hyderabad in ITTA.No.502 of 2014 Judgment dated 31.07.2014. Similar issue has been allowed by us in the assessee's appeal in the earlier assessment year. Respectfully following the same, we dismiss ground No.2 of the Revenue. 13. On ground No.4, the Ld. D.R. submitted as follows : 13.1. As seen from the facts of the case, in the statement of total income filed by the assessee along with return of income, the assessee itself has disallowed a sum of Rs. 31,99,845/- in terms of Sec. 40(a)(ia) of the I.T. Act as the assessee has failed to deduct tax at source under Chapter XVII of Income Tax Act. As such, t....
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....e extended to determine the profits of the business for the purpose of computing deduction under section 10A. ii) The intention of legislature in introducing provisions of Sec. 40(a)(ia) is to penalise such asses sees who fail to follow the TDS provisions scrupulously, where TDS being one of the major source of revenue i.e. 40% to 45% of the total direct tax revenues comes through TDS provisions. As such, the purpose of disallowance u/s. 40(a)(ia) is to make the assessee aware that he/it should face multiple consequences on account of nondeduction of tax including levy of demand u/s. 201(1), interest 201(1A), penalty u/s.221(1), and thereby forcing to abide by the TDS provisions. iii) As such, the disallowance of such expenditure made u/s. 40(a)(ia) as a measure of punishment/penalty cannot give rise to benefit to the assessee by way of claiming deduction u/s.10A on such amount disallowed. Otherwise, it would lead to absurd situation where, even after disallowance of huge amount for non deduction of TDS, the assessee will not pay any tax or penalty by virtue of claiming the entire amount of disallowance as deduction u/s.10A Accordingly, the real intention of the legislature behin....