TaxTMI 
TaxTMI 
2020 (4) TMI 122
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....ntract research and development services and sourcing support services for its group companies. The return of income for the AY 2012-13 was filed on 30.11.2012 disclosing total income of Rs. 13,00,78,070/-. Against the said return of income, the assessment was completed by the Deputy Commissioner of Income Tax, Corporate Circle-5(1), Chennai (hereinafter called "AO") vide order dated 02.05.2016 passed u/s. 143(3) r.w s. 92CA(3) of the Income Tax Act, 1961 (in short 'the Act') after making the following disallowances. (i) Restricting the disallowance u/s.10AA of the Act by reducing the expenditure incurred in foreign currency from export turnover. (ii) Addition on account of belated remittance of employees contribution to Employees Provident fund/ESI Rs. 28,11,739/-. (iii) Adjustment made u/s.92CA of the Act Rs. 35,87,344/-. (iv) Interest on fixed deposits Rs. 3,69,63,622/-. (v) The Assessing Officer also disallowed remittance of foreign tax paid of Rs. 8,44,57,768/- claimed during the assessment proceedings against claim made in the return of income of Rs. 5,58,87,820/- on the ground that claim was not made in the return of income by pla....
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....rency and communication and insurance costs as having been incurred in connection with rendering services outside India without considering the facts of the case and nature of such expenses. 2.3. The Ld. CIT(A) and the Ld. AO have failed to appreciate that the export turnover earned by the appellant does not include any receipts separately recovered towards expenditure incurred in foreign currency, communication and insurance cost 2.4. The Ld. CIT(A) and the Ld. AO failed to consider the favorable directions of the DRP on the identical issue in Appellant's own case for the earlier AY 2009- 10 2.5. The Ld. CIT(A) has erred in not separately adjudicating the issue of exclusion of communication and insurance cost from export turnover 3. Exclusion of 'Other Income' from computation of profits for the purpose of computation of deduction under section 10AA 3.1. The Ld. AO have erred in excluding foreign exchange gain and other income from profits of the undertaking in the computation of deduction under section 10AA of the Act by concluding the same are not profits derived by the eligible undertaking. 3.2. The Ld. CIT(A) has erred in n....
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....section 1OAA of the Act. Copy of the aforementioned directions of Hon'ble DRP for AY 2009-10 is enclosed as Annexure 6of this submission. In addition to the above, the Appellant places the following arguments before your goodself - 2. Expenditure not incurred for rendering services outside India The intention of the legislation is to preclude the benefit of section 10AA of the Act in respect of expenses incurred in foreign exchange in rendering service outside India. The same is evident from the definition of export turnover provided in explanation 1 to section 1OAA of the Act which mandates that expenditure if any Incurred in rendition of services in foreign soil alone have to excluded from export turnover while computing deduction under section i0AP of the Act. In the instant case, the Ld. AO has not appreciated this aspect and has proceeded to exclude expenditure from export turnover while computing deduction under section 1OAA of the Act, merely because it was incurred in foreign currency. At this stage, the Appellant wishes to place reliance on the ruling of the Hon'ble Bangalore Income Tax Appellate Tribunal ('Tribunal') in the cas....
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....wing grounds of appeal. ''1. The order of the ld CIT(A) is contrary to law and facts and circumstances of the case. 2.1 The ld CIT(A) erred in directing the AO to exclude expenditure incurred in foreign currency and other income from the total turnover also, relying on the decision of the Tribunal in assessee's case for AY 2009-10, wherein the Hon'ble Tribunal had relied on its decision in the case of M/s Sak Soft Limited, whereby expenditure incurred in foreign currency cannot form part of both export and total turnover. 2.2 The ld CIT(A) failed to note that as per Explanation 1(i) to Sec.10AA, export turnover does not include freight, telecommunication charges or insurance attributable to the delivery of articles or things outside India or expenses, if any, incurred in foreign exchange in rendering of services outside India and accordingly the AO is justified in excluding the expenditure incurred in foreign currency from the export turnover. 2.3 The id CIT(A) ought to have noted that as per Explanation 1 to Sec.10AA, there is no mandate given in the Act to exclude such expenditure incurred in foreign currency from the total turnover. 2....
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....Extrusion Limited, has been accepted with regard to employer's contribution only and does not apply ,to the claim of deduction under employees' contribution. 4. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored''. 11. Grounds of appeal No.1 & 4 are general in nature therefore, does not require any no specific adjudication. 12. Ground No.2 challenges the decision of ld. CIT(A) in directing the Assessing Officer to exclude expenditure incurred in foreign currency on insurance, freight and telecommunication charges from both export turnover and total turnover. The issue is no longer res integra, and has been decided in favour of the assessee and against the Revenue by the decision of the Hon'ble Apex Court in the case of CIT vs. HCL Technologies Ltd, (2018) 404 ITR 719, wherein at para 19 to 21, it has been held as under:- ''19. In the instant case, if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software under section 10A of the Income-tax Act are allowed only in export turnov....