AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (3) TMI 977
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee - Company for the assessment year 2005-06, the Assessing Officer found that the assessee incurred an amount of Rs. 6,67,478/- towards internet expenses for export of Software. The assessee contended that as the amount is excluded from export turnover, the same should be reduced from the total turnover also. The Assessing Officer rejected this contention and added the same amount to the total turnover. The Assessing Officer further found that the assessee did not fulfill the conditions for deductions under Section 10A laid down in Clauses (ii) & (iii) of Section 10A(2) since the Company was found to have been formed by re-construction and by the transfer to a new business of plant and machinery previously used. The assessee relied....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was right in holding that internet expenses incurred in foreign exchange should be reduced from the total turnover for the purpose of computing deduction under Section 10A? 2)Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee was entitled to deduction under Section 10A in respect of the alleged new unit even though the said unit had been substantially made up using the assets of the old units and thus not fulfilling the conditions laid down in clauses (ii) and (iii) of Section 10A(2)? 3)Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee's claim for deduction u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ommissioner of Incometax, Central - III Vs. HCL Technologies Ltd.] "... 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 IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature. 20.Even in the common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise any other ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gible for deduction under Section 10B. The return was processed on 28.03.2002. Subsequently, the Assessing Officer had reason to believe that income chargeable to tax had escaped assessment on account of the assessee Company being ineligible for deduction under Section 10A. Subsequently, a notice dated 22.03.2007 was issued under Section 148 and after giving an opportunity of hearing, the scrutiny assessment order was passed on 17.12.2007, disallowing the entire claim of deduction under Section 10B. Further, the expenditure incurred for the renovation and repairs of the rented premises of the assessee Company was disallowed by the Assessing Officer on the ground that such expenses were in the nature of capital expenditure. The Assessing Off....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nery as those are bearing charge of financial institution, does not violate Clause (ii) and (iii) of Sub Clause (2) to Section 10A of the Income Tax Act." 7.The order passed by the Income Tax Appellate Tribunal was challenged by the Department in T.C.A.No.1916 of 2008 and the Hon'ble Division Bench of this Court by its judgment dated 26.10.2018 confirmed the order of the Income Tax Appellate Tribunal dated 16.05.2008 made in I.T.A.No.2255/Mds/06 for the Assessment Year 2002-03 and dismissed the appeal. In view of the judgment of the Hon'ble Division Bench of this Court, it is clear that the applicability of Clauses (ii) and (iii) of Sub Clause (2) to Section 10B of the Act, the impugned order passed by the Income Tax Appell....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enue through the Assessing Officer in the Assessment order by computing the total income by way of brought forward or carry forward the depreciation allowance of the earlier Assessment years and set off the unabsorbed depreciation first and making the return Nil, thereby leaving the Assessee in a position where it could not claim an deduction under Section 10B as there was no income after set off of carry forward depreciation and unabsorbed depreciation from earlier years. 29.This method of computing the income in the present case made by the Revenue is totally against the said law as has been declared by te Hon'ble Apex Court in the aforesaid decision in Commissioner of Income-tax v. Yokogawa India Ltd., (cited supra). ....