TaxTMI 
TaxTMI 
2025 (6) TMI 1312
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....duction u/s 10A & 10AA of the I.T. Act 1961. 3. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in treating income of 12,61,336/- from interest on employee loans as eligible for deduction u/s 10A & 10AA of the I.T. Act 1961. 4. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in treating income of Rs. 21,21,16,226/- from Foreign Exchange Gain & Forward Contract Gain as eligible for deduction u/s 10A & 10AA of the LT. Act, 1961 ignoring the fact, that the gain is arises due to hedging activity and is not derived by the specified business activity. 5. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred ill reducing the Freight & telecommunication charges of Rs. 7,03,76,502/- from total turnover also for the purpose of computation of deduction u/s 10A & 10AA of the I.T. Act, 1961. 6. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in reducing the Expense in respect of migration Ion the job training amounting to Rs. 150,59,13,198/- from total turnover also for the purpose of computation of deduction u/s 10A & 10AA of the I.T. Act, 1961. 7. Whether....
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....th bank and related companies only for such period for which the surplus generated out of the assessee's business could not have been efficiently deployed in the assessee's business/expansion plans. As regards interest on employee's loan, he submitted that employees were engaged in rendering IT/ITeS and hence are part of the day to day running of the business of the assessee and assists in smooth conduct of its business. In view of his above submissions, it is submitted that the interest received are inextricably linked to the conduct of business of the eligible undertakings of the assessee and should also be treated as profit of the business eligible for deduction under section 10AA of the Act. In this regard, he also relied on the written submissions dated 23-09-2016 filed before CIT(A) at pages 189 to 220 of PB - relevant at pages 195-196 In support of the conclusion of the ld. CIT (A), he further placed reliance on the following decisions :- (i) Motorola India Electronics reported in 225 Taxman 11 (Kar)(Mag) (ii) Hewlett Packard Global Soft Ltd reported in 403 ITR 453 (Kar)(FB) (iii) Riviers Home Furnishing reported in 237 Taxman 520 (Del) (iv) Camiceria Apparels In....
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.... AY 2011-12 in ITA Nos.4060 & 4251/Del/2016 vide order dated 29-04-2024 and relevant issue is discussed at para 8 onwards with conclusions in paras 8.5 to 8.8. He submitted that ITAT order for AY 2011-12 has thereafter been followed by ITAT in AY 2012-13 in ITA Nos. 6414/Del/2016 & 6542/Del/2016 order dated 18-12-2024 and relevant issue is discussed at para 9 onwards with conclusions in para 11. He further placed reliance on the following decisions :- (i) Pentasoft Technologies reported in 347 ITR 578 (Mad). (ii) Gen Plus Jewellery reported 233 CTR 248(80m) (iii) Cognizant Technology Solutions reported in (2023) 151 taxmann.com 401 (Mad) SLP dismissed in 454 ITR 1 (SC). 8. Ld. DR of the Revenue relied on the findings of lower authorities. 9. Considered the rival submissions and material placed on record. We observed that the identical issue was decided by the ITAT against the Revenue in AY 2011-12 vide order dated 29.04.2024 (supra) and for the sake of clarity, the relevant finding of the said decision is reproduced below :- "8.5 At the outset, we find that assessee had furnished complete details of income from foreign exchange/forward contract gains before the ld. AO vid....
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....). 8.8. In view of the aforesaid observations and respectfully following the judicial precedence relied upon hereinabove, ground no. 4 raised by the Revenue is dismissed." 10. Respectfully following the decision of the coordinate Bench of the Tribunal, we dismiss Ground No.4 raised by the Revenue. 11. With regard to Ground Nos.5 & 6 of Revenue's appeal and Ground Nos.1 & 2 of assessee's appeal, ld. AR of the assessee submitted that here again, there is a typing error in grounds drafted by the Assessing Officer and during the year under consideration, the issue in dispute is only vis-avis deduction claimed u/s 10AA of the Act. He submitted that identical issue has been decided in favour of the assessee by ITAT in AY 2011-12 vide order dated 29-04-2024 and relevant issue is discussed at para 5 onwards with conclusions in para 5.1 and 5.2. He further submitted that ITAT order for AY 2011-12 has been followed by ITAT in AY 2010-11 in ITA Nos.6773/0eI/2019 & 6582/De1/2019 order dated 11.10.2024. He submitted that the above-mentioned orders, thereafter, has been followed by ITAT in AY 2012-13 in ITA Nos. 6414/Del/2016 & 6542/Del/2016 order dated 18.12.2024. 11.1 He further submitted....
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.... bills were raised by the assessee to its overseas customers basis the agreed rates/ remuneration methodology in respect of the projects executed and revenue from the contracts is recognized by the assessee on the basis of billable time spent by the employees working on the project, priced at the contracted rate. He submitted that telecommunication expenses incurred in foreign currency were not invoiced by the assessee to its overseas customers and hence these expenses cannot be excluded from export turnover. He submitted that therefore, since the assessee itself had not included the recovery of expenses in respect of telecommunication expenses and migration Ion the job training services in the figure of 'export turnover' while computing deduction u/s 10AA of the Act, the same cannot be excluded. He submitted that ld. CIT(A) in AYs 2011-12, 2012-13 and 2013-14 partly allowed the ground of appeal raised by the assessee by holding that the amount by which export turnover is reduced on account of telecommunication expenses should be reduced from the total turnover for the purpose of computing the deduction allowable u/s 10AA. 12. Ld. DR of the Revenue relied on the findings o....
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....ssessee's employees in order to enable them to understand the operations of the customers and help in migrating those operations from overseas customer locations to STPI and SEZ units located in India. In order to effect the migration of customer operations from overseas locations to India, some of the employees of the assessee having requisite experience and skill are selected to undergo on-the-job training at overseas customer locations. The expenses incurred by the assessee on such on-the-job training or migration activities are reimbursed by the assessee's customers which, are netted-off against the respective expense items. 5.2 The learned AO by referring to the definition of export turnover as provided in Section 2(iv) of Section 10A of the Act, reduced the telecommunication expenses incurred in foreign currency relating to - reimbursement received by the assessee on account of migration/ on-the-job training activities from the export turnover and correspondingly did not reduce the same from the ambit of total turnover, thereby reducing the claim of deduction u/s 10A/10AA of the Act. This issue is no longer res integra in view of the decision of the Hon'ble Supreme Cour....
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....gh Court in case of M/s Birlasoft Ltd. ITA No. 1284 of 2011 order dated 15.12.2011 16. Ld. DR of the Revenue relied on the findings of lower authorities. 17. Considered the rival submissions and material placed on record. We observed that the identical issue was decided by the ITAT against the Revenue in AY 2011-12 vide order dated 29.04.2024 (supra) and for the sake of clarity, the relevant finding of the said decision is reproduced below :- "10.1 We have heard rival submissions and perused the materials on record. The assets like printers, routers along with other accessories/ peripherals form one integrated system and would be of no use independently of each other. Therefore, all such facilities from part of computers and hence eligible for depreciation at the rate applicable for computers. This issue is duly covered by the decision of the Hon'ble Jurisdictional High Court in the case of BSES Yamuna Powers in ITA no. 1267 of 2010 dated 31.08.2010 and in the case of Orient Ceramics reported in 200 Taxman 64 (Del). In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, ground no. 9 raised by the Revenue is dismissed." ....
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.... facts and in law the order passed by Assessing Officer {herein above referred to as the "AO"} is void ab initio and bad in law." 23. The assessee has also taken the following additional ground of appeal :- "The Appellant prays that the Dividend Distribution Tax ('DOT') Rs. 83,34,148 paid under section 115-O of the Income-tax Act, 1961 ('the Act') at the rate of 16.2225 percent on dividends declared and paid by the Appellant to its parent foreign shareholder Genpact India Investments, a tax resident of Mauritius, is in excess of the rate of 5 percent provided under Article 10 of the Double Taxation Avoidance Agreement between India and Mauritius. The Appellant prays for a grant of refund of the excess DOT paid by it under section 115-O of the Act." 24. After considering the rival submissions and material placed on record, we observed that the issue raised by the assessee in additional ground goes to the root of the matter challenging the legal issue. In the light of Hon'ble Supreme Court in the case of NTPC, Limited vs. CIT (1998) 229 ITR 383 (SC), we are inclined to admit the additional ground and take up the same for adjudication. 25. Ground Nos.1 & 2 of as....