TaxTMI 
TaxTMI 
2012 (3) TMI 736
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....e of depreciation of Rs. 1,15,78,577 on computer software. The learned CIT (A) failed to consider Income Tax Rules, which prescribe depreciation @60% on computer software. 2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming disallowance of expenditure u/s. 14A to the tune of Rs. 50,198 and further erred in directing to compute the disallowance as per Rule 8D. 3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming deduction u/s. 10A to Rs. 2,20,66,616 as against Rs. 3,29,17,544 claimed by the Appellant. The learned CIT (A) failed to appreciate that the profits of eligible undertaking u/s. 10A were correctly computed. 3 ....
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....ation; therefore, the directions of the CIT (A) are not sustainable and accordingly, we set aside the order of the CIT (A) on this issue. The ld. AR has submitted that the assessee would accept the disallowance made by the Assessing Officer @ 0.5% and therefore, it has no grievance against the order of the Assessing Officer on this issue. 9 In view of the above statement of the ld. AR of the assessee, we confirm the disallowance of Rs. 50,198/- made by the Assessing Officer at 0.5% of the investment u/s. 14A towards administrative expenses. 10 Ground no.3 is regarding reducing the amount of deduction u/s. 10A to Rs. 2,20,66,619 against the claim of Rs. 3,29,17,544/-. 10.1 The assessee set up two units during the FY 2004-05 one in K....
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.... deduction u/s. 10A was certified by the auditors in form 56F along with basis for determining profits of the STP Undertaking. It was further submitted that the higher profitability of STPI unit attributed to dedicated customer and reimbursement of Bench Time by ITEC, which is not in the case of other customers catered to by Non-STP Unit. It was submitted that since the employees at STP unit were employed with concurrence of ITEC; therefore, they cannot be transferred to other units or employed for other customer's projects. The ld. AR of the assessee referred the comparative Chart of working done by assessee and that by Assessing Officer placed at page 28 of the PB and submitted that the major difference is in respect of Staff cost which i....
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....lating income of the STP Unit. 10.4 The ld. AR of the assessee has submitted that the decision in the case of Parry Agro reported in 257 ITR 41(Ker), which was relied upon by the CIT (A) is in respect of deduction u/s. 80HHC which itself provides for average profits. It was submitted that in the case of JV Electronics, both the Units were operating from same premises which is not the case here. 10.5 On the other hand, the ld. DR has relied upon the orders of the lower authorities and submitted that there is a huge difference in the profit ratio of the 10A units and non 10A unit, which is not possible in the ordinary circumstances. The assessee is doing the identical business from all the undertakings; therefore, the profit ratio canno....
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....d the ultimate gain or loss of the business was worked out by a common P & L account and Balance Sheet. There was complete interlacing, interdependence and dovetailing of different business activities and therefore, all such activities constituted one the same business. 11.1 It is apparent from the observations of the CIT (A) that the provisions of sec. 10A and particularly sub.sec. (1) and sub.sec (4) of sec. 10A has been misunderstood by the CIT(A). As per sub.sec. (1) of sec 10A, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software shall be allowed from the total income of the assessee. For the purpose of sub.sec.(1) and sub. sec. 1(A), the profits derived fr....
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.....sec. (4) of sec. 10A. Further, as per the direction of the Bench, the assessee has filed a comparative chart showing the expenditure and profit ratio of the earlier year and the year under consideration for the non STP units. It is clear from the comparative chart that the profit ratio of the year under consideration of the non STP unit is 16.5% in comparison to loss of 44.65% in the earlier year. Thus, it is clear that there is no case of shifting of expenditure of the STP unit to the non STP unit for the year under consideration because the STPI has been set up in the year under consideration and that too in the month of Jan 2006. When the operating profit as well as net profit of the non STP unit is considerably higher then the earlier ....