The Income Tax Appellate Tribunal ( ITAT ) of Mumbai bench held that expenses excluded from the export turnover are to be excluded from the total turnover while computing the deduction under Section 10A of the Income Tax Act, 1961.
The Assessee Crisil Limited has two business divisions namely (i) Ratings and (ii) Research. Under the Ratings segment, the Assessee is engaged in rendering back-end support for data analysis services to its associated enterprises through the Global Analytical Centre ( GAC ) which is the transaction under dispute.
After filing the return of income, the assessor’s case was selected for scrutiny. During the proceedings the Assessing Officer to exclude expenses incurred in foreign currency from total turnover as well, for the purpose of deduction u/s 10A of the Income Tax Act.
Aggrieved by the order assesee filed an appeal before the Dispute Resolution Panel. The DRP allowed the appeal filed by the assessee. Thereafter the revenue filed an appeal before the tribunal.
During the adjudication Dhanesh Bafna, the counsel for assessee relied upon the decision of Bombay High Court’s in the case of Gem Plus Jewellery India Ltd. and held that the expenses excluded from the export turnover have to be excluded from the total turnover as well while computing deduction under Section 10A of the Income Tax Act.
Vachashpati Tripathi, Department representatives supported the decision of assessing officers.
The tribunal relied upon the decision of Supreme Court in the case of HCL Technologies Ltd. observed that expenses excluded from the export turnover have to be excluded from the total turnover as well while computing deduction under section 10A of the Income Tax Act.
After analyzing the submission of both parties the bench comprising Aby T Varkey (Judicial Member) and S. Rifaur Rahman (Accountant Member) held that expenses excluded from the export turnover have to be excluded from the total turnover as well while computing deduction under section 10A of the Income Tax Act.
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