The Delhi Bench of Income Tax Appellate Tribunal ( ITAT) granted ₹203 crore tax relief to Genpact India under Section 10AA of the Income-tax Act,1961, holding that interest income, foreign exchange gains, and export-linked expenses were eligible for deduction.

The Revenue-appellant appealed against the Commissioner of Income Tax (Appeals)[CIT(A)]’s order for Assessment Year (AY) 2013-14 dated 18.10.2024. In this case Genpact India,responden-assessee, clarified that there was a typographical error in the Assessing Officer (AO )’s grounds and that the only issue in dispute concerned the deduction claimed under Section 10AA of the Act. The AO had initially classified interest income as "Income from Other Sources" and denied the deduction, but the final assessment treated it as "Other Business Income."

The assessee explained that the total interest income of ₹23.46 crore ,comprising ₹19.85 crore from fixed deposits, ₹3.47 crore from inter-corporate deposits, and ₹12.6 lakh from employee loans was earned from surplus funds temporarily parked, which had originated from its Information Technology(IT)/IT Enabled Services (IT/ITeS) export business. The claim was supported by ITAT rulings in its favour for AYs 2010-11 to 2012-13, and by judicial precedents including Motorola India, Hewlett Packard Global Soft, and Reliance Energy.

The tribunal noted that in AY 2011-12, the same issue had been settled in favour of the assessee. Since the interest was treated as business income, the bench held the Section 10AA deduction to be allowable and accordingly dismissed Grounds 1 to 3.

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Regarding the foreign exchange and forward contract gain of ₹21.21 crore, the assessee submitted that the income arose from hedging export receivables and was directly linked to its core export business. Referring to favourable decisions such as Pentasoft Technologies and Cognizant Technology Solutions, the assessee maintained the gain was eligible for deduction. The tribunal accepted the explanation and dismissed Ground 4.

The assessee also addressed the treatment of export turnover components. It explained that telecommunication and freight expenses of ₹7.03 crore were not invoiced to overseas clients and thus not included in export turnover. Similarly, migration and job training expenses of ₹150.59 crore were reimbursed by clients and not considered as part of export receipts. Relying on the Supreme Court ruling in CIT v. HCL Technologies Ltd., the tribunal held that exclusions from export turnover must also be made from total turnover and dismissed Grounds 5 and 6.

The two member bench comprising Anubhav Sharma(Judicial Member) and S.Rifaur Rahman (Accountant Member) upheld the CIT(A)’s order and dismissed all grounds raised by the Revenue.

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