Case Law Details
ITAT have consistently held that the internet charges have to be excluded both from the export turnover as well as from the total turnover while computing deduction u/s 10A of the Act. The Hon’ble Bombay High Court in case of CIT vs. Gem Plus Jewellery (330 ITR 175) as well as different Benches of Tribunal including ITAT, Chennai Bench (SB) in the case of ITO vs. Sak Soft (313 ITR (AT) 853) have held that communication charges attributable directly to the export of article or thing outside India has to be excluded both from export turnover as well as total turnover while computing exemption u/s 10A of the Act.
Relevant Extract of the Judgment
2. Briefly the facts of the case are that the assessee company is engaged in the business of software development service, filed its return of income for the AY 2010-11 declaring total income at Rs. Nil and book profit u/s 115JB was admitted at Rs. 50,16,122/-. The AO completed the assessment by assessing the income at Rs. 14,66,185/- under normal provisions after making addition u/s 10A of Rs. 31,26,509/- and assessed book profit u/s 115JB at Rs. 50,16,122/-.
2.1 As the assessee is in the business of software development services, during the previous year 2009-10, the assessee company has exported the software services to various customers and made export turnover for a value of Rs. 4,41 ,20,060/- for which export invoices were raised and sale proceeds for such exports were received in India by the assessee company in convertible foreign exchange for Rs. 4,13,65,229/- within a period of six months from the end of the previous year as prescribed in section 10A(3) of the Act.
8. As regards ground No. 2, the ld. AR submitted that the issue in dispute is squarely covered by the decisions of coordinate benches of Hyderabad ITAT. He relied on the following decisions:
1. ACIT Vs. Microsoft Global Services Centre P.Ltd., ITA No. 2124/Hyd/2010, order dated 18/05/2012.
2. M/s Mehra Brothers Vs. ITO, ITA No. 508/LKW/12, order dated 28/11/2014.
9. DR, on the other hand relied on the orders of revenue authorities.
10. Considered the rival submissions and perused the material facts on record. The Hon’ble Courts and the coordinate benches of ITAT have consistently held that the internet charges have to be excluded both from the export turnover as well as from the total turnover while computing deduction u/s 10A of the Act. The Hon’ble Bombay High Court in case of CIT vs. Gem Plus Jewellery (330 ITR 175) as well as different Benches of Tribunal including ITAT, Chennai Bench (SB) in the case of ITO vs. Sak Soft (313 ITR (AT) 853) have held that communication charges attributable directly to the export of article or thing outside India has to be excluded both from export turnover as well as total turnover while computing exemption u/s 10A of the Act. In view of the above, we set aside the order of the CIT(A) and direct the AO to exclude the internet charges of Rs. 5,66,628/- from the export turnover as well as total turnover while computing 10A deduction. Accordingly, the ground raised by the assessee is allowed.
