Sec.10A- Communication cost in absence of profit element is to be excluded from total & export turnover

Brief of the case:

In the case of Pegasystems Worldwide India Pvt. Ltd. Vs. ACIT Hyderabad Bench of ITAT directed the AO to reduce communication cost not only from export turnover but also from the total turnover for the purpose of computation of deduction as per Explanation 2 to section 10A. ITAT relied upon the case of ITO Vs. D.E. Block Indian Software Pvt. Ltd., wherein the tribunal considered the issue of adjustments of total turnover for the purpose of computing eligible profits U/s. 10A and held that the communication expenses need to be excluded from the exports as per the clause-IV of Explantion-2 to section 10A. The above observation was supported by Hon’ble Bombay High Court in the case of CIT Vs. Gem Plus Jewellery India Ltd. [233 CTR 248] (Bombay).

Facts of the case:

• Assessee, is wholly owned subsidiary of Pegasystems, USA, an Associated Enterprise (AE), is a software solution provider to business process management software solutions and business rules platform.

Please become a Premium member. If you are already a Premium member, login here to access the full content.