Section 10A

Sunset date for claiming Income Tax exemption for SEZs – Extension Needed

Income Tax - Sunset date for claiming Income Tax exemption for SEZs – Time to further extend the sunset date mentioned under Section 10AA of the Income Tax Act, 1961 considering difficulties faced by SEZ Units to commence the production due to restriction placed for controlling pandemic Covid-19. Article explains Sunset date for claiming Income ...

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For section 10A, total turnover is sum of export & domestic turnover

Income Tax - Section 10A of the Income Tax Act, 1961 (the Act for short) deals with special provision in respect of newly established undertakings in free trade zone, etc. For the purposes of section 10A, total turnover is sum of export turnover as well as domestic turnover...

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Exemption Under Special Provisions – Sections 10A/10AA/10B

Income Tax - Article discusses Exemption Under Special Provisions of Sections 10A, Section 10AA and Section 10B of Income Tax Act, 1961. A. Section 10A- Special provision in respect of newly established undertakings in free trade zone, etc. The benefit in respect of newly established Industrial Undertaking in FTZ, EHTP SEZ or STP is Available to all A...

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Benefits To SEZ Entities Under The Income Tax Law

Income Tax - An entrepreneur, who begins to manufacture or produce articles or things or provide any services during the period beginning from 1st April, 2005 to 31st March, 2020, shall be eligible to take a deduction under section 10AA with respect to the export turnover of his unit located in SEZ....

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File Tax Return for exempt Income if exceeds basic exemption limit

Income Tax - Existing provisions of sub-section (1) of section 139 provide that every person referred to therein shall file a return of income on or before the due date. The sixth proviso to the said section provides that every person, being an individual or Hindu undivided family or an association of person or a body of individual...

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Role of IT Sector is Crucial to Promote E-Governance – FM

Income Tax - FM: Role of IT Sector is Crucial in Order to Promote E-Governance for Empowering Citizens; to Promote the Inclusive and Sustainable Growth of the Electronics, IT and ITeS Industries and Enhancing India’s Role in Internet Governance...

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Infosys plans to appeal against arbitrary order, Industry Surprised by order

Income Tax - Infosys Technologies Ltd. Tuesday said it will appeal against an order from the income tax department seeking more than 4 billion rupees ($88.8 million) in taxes for software sales made at the overseas premises of its international clients. The Econo...

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Section 10AA Deduction eligible on Voluntary Transfer Pricing Adjustment by Assessee

EYGBS (India) LLP Vs DCIT (ITAT Bangalore) - The issue under consideration is whether denial of claim of deduction u/s 10AA of the Act on transfer pricing adjustment made by the assessee voluntarily is justified in law?...

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Foreign tax credit available even on income not subjected to tax in India except foreign tax paid in Finland & Canada

Tata Consultancy Services Ltd. Vs Addl. CIT (ITAT Mumbai) - Tata Consultancy Services Ltd. Vs Addl. CIT (ITAT Mumbai) As could be seen, while the Assessing Officer has disallowed assessee’s claim of foreign tax credit in respect of income exempt under section 10A/10AA of the Act on the reasoning that only such income which is subjected to tax in both t...

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Profit Enhanced due to disallowance u/s 40(a)(ia) allowed for Dedcution u/s 10AA

JCIT Vs Mphasis Ltd. (ITAT Bangalore) - The disallowance of the expenditure u/s 40(a)(ia) would automatically enhance the taxable income of the assessee and the assessee is eligible for the deduction u/s 10A of the Income-tax Act on the enhanced income....

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Section 10A/10B deduction eligible on ‘deemed export’ to other STP unit

Preludesys India Ltd. Vs. ACIT (Madras High Court) - Preludesys India Ltd. Vs. ACIT (Madras High Court) The first aspect that has to be considered is as to whether the Income Tax Act, 1961 deals with the concept of a ‘deemed export’. This position has been clearly explained by the High Court of Karnataka both in the case of Tata Elxsi Ltd., and in...

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Foreign currency expense cannot to be excluded for computing export Turnover

Mindtree Ltd Vs. ACIT (Karnataka High Court) - Mindtree Ltd Vs. ACIT (Karnataka High Court) Thus, the  Commissioner  of  Income  Tax (Appeals) has recorded a categorical finding that assessee is engaged in the development of computer software, which is exported outside India. The aforesaid finding has not been set aside by the Tribunal. Ther...

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Computation of deduction u/s 10A of Income Tax Act, 1961

Circular No. 4/2018-Income Tax - (14/08/2018) - As per section 10A(4) of Income Tax Act, 1961, profits derived from export of articles or things or computer software shall be amount which bears to the profits of the business of the undertaking , the same proportion as the export turnover in respect of such articles or things or computer software ...

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Sec 10AA – Employee Transfer limit (From STPI/Other Units to SEZ) increased to 50%

Circular No. 14/2014-Income Tax - (08/10/2014) - Circular No. 14/2014-Income Tax CBDT had issued Circular No.12/2014 dated 18th July, 2014 to clarify that mere transfer or re-deployment of existing technical manpower from an existing unit to a new SEZ unit in the first year of commencement of business will not be construed as splitting up or reco...

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Deduction U/s. 10A/10AA on transfer of Technical Man-power in case of software industry -Reg.

Circular No. 12/2014-Income Tax - (18/07/2014) - Circular No. 12/2014-Income Tax Section 10AA of the Income-tax Act, 1961, inter-alia, provides for deduction in respect of the profits derived by a unit set up in SEZ from export of computer software or from providing any ITES services. The said deduction available to a new SEZ unit is subject to c...

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CBDT clarification on export of computer software in relation to Sec 10A, 10AA, 10B

CBDT Instruction No 3/2014 - (14/03/2014) - A clarificatory Circular No. 01/2013 dated 17.01.2013 was issued by CBDT to address various contentious issues leading to tax disputes in cases of entities engaged in export of computer software which are availing tax-benefits under sections 10A, 10AA and 10B of the Income-tax Act, 1961....

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AO to follow clarification on export of computer software Direct tax benefits -CBDT

INSTRUCTION NO. 17/2013 - (19/11/2013) - A clarificatory Circular No. 01/2013, dated 17-1-2013 (hereinafter referred to as 'Circular') was issued by CBDT to address various contentious issues leading to tax disputes in cases of entities engaged in export of computer software which are availing tax-benefits under sections 10A, 10AA and 10B ...

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Recent Posts in "Section 10A"

Section 10AA Deduction eligible on Voluntary Transfer Pricing Adjustment by Assessee

EYGBS (India) LLP Vs DCIT (ITAT Bangalore)

The issue under consideration is whether denial of claim of deduction u/s 10AA of the Act on transfer pricing adjustment made by the assessee voluntarily is justified in law?...

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Foreign tax credit available even on income not subjected to tax in India except foreign tax paid in Finland & Canada

Tata Consultancy Services Ltd. Vs Addl. CIT (ITAT Mumbai)

Tata Consultancy Services Ltd. Vs Addl. CIT (ITAT Mumbai) As could be seen, while the Assessing Officer has disallowed assessee’s claim of foreign tax credit in respect of income exempt under section 10A/10AA of the Act on the reasoning that only such income which is subjected to tax in both the countries would qualify for […...

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Profit Enhanced due to disallowance u/s 40(a)(ia) allowed for Dedcution u/s 10AA

JCIT Vs Mphasis Ltd. (ITAT Bangalore)

The disallowance of the expenditure u/s 40(a)(ia) would automatically enhance the taxable income of the assessee and the assessee is eligible for the deduction u/s 10A of the Income-tax Act on the enhanced income....

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Section 10A/10B deduction eligible on ‘deemed export’ to other STP unit

Preludesys India Ltd. Vs. ACIT (Madras High Court)

Preludesys India Ltd. Vs. ACIT (Madras High Court) The first aspect that has to be considered is as to whether the Income Tax Act, 1961 deals with the concept of a ‘deemed export’. This position has been clearly explained by the High Court of Karnataka both in the case of Tata Elxsi Ltd., and in […]...

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Foreign currency expense cannot to be excluded for computing export Turnover

Mindtree Ltd Vs. ACIT (Karnataka High Court)

Mindtree Ltd Vs. ACIT (Karnataka High Court) Thus, the  Commissioner  of  Income  Tax (Appeals) has recorded a categorical finding that assessee is engaged in the development of computer software, which is exported outside India. The aforesaid finding has not been set aside by the Tribunal. Therefore, in view of Explanation 2(iii) to ...

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Section 10AA Deduction on Enhanced Income Earned through APA

ACIT Vs EYGBS India Pvt. Ltd. (ITAT Bangalore)

whether the 1st proviso of section 92C(4) is triggered when the income computation for deduction u/s 10AA is enhanced only in the computation of income and no such entries are made in the books of account?...

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Interest on Bank deposits eligible for Section 10A or 10B deduction: HC

CIT Vs. Sankhya Technologies Pvt Ltd. (Madras High Court)

CIT Vs. Sankhya Technologies Pvt Ltd. (Madras High Court) It has been brought to the notice of this Court that there is a judgment of the Full Bench of the Karnataka High Court, to which one of us (Dr.Vineet Kothari, J.) was a party, in which the Full Bench has held that the interest on […]...

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ITAT remand back Matter to AO for Re-Examination of Relocation Expense & Related TDS Compliance

American Express (I) P. Ltd. Vs DCIT (ITAT Delhi)

The issue under consideration is whether disallowance of relocation expenses u/s 40(a)(i) of the Act and non granting of tax deducted at source with respect to that expense is justified in law?...

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Section 10AA Deduction eligible on Manufacturing Activity as per SEZ Act

CIT Vs M/s. Vetrivel Minerals (Madras High Court)

whether the tribunal is correct in holding that the assessee is carrying on manufacturing activity as per SEZ Act, 2005 and hence eligible for deduction U/s.10AA?...

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Assessee can claim section 10A exemption on section 10B exemption denial

Krythium Solutions Private Limited, Vs ACIT (ITAT Cochin)

Krythium Solutions Private Limited Vs ACIT (ITAT Cochin) The issue under consideration is whether claiming deduction u/s 10A of the Income Tax Act through filing revised return is justified in law? ITAT states that the CBDT Circular No.14 (XL-35) dated 11.04.1955 has clarified that the revenue shall not take advantage of ignorance of the ...

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Import of diamonds for re-export qualify for section 10AA deduction

Solitaire Diamond Exports Vs ITO (ITAT Mumbai)

The issue under consideration is whether the AO is correct in disallowance of the deduction claim u/s 10AA by stating that the import of diamonds for re-export is not eligible for such deduction?...

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Expenses cannot be excluded from Export Turnover u/s 10AA merely because it is in Foreign Currency

Renault Nissan Technology & Business Centre India Private Limited Vs CIT (Madras High Court)

The issue under consideration is whether the foreign currency expenditure need to be excluded from the ‘export turnover’ of the assessee for the purpose of computing deduction under Section 10AA of the Act?...

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Book profit | Section 10A deduction | HC refers matter back to ITAT

Yokogawa India Ltd Vs DCIT (Karnataka High Court)

The tribunal has held that net profits have to be determined as per the provisions of the companies Act and thereafter, the adjustments have to be made. It has further been held that the assessee cannot adjust the books of profit except as provided under the companies Act....

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Section 10AA deduction eligible on voluntary transfer pricing adjustment

DCIT Vs EYBGS India Pvt. Ltd. (ITAT Bangalore)

The issue under consideration is whether the officer is correct in rejecting claim for deduction u/s 10AA of the Act on the amount of transfer pricing adjustment voluntarily made by the assessee?...

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Sunset date for claiming Income Tax exemption for SEZs – Extension Needed

Sunset date for claiming Income Tax exemption for SEZs – Time to further extend the sunset date mentioned under Section 10AA of the Income Tax Act, 1961 considering difficulties faced by SEZ Units to commence the production due to restriction placed for controlling pandemic Covid-19. Article explains Sunset date for claiming Income ...

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Posted Under: Income Tax |

Section 10A/10B deductions should be made from Gross Total Income instead of Total Income

Comstar Automative Technologies Vs DCIT (Madras High Court)

Deductions either under Section 10A or 10B would be made while computing the gross total income of the eligible undertaking and not at the stage of computation of the total income....

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For section 10A, total turnover is sum of export & domestic turnover

Section 10A of the Income Tax Act, 1961 (the Act for short) deals with special provision in respect of newly established undertakings in free trade zone, etc. For the purposes of section 10A, total turnover is sum of export turnover as well as domestic turnover...

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Posted Under: Income Tax |

HC allowed deduction U/s. 10AA as new unit was not formed by transferring any machinery or plant previously used

Pr. CIT Vs. Macquarie Global Services Pvt. Ltd. (Delhi High Court)

Pr. CIT Vs. Macquarie Global Services Pvt. Ltd.  (Delhi High Court) The respondent-assessee had set up a new unit in Special Economic Zone (SEZ) income from which was claimed as exempt under Section 10AA of the Act for a period of ten years commencing from the Assessment Year 2010-11. Exemption was allowed in the Assessment […]...

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Question of Violation of Section 10AA(4)(ii) should be raised in First Year of Operation / Exemption

CIT Vs Macquarie Global Services Pvt Ltd (Delhi High Court)

CIT Vs Macquarie Global Services Pvt Ltd (Delhi High Court) It is an accepted and admitted position that the unit in the SEZ had commenced business in the period relating to the Assessment Year 2011-12. The assessee had claimed and was allowed deduction under Section 10AA in the Assessment Years 2011-12 and 2012-13. The Assessing [&hellip...

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Sec. 10AA Eligible unit’s loss can be set off against income of other units

DCIT (LTU) Vs. M/s. Avtec Limited (ITAT Mumbai)

Undisputedly, the assessee has claimed business loss of Rs.3,90,35,968/- from MEPZ Unit at Chennai, eligible for deduction u/s 10AA. It is also not in dispute that assessee has claimed set off of this loss against the income from other units. AO proceeded to hold that loss from MEPZ unit at Chennai, which is eligible for […]...

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Posted Under: Income Tax |

Exemption Under Special Provisions – Sections 10A/10AA/10B

Article discusses Exemption Under Special Provisions of Sections 10A, Section 10AA and Section 10B of Income Tax Act, 1961. A. Section 10A- Special provision in respect of newly established undertakings in free trade zone, etc. The benefit in respect of newly established Industrial Undertaking in FTZ, EHTP SEZ or STP is Available to all A...

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Posted Under: Income Tax |

Computation of deduction u/s 10A of Income Tax Act, 1961

Circular No. 4/2018-Income Tax (14/08/2018)

As per section 10A(4) of Income Tax Act, 1961, profits derived from export of articles or things or computer software shall be amount which bears to the profits of the business of the undertaking , the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the busin...

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Deduction U/s. 10AA cannot be denied in in 3rd year by examining factors which were required to be seen in first year

Macquarie Global Services Vs DCIT (ITAT Delhi)

Macquarie Global Services Vs DCIT (ITAT Delhi) Once the claim of deduction u/s 10AA has been accepted in the first year of the operations and also in the second year, then in the third year same cannot be withdrawn by examining the factors which were required to be seen in the first year of the […]...

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Unabsorbed depreciation not to be adjusted first in computation of deduction U/s. 10A

M/s Vision IKnowledge Solutions Pvt. Ltd. Vs Pr. CIT-9 (ITAT Delhi)

Deduction u/s 10A is to be allowed from total income as computed under chapter IV of the Income Tax Act, 1961 and not at the stage of computation of total income under chapter VI of the Income Tax Act, 1961. Therefore from this it is clear that while claiming deduction u/s 10A unabsorbed depreciation is not to be adjusted....

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Definition of total turnover given U/s. 80HHC / 80HHE cannot be adopted for Section 10A

CIT vs. HCL Technologies Ltd. (Supreme Court)

The definition of total turnover given under Sections 80HHC and 80HHE cannot be adopted for the purpose of Section 10A: HCL Technologies case...

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Sec 10A / 10B: Bar in section 92CA(4) not applies to suo motu TP adjustments

Approva Systems Pvt. Ltd Vs. DCIT (ITAT Pune)

Approva Systems Pvt. Ltd Vs. DCIT (ITAT Pune) Now, coming to the second claim of deduction under section 10B/10A of the Act on TP adjustment of Rs 64,07,399/-. The assessee on its own motion had offered adjustment on account of transfer pricing provision to the extent of Rs 64,07,399/-. The computation of income is placed […]...

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Section 10AA deduction allowed in previous year can’t be denied in current year

Macquarie Global Services Pvt. Ltd. Vs DCIT (ITAT Delhi)

The aforesaid appeal has been filed by the assessee against final assessment order dated 27.9.2017 passed u/s 143(3) read with section 144C(5) in pursuance of directions given by the Dispute Resolution Panel (DRP) vide order dated 7.9.2017. ...

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Benefits To SEZ Entities Under The Income Tax Law

An entrepreneur, who begins to manufacture or produce articles or things or provide any services during the period beginning from 1st April, 2005 to 31st March, 2020, shall be eligible to take a deduction under section 10AA with respect to the export turnover of his unit located in SEZ....

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Posted Under: Income Tax |

Rental Income incidental to business of assessee is eligible for deduction U/s. 10A

M/s. Infosys Limited Vs. Addl. Commissioner of Income Tax (ITAT Bangalore)

It was urged that the letting out of space to Infosys BPO Ltd. and BSNL at Chennai were therefore incidental to the business carried on by the assessee and therefore eligible for deduction under Section 10A of the Act....

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HC on allowability of deduction U/s. 10A / 10B on Interest Income

CIT Vs. Hewlett Packard Global Soft Ltd (Karnataka High Court)

CIT Vs. Hewlett Packard Global Soft Ltd (Karnataka High Court) (Full Bench) HC held that assessee was entitled to 100% exemption or deduction under Section 10-A of the Act in respect of the interest income earned by it on the deposits made by it with the Banks in the ordinary course of its business and […]...

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Exemption U/s. 10A / 10B can be claimed on incidental income from export of goods

CIT Vs. Hewlett Packard Global Soft Ltd (Karnataka High Court)

Profits of the business of the Undertaking for the purposes of Section 10-A/ 10-B includes the Profits and Gains from export of the articles as well as all other incidental incomes...

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Tribunal bound to consider alternative claim to grant benefit U/s. 10A when Appellant was denied exemption u/s. 10B

CIT Vs. Ms Flytxt Technology P. Ltd. (Kerala High Court)

CIT Vs. Ms Flytxt Technology P. Ltd. (Kerala High Court) Admittedly, the assessee initially claimed the benefit of Section 10B which was allowed by the Assessing Officer. Only when the Commissioner was seized of the proceedings under Section 263, the assessee raised an alternative claim for the benefit of Section 10A. The Commissioner did...

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Reassessment for mere non submission of working sheet of deduction U/s. 10A with Form 56F is not valid

HCL Technologies Ltd Vs DCIT (Delhi High Court)

 The AO’s reason for re-opening is that along with the certificate in Form 56F, which was the certificate of the CA, the working sheet of deduction was not enclosed. That was not a requirement of law. What Form 56F has to be accompanied with is specified under the Income Tax Rules itself. The mere fact […]...

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Every loss of revenue due to AO order cannot be treated as prejudicial to revenue interest

M/s. Ernst & Young Pvt. Ltd. Vs C.I.T., Kol-3, (ITAT Kolkata)

In a major relief to the Ernst & Young Pvt Ltd (EY), the Kolkata bench of the ITAT confirmed the original assessment order passed by the Assessing Officer allowing deduction under sections 10A and 10AA of the Income Tax Act to the Company without set off of loss of taxable unit....

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S. 10A Deduct Foreign currency Expenses from Export /Total Turnover

M/s. Sunquest Information Systems India Pvt. Ltd. Vs JCIT (OSD) (ITAT Bangalore)

Insurance & Travelling Expenses incurred in Foreign Currency needs to be Excluded from both Export and Total Turnover for the purpose of section 10A Calculations...

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Section 10A: SC explains Exemption Vs. Deduction & Stage of Deduction / Exemption

C.I.T. & ANR. Vs M/S Yokogawa India Ltd. (Supreme Court of India)

The export turnover and the total turnover for the purposes of sections 10A and 10B shall be of the undertaking located in specified zones or 100% Export Oriented Undertakings, as the case may be, and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this...

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Section 10A: Internet Charges deductible from both Export & Total Turnover

Qvantel Software Solutions Vs Income-tax Officer (ITAT Hyderabad)

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. ...

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File Tax Return for exempt Income if exceeds basic exemption limit

Existing provisions of sub-section (1) of section 139 provide that every person referred to therein shall file a return of income on or before the due date. The sixth proviso to the said section provides that every person, being an individual or Hindu undivided family or an association of person or a body of individual...

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TP: No deduction u/s 10A on enhanced value after ALP adjustment

Headstrong Services India Pvt. Ltd. Vs DCIT (ITAT Delhi)

ITAT Delhi held in the case of Headstrong Services India Pvt. Ltd. vs. DCIT that both the submission of the assessee is unacceptable. Regarding first submission for not carrying out any transfer pricing adjustment in view of the benefit enjoyed by it u/s 10A is concerned, we find that no exception has carved out by the statute for non-det...

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Sec 10A – Deduction allowed to new unit being independent unit, physical demarcation with old unit not relevant

DCIT Vs M/s E-Soft Technologies Ltd. (ITAT Lucknow)

ITAT Lucknow held in the case of DCIT vs. M/s E-Soft Technologies Ltd. that as per the CBDT Circular No. 01 of 2013 and as per the Tribunal decision of the Pune Bench in the case of ACIT Vs Symantec Software India P. Ltd in ITA No. 787/PN/09, dated 30th November 2011...

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S. 10A / 10B Restriction on transfer of technical manpower under Circular Nos.14 and 12 of 2014

The Central Board of Direct Taxes (CBDT) had issued a Circular No.12 of 2014, dt.18.7.2014, by way of clarification regarding allowability of deduction under section 10A / 10AA, on transfer of technical man-power in the case of software industry [366 ITR (St) 1 : 106 DTR (St) 28]. Vide paragraph (4) of the aforesaid Circular No.12 / 2014,...

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Eligibility Of S.T.P Units and Computation of Their Profits For Deduction U/s. 10A of Income-Tax Act, 1961

Ten year tax holiday is available under section 10A to certain undertakings in free trade zones, electronic hardware technology parks, software technology parks or in special economic zones. The exemption is however subject to fulfillment of certain conditions. What are these conditions and how to meet them to avail the maximum benefit is...

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All about carry forward & set off business loss & unabsorbed depreciation by undertaking governed by section 10A or 10B

As per the provisions of Section 10A(6) or 10B (6) of the Income-tax Act, 1961, before their amendment, vide Finance Act, 2003, the undertakings were not permitted to carry forward their business losses and unabsorbed depreciation for set-off against the profits and gains of an assessment year (AY) immediately succeeding the last of the r...

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Exemption u/s 10A available on undisclosed income surrendered during survey proceeding u/s 133A

M/s Bridal Jewellery Mfg. Co. Vs ITO (ITAT Delhi)

M/s Bridal Jewellery Mfg. Co.Vs. ITO (ITAT Delhi) In the present case, it is an admitted fact that the assessee was engaged in the manufacturing of jewellery, during the process of manufacturing on behalf of the customers...

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

Pegasystems Worldwide India Pvt. Ltd. Vs ACIT (ITAT Hyderabad)

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....

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Claim for Set off of unabsorbed business loss b/f against profit of section 10A after AY 2001-02 is allowable

CIT Vs M/s Shantivijay Jewels Ltd. (Bombay High Court)

CIT Vs. M/s Shantivijay Jewels Ltd. (Bombay High Court) In this case Hon’ble Court considered question of law that whether claim for set off of unabsorbed business loss which was brought forward in subsequent AY against the profit of section 10 A is allowable or not....

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Assessee can claim deduction u/s 10A for remaining years although he availed deduction u/s 80HHE in past

DCIT Vs M/s. Tata Consultancy Services (ITAT Mumbai)

ITAT Mumbai held In the case of DCIT vs. M/s. Tata Consultancy Services that section 80HHC does not place any restriction to shift the claim of deduction or exemption under any other provision in respect of profits for which no deduction has been claimed and allowed in the previous year. ...

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No set-off of business losses of non 10A units while computing deduction u/s 10A

DCIT Vs M/s. Makino India Pvt. Ltd. (ITAT Bangalore)

ITAT Bangalore held In the case of DCIT vs. M/s. Makino India Pvt. Ltd. that the relief under Section 10A is in the nature of exemption even though termed as deduction. The profits from such 10A units are neither subject to the charge of income tax nor includible in total income. ...

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No Set-off of losses or unabsorbed Depreciation/business loss against Profit Exempt U/s. 10A

M/s. A. T. Kearney India Pvt. Ltd. Vs ITO (ITAT Delhi)

M/s. A. T. Kearney India Pvt. Ltd. Vs. ITO (ITAT Delhi) Profits and gains u/s 10A were not to be included in the income of the assessee at all and as such the question of setting off of loss of assessee of any profits ...

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S. 10B Approval received from STPL is proper approval for claiming deduction

Quality BPO Services Pvt Ltd, Vs ACIT (OSD) (ITAT Ahmedabad)

Quality BPO Services Pvt Ltd, Vs ACIT (OSD) (ITAT Ahmedabad)- The issue under appeal relates to examination of the claim of assessee under section 10B of the Act at Rs.67,08,733/- which hitherto has been disallowed by the Assessing Officer and further sustained ...

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Revised computation sufficient for mistake in currency conversion for computation of exemption U/s. 10A: HC

E-Funds International India Private Limited Vs PR. Commissioner of Income Tax (Delhi High Court)

The Delhi High Court held in the case of E-Funds International India Private Limited v. PR. CIT, while dismissing the appeals of the Revenue that revised computation was sufficient in the place of furnishing revised returns as there was only a minor technical fault as the figure of USDs was not changed into Rupees while computing the ded...

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Sec. 10B Interest on FDRs on margin kept in bank for utilization of letter of credit limits is business Income

Principal CIT Vs Universal Precision Screws (Delhi High Court)

Delhi High Court held In the case of Principal CIT vs. Universal Precision Screws that interest on fixed deposits has the requisite characteristic of business income and has a nexus to the business activities of the Assessee....

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Section 10B Foreign exchange fluctuation includible in export turnover: HC

The Commissioner of Income Tax Vs M/s. Pentasoft Technologies Ltd. (Madras High Court at Judicature)

CIT vs. M/s. Pentasoft Technologies Ltd. (Madras High Court)- In order to allow a claim under Section 10A of the Act, what all is to be seen is whether such benefit earned by the assessee was derived by virtue of export made by the assessee....

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Notional interest not eligible for deduction u/s 10A: HC

Thomson Press (India) Ltd Vs CIT (Delhi High Court)

Thomson Press (India) Ltd vs. CIT (Delhi High Court), ITA 83/2003, Dated-09.10.2015 Claim that notional interest on funds placed by the s. 10A eligible unit with the H.O. is allowable as a deduction to the H.O. and is exempt in the hands of the s. 10A unit is an unsustainable view....

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S. 254 Tribunal can consider the plea not raised before CIT (A)

Fast Booking (I) Pvt. Ltd. Vs DCIT (Delhi High Court)

Delhi High Court has held In the case of Fast Booking (I) Pvt. Ltd. Vs. DCIT that Under Section 254 Tribunal has inherent power to entertain alternative plea of which was not urged before CIT(A). High Court Directed the Tribunal to consider the Plea of the Assessee that in case he is denied benefit ...

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Deduction U/s. 10A cannot be disallowed for mere belated receipt of export proceeds

ITO Vs M/s.Testree Solutions Pvt. Ltd. (ITAT Bangalore)

In case of ITO VS. M/s.Testree Solutions Pvt. Ltd, ITAT Bangalore held that the export proceeds received after the expiry of the period of six months from the end of the relevant previous year was to be allowed as a deduction u/s 10A ....

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Assessee & Revenue have right to File cross objection before ITAT

Fast Booking (I) Pvt. Ltd. Vs Dy. Commissioner Of Income Tax (Delhi High Court)

The Delhi High Court Has Held In the case of Fast Booking (I) Pvt. Ltd. Vs Dy. Commissioner Of Income Tax that both the assessee as well as the department have a right to file an appeal/cross-objections before the Tribunal. ...

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Wthout assigning reasons Tribunal cannot remand matter to A.O. on matters on which in earlier years it decided in favour of Assessee

Hinduja Global Solutions Ltd. Vs Union of India (Bombay High Court)

In the case of Hinduja Global Solutions Ltd. Vs. UOI Assesse’s case for exemption under section 10A was allowed in earlier years by Tribunal. During the relevant year, the Tribunal disallowed assessee claim. ...

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Exemption cannot be denied merely for claim under wrong section

M/s. Annam Software Pvt. Ltd. Vs Commissioner of Income-Tax (ITAT Chennai)

Annam Software Pvt. Ltd. vs. CIT (ITAT Chennai) Assesse, an EOU, filed its return claiming exemption u/s 10 B. A.O. rejected assesse’s claim. In appellate proceedings , assesse raised a plea that in relevant year it had claimed deduction u/s 10 A...

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Penalty cannot be imposed for mere non acceptance of claim made by Assessee

TechNVision Ventures Ltd. Vs DCIT (ITAT Mumbai)

TechNVision Ventures Ltd. Vs. DCIT (ITAT Mumbai) Merely because the assessee had claimed the expenditure, where claim was not accepted or was not acceptable to the revenue, that by itself would not, attract the penalty under Section 271(1)(c)....

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Judicial Functions should not be performed in Arbitrary Manner- HC

Hinduja Global Solutions Ltd. Vs Union of India (Bombay High Court)

In the present case the Hon’ble High Court while accepting the Writ filed by the assessee, restored the matter back to the Tribunal by observing that the Judicial Functions should not be performed in the arbitrary manner....

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Deduction for PF and ESI contribution cannot be disallowed if paid before due date of filing return

ITO Vs. M/s. M.L. Outsourcing P. Ltd. (ITAT Delhi)

ITAT held that (i) International recruitment service operations conducted from STPI, Noida are held to be eligible for benefit of deduction u/s 10A. (ii) The deduction of payment of employees’ contribution towards provident fund and ESI cannot be disallowed under section 43B...

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Reopening despite submission of all facts in relation to deduction claimed by assessee during original assessment is impermissible

Capgemini India Pvt. Ltd. Vs Asst. Commissioner of Income Tax (Bombay High Court)

The Assessing Officer had issued notice u/s 148 of IT act to reopen the assessment of the AY 2007-08 giving reasons to believe that there was non-disclosure of all facts with respect to deduction u/s 10A by the assessee and the assessee had taken the deduction without setting off the loss of one unit....

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Estoppel does not apply against a Statute

HCL Technologies Vs. ACIT (Delhi High Court)

In the present case the Hon’ble High court while deciding two vital issues held that the estoppels does not apply against a statute and Mere expansion of the Existing Units can’t be termed as a separate undertaking in order to claim deductions under section 10A....

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Section 10A exemption- Approvals given by Directors of STPI is valid

Mentor Graphics (Noida) P. Ltd., Vs DCIT (ITAT Delhi)

Assesee claimed deduction of Rs. 1.33 crores under Section 10A of the Act. On being called upon to explain about the eligibility of deduction, the assessee stated that it was entitled to deduction in view of fulfillment of all the requisite conditions as prescribed under Section 10A....

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Role of IT Sector is Crucial to Promote E-Governance – FM

FM: Role of IT Sector is Crucial in Order to Promote E-Governance for Empowering Citizens; to Promote the Inclusive and Sustainable Growth of the Electronics, IT and ITeS Industries and Enhancing India’s Role in Internet Governance...

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Posted Under: Income Tax |

Income & Wealth Tax Issues in SEZ assessment

1. No time limit for realisation of exports proceeds The intent of enactment of sections 10A/10B/10BA/10AA in the Income Tax Act, 1961 is to encourage exports which in turn would infuse the economy with foreign currency remittances. Timely ‘foreign currency remittances’ into India is the underlying intent spelt out in section 10A, sec...

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Posted Under: Income Tax | ,

Sec 10AA – Employee Transfer limit (From STPI/Other Units to SEZ) increased to 50%

Circular No. 14/2014-Income Tax (08/10/2014)

Circular No. 14/2014-Income Tax CBDT had issued Circular No.12/2014 dated 18th July, 2014 to clarify that mere transfer or re-deployment of existing technical manpower from an existing unit to a new SEZ unit in the first year of commencement of business will not be construed as splitting up or reconstruction of an existing business, prov...

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Deduction U/s. 10A/10AA on transfer of Technical Man-power in case of software industry -Reg.

Circular No. 12/2014-Income Tax (18/07/2014)

Circular No. 12/2014-Income Tax Section 10AA of the Income-tax Act, 1961, inter-alia, provides for deduction in respect of the profits derived by a unit set up in SEZ from export of computer software or from providing any ITES services. The said deduction available to a new SEZ unit is subject to certain conditions including: i) i...

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CBDT clarification on export of computer software in relation to Sec 10A, 10AA, 10B

CBDT Instruction No 3/2014 (14/03/2014)

A clarificatory Circular No. 01/2013 dated 17.01.2013 was issued by CBDT to address various contentious issues leading to tax disputes in cases of entities engaged in export of computer software which are availing tax-benefits under sections 10A, 10AA and 10B of the Income-tax Act, 1961....

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AO to follow clarification on export of computer software Direct tax benefits -CBDT

INSTRUCTION NO. 17/2013 (19/11/2013)

A clarificatory Circular No. 01/2013, dated 17-1-2013 (hereinafter referred to as 'Circular') was issued by CBDT to address various contentious issues leading to tax disputes in cases of entities engaged in export of computer software which are availing tax-benefits under sections 10A, 10AA and 10B of the Income-tax Act, 1961....

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Circular on Sections 10A, 10AA, 10B and 10BA – Related to set off and carry forward of losses

Circular No. 07/DV/2013 (16/07/2013)

Circular No. 07/DV/2013-Income Tax The two sections 10A and 10B of the Act were initially placed on statute in 1981 and 1988 respectively, and continued with some modifications and amendments till 31.03.2001. Section 10A as inserted by Finance Act, 1981 read as under: "Section 10A. Special provision in respect of newly established in...

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Approval granted by STPI Director is sufficient to satisfy conditions relating to approvals u/s. 10A

CIT Vs Technovate E Solutions Pvt Ltd (Delhi High Court)

Directors of the Software Technology Parks of India have the authority of the Inter-Ministerial Standing Committee and that all approvals granted by the STPI Directors are therefore deemed to be valid. The position is also clear from a letter dated 6.5.2009 issued by the Central Board of Direct Taxes to the Joint Secretary, Ministry of Co...

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I-T Dept releases Book on Controversies in Income Tax Assessment

The genesis of this book is an exercise carried out to compile best quality assessment orders passed in each Chief C.I.T region of Gujarat during the Financial Year 2011-12. On analyzing these orders it emerged that majority of additions were relatable to issues pertaining to 19 topics. Therefore it was decided to constitute  an expert [...

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Deduction u/s. 10A is allowable without setting off of losses of other units

Genisys Integrating System (India) (P.) Ltd. Vs Deputy Commissioner of Income-tax (ITAT Bangalore)

It is after the deduction under Chapter VI-A that the total income of an assessee is arrived at. Chapter VI-A deductions are the last stage of giving effect to all types of deductions permissible under the Act. At the end of this exercise, the total income is arrived at. Total income is thus, a figure arrived at after giving effect to all...

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S. 10A Expenses Reduced from Export Turnover Needs to be reduced from Total Turnover too

Global Logic India Pvt. Ltd. Vs. Dy. Commissioner of Income Tax (ITAT Delhi)

Ld. Counsel of the assessee submitted that that even if any freight, telecommunication or insurance expense during the year, are reduced from the export turnover, such sums will also have to be reduced from the total turnover of the company for the purpose of computation of deduction u/s. 10A....

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Foreign Currency Expenses on software development is to be excluded from Export Turnover in Computation of deduction U/s. 10A & 80HHE

M/s. Polaris Software Lab Vs The Addl. Commissioner of Income-tax (ITAT Chennai)

The ground raised by the Revenue relates to exclusion of foreign currency expenses not related to onsite software development from the export turnover for the purpose of computing deduction u/s 10A and 80HHE of the Act. The case of the assessee is that foreign expenditure which has been incurred on on-site software development activity sh...

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An entity established with new set of employees & Capital cannot be said restructured entity

Commissioner of Income Tax-I Vs. M/s Sagun Gems Pvt. Ltd. (Rajasthan High Court)

Various objections raised by AO as mentioned above have been verified by ld. CIT(A) and found that land and building and machineries are new. Capitals introduced by the Directors are from their own sources and not by transferring from M/s. Shagun. Out of 70 employees employed by assessee company, only 8 employees were related to M/s Shagu...

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S. 10B Conversion of marble blocks into the polished slabs & tiles constitutes manufacture

M/s Grace Exports Vs. ITO Ward-2 (1) (Rajasthan High Court)

So far the question of benefit under s. 10B of the Act is concerned, the learned counsel for the appellant-assessee has submitted that the view as taken by the Tribunal cannot be sustained for the authoritative pronouncement of the Hon'ble Supreme Court in the case of ITO v. Arihant Tiles & Marbles (P.) Ltd. [2010] 186 Taxman 439 (SC) hol...

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Deduction U/s. 10A allowable before setting off of losses and unabsorbed depreciation

Valueprocess Technologies (I) (P.) Ltd. Vs Income-tax Officer, Ward-10(3)(1), Mumbai (ITAT Mumbai)

Section 10A of the Income-tax Act, 1961, is a provision which is in the nature of a deduction and not an exemption. The deduction under section 10A has to be given effect to at the stage of computing the profits and gains of business. This is anterior to the application of the provisions of section 72 which deals with the carry forward an...

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No disallowance U/s. 10A for mere higher profits if the same is not found to be for tax avoidance

Zavata India (P.) Ltd. Vs Income-tax Officer, Ward 3(2), Hyderabad (ITAT Hyderabad)

Since the assessee's operations are efficient enough to obtain more profits and since the receipts are at arm's length and there is no passing of excess profits by the parent company (AE) to the assessee, the Assessing Officer's action in restricting the profits is not correct. Also there is no reason to restore it to the Assessing Office...

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Deduction U/s. 10B available before setting off of brought forward losses & unabsorbed depreciation

Assistant Commissioner of Income-tax Vs Charon Tec (P.) Ltd. (ITAT Chennai)

It is a well settled law that when two different views of the different jurisdictional High Courts are available, the decision favourable to the assessee is to b03e followed. The hon'ble Supreme Court of India in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) has held that (page 195) "if two reasonable constructions of ...

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Losses of non Section 10A units cannot be set off against profit of 10A unit

GE India Technology Centre (P.) Ltd. Vs Deputy Director of Income-tax (ITAT Bangalore)

This issue is covered by the decision of the Hon'ble High Court of Karnataka in the case of Yokogawa India (cited Supra), wherein it has been held that for computing the deduction u/s 10A of the Act, the profit of eligible units have to be deducted at source and do not enter into the computation of income and as a consequence of which, th...

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Clarification Regarding issues Relating to Export of Computer Software- Direct TAX Incentives

Income tax press release (17/01/2013)

The Indian Software Industry has been the beneficiary of direct tax incentives under the provisions like sections 10A, 10AA & 10B of the Income-tax Act, 1961 in respect of their profits derived from the export of computer software. ...

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Clarifications on Issues relating to export of computer software – Deduction U/s. 10A, 10AA & 10B

Circular No. 01/2013-Income Tax (17/01/2013)

Circular No. 01/2013-Income Tax The CBDT has issued a Circular No. 01/2013 dated 17.01.2013 in which it has provided clarifications on various issues relating to the export of computer software and the allowance of deduction under sections 10A, 10AA and 10B of the Income-tax Act, 1961. Circular Covers the following issues :- 1. Whe...

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Deduction u/s. 10A to be allowed before set off of brought forward unabsorbed losses against current year profits

Medusind Solution India Pvt. Ltd. Vs The Asstt. Commissioner of Income Tax (ITAT Mumbai), IT Appeal No. 6703 (Mum.) of 2010

On the other hand, the ld. D.R. while agreeing that the interest on fixed deposits pledged with the bank on account of margin money is eligible for deduction u/s 10A of the Act submits that in view of the finding recorded by the A.O. the assessee is not entitled to deduction u/s 10A of the Act in respect of interest on NSC and interest on...

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S.10A Foreign remittances to be credited within 6 months in a/c of assessee

Capital Foods Exports (P.) Ltd. Vs Assistant Commissioner of Income-tax (ITAT Mumbai)

Unless the foreign remittances are credited in the account of assessee or at least credited in the account of the bank, it can not be said that the export proceeds have been received in or brought into India. The assessee has placed on record a certificate from State Bank of India which only states that the proceeds of the foreign remitta...

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No deduction U/s.10A if Assessee do not file ROI within the due date

Saffire Garments Vs Income-tax Officer (ITAT Rajkot)

The Proviso to s. 10A(1A) provides that no deduction under this section shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified u/s 139(1). The assessee’s argument that the said Proviso is merely directory and not mandatory is not acceptable. ...

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No Deduction u/s.10A for STPI unit demerged from assessee

Joint Commissioner of Income-tax (OSD), Circle-12(5), Bangalore Vs Valdel Engineers & Constructors (P.) Ltd. (ITAT Bangalore)

From a reading of section 10A(7A), it is clear that its provisions apply to a situation where an undertaking whose income is deductible under section 10A is transferred in a scheme of amalgamation or demerger before the end of the specified 10 years. In the present case the STPI undertaking of the assessee stands transferred in a scheme o...

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SEZ units continue to be exempt from MAT

Genesys International Corpn. Ltd Vs. ACIT (ITAT Mumbai)

Unit in SEZ will be covered by sub-section(6) to section 115JB of the Act irrespective of the fact that those units were claiming deduction u/s.10A of the Act. We also observe that benefit given to SEZ unit from the applicability of provisions of section 115JB has been withdrawn by the Finance Act, 2011 by inserting a proviso to section 1...

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Section 10A does not contemplate any break in period of five assessment year

Expo Packaging Vs Assistant Commissioner of Income-tax (Gujarat High Court)

Sub-section (3) of section 10A either before or after its substitution does not contemplate a break in the five succeeding assessment years in relation to which an assessee is entitled to avail of benefit under section 10A of the Act. Thus, in case of an assessee who had already started availing the benefit of section 10A of the Act in an...

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Carry forward business losses & depreciation cannot be set off against profits of an undertaking while working out claim u/s. 10B

ASB International (P.) Ltd. Vs Deputy Commissioner of Income tax, Circle-1 (ITAT Mumbai)

Since the provisions of section 10A and 10B are similar in nature and as the jurisdictional High Court decided the issue while considering the provisions of section 10B also respectfully following the above, we uphold the contention of assessee that carry forward business losses and depreciation cannot be set off to the profits of the und...

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New provisions of section 10A provides for deduction & not exemption

Opus Software Solutions (P.) Ltd. Vs Assistant Commissioner of Income-tax (ITAT Pune)

Ostensibly, while denying the assessee's claim of carried forward unabsorbed loss/depreciation assessed under the normal provisions of the Act, the Assessing Officer has proceeded on the basis that section 10A of the Act provides an exemption and, therefore, loss suffered in such unit is not allowed to be set off or carried forward for f...

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Relief u/s. 10A has to be given before adjustment of current as well as past losses

Commissioner of Income-tax Vs TEI Technologies (P.) Ltd. (Delhi High Court)

ection 10A, as it presently stands, though worded as deduction provision, is essentially and in substance an exemption provision. We have also held that the implication of an exemption provision is that the particular income which is exempt from tax does not enter the field of taxation and is not subject to any computation. ...

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Section 10A deduction can be claimed by filing revised return u/s. 139(5)

VNS Makro Technologies (P.) Ltd. Vs Deputy Commissioner of Income-tax (ITAT Hyderanad)

Reason behind disallowance of claim made by the assessee was that since the assessee had not claimed deduction under section 10A in the return filed under section 139(1), the proviso to section 10A debarred him from making any such claim in revised return. At this stage, it would be relevant to take note of the proviso under section 10A. ...

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Section 10A / 10B deduction allowable without set off of losses of non-eligible units

The Commissioner of Income Vs Black & Veatch Consulting Pvt.Ltd. (Bombay High Court)

Section 10A is a provision which is in the nature of a deduction and not an exemption. This was emphasised in a judgment of a Division Bench of this Court while construing the provisions of Section 10B in Hindustan Unilever Ltd Vs. Deputy Commissioner of Income Tax 2. (2010) 325 ITR 102 at para 24. ...

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S.10A, Eligible business is to be considered as a separate entity

Jt. Director of Income-tax, International Taxation Vs M/s Virage Logic International (ITAT Delhi)

Plain reading of above provisions makes it abundantly clear that for the purposes of section 10A, the eligible business (appellant’s branch office in this case) is to be considered as a separate entity and transfer of goods or services by eligible business to/from other business of the assessee are to be treated as if such transfer has ...

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No tax withholding on remittance by Indian head office to its foreign branch

M/s. Semantic Space Technologies Ltd., Hyderabad Vs Dy. Commissioner of Income-tax (ITAT Hyderabad)

ITAT held that tax withholding provisions under section 195 of the Income-tax Act, 1961 (the Act) are not applicable to payments made by the Indian head office to its foreign branch, as both are 'residents' according to the Indian Income-tax Act, 1961 and the relevant Double taxation avoidance agreement (the tax treaty) between India and ...

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Section 10A deduction is available to a new unit even though STPI approval refers to it as expansion of existing unit

ACIT Vs. Symantec Software India P. Ltd. (ITAT Pune)

ACIT Vs. Symantec Software India P. Ltd. (ITAT Pune)- Based on the specific facts of the case, the Tribunal has reiterated that the fulfillment of the conditions of section 10A(2) is of utmost importance for claiming a deduction under section 10A. A reference to the new undertaking as expansion by the STPI would not dis-entitle the assess...

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