RAVE TECHNOLOGIES (INDIA) P. LTD, MUMBAI v. ACIT CIR 2(3), MUMBAI

ITA 5558/MUM/2009 | 2004-2005
Pronouncement Date: 07-11-2014 | Result: Allowed

Appeal Details

RSA Number 555819914 RSA 2009
Assessee PAN AABCR2855C
Bench Mumbai
Appeal Number ITA 5558/MUM/2009
Duration Of Justice 5 year(s) 29 day(s)
Appellant RAVE TECHNOLOGIES (INDIA) P. LTD, MUMBAI
Respondent ACIT CIR 2(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 07-11-2014
Date Of Final Hearing 11-09-2014
Next Hearing Date 11-09-2014
Assessment Year 2004-2005
Appeal Filed On 09-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA PRESIDENT AND B. R.BASKARAN (AM) . . . . ./I.T.A. NO.5558/MUM/2009 ( / ASSESSMENT YEAR :2004-05) RAVE TECHNOLOGIES (INDIA) PVT LTD BALLARLD HOUSE 2 ND FLOOR ADI MARZBAN PATH BALLARED PIER FORT MUMBAI-400001 / VS. ASSTT. COMMISSIONER OF INCOME TAX 2(3) AAYAKAR BHAVAN M K ROAD MUMBAI-400020 ( / APPELLANT) .. ( / RESPONDENT) ./I.T.A. NO.5607/MUM/2009 ( / ASSESSMENT YEAR :2004-05) DY. COMMISSIONER OF INCOME TAX 2(3) ROOM NO.555 AAYAKAR BHAVAN MUMBAI-400020 / VS. RAVE TECHNOLOGIES (INDIA) PVT LTD BALLARLD HOUSE 2 ND FLOOR ADI MARZBAN PATH BALLARED PIER FORT MUMBAI-400001 ( / APPELLANT) .. ( / RESPONDENT) ./I.T.A. NO.1996/MUM/2010 ( / ASSESSMENT YEAR :2005-06) DY. COMMISSIONER OF INCOME TAX 2(3) ROOM NO.555 AAYAKAR BHAVAN MUMBAI-400020 / VS. RAVE TECHNOLOGIES (INDIA) PVT LTD BALLARLD HOUSE 2 ND FLOOR ADI MARZBAN PATH BALLARED PIER FORT MUMBAI-400001 ( / APPELLANT) .. ( / RESPONDENT) ITA NOS.5558/MUM/2009 & 0THER FIVE APPEALS 2 ./I.T.A. NO.3771 AND 3772/MUM/2012 ( / ASSESSMENT YEARS :2006-07 & 2007-08) RAVE TECHNOLOGIES (INDIA) PVT LTD BALLARLD HOUSE 2 ND FLOOR ADI MARZBAN PATH BALLARED PIER FORT MUMBAI-400001 / VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE (OSD)2(3) AAYAKAR BHAVAN M K ROAD MUMBAI-400020 ( / APPELLANT) .. ( / RESPONDENT) ./I.T.A. NO.5232/MUM/2013 ( / ASSESSMENT YEAR :2008-09) RAVE TECHNOLOGIES (INDIA) PVT LTD BALLARLD HOUSE 2 ND FLOOR ADI MARZBAN PATH BALLARED PIER FORT MUMBAI-400001 / VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE(2(3) AAYAKAR BHAVAN M K ROAD MUMBAI-400020 ( / APPELLANT) .. ( / RESPONDENT) ./ ! ./ PAN/GIRNO.:AABCR2855C ' / ASSESSEE BY : SHRI HIRO RAI # ' /REVENUE BY : SHRI PITAMBAR DAS $ % # & ' / DATE OF HEARING : 12.9.2014 ()*+ # & ' /DATE OF PRONOUNCEMENT : 7.11.2014 / O R D E R PER BENCH: THE ASSESSEE HAS FILED APPEALS FOR ASSESSMENT YEA RS 2004-05 2006-07 2007-08 AND 2008-2009. THE REVENUE HAS FILED APPEA LS FOR ASSESSMENTS YEARS 2004-05 AND 2005-06. ALL THESE APPEALS WERE HEARD TOGETHER AND HENCE THESE APPEALS ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.5558/MUM/2009 & 0THER FIVE APPEALS 3 2. WE SHALL FIRST TAKE UP THE APPEALS FILED BY BOTH THE PARTIES FOR THE ASSESSMENT YEAR 2004-05. IN THE ASSESSEES APPEAL FOLLOWING ISSUES ARE CONTESTED: A) REJECTION OF CLAIM FOR SET OFF OF UNABSORBED DEPR ECIATION OF RS.6 40 171/- PERTAINING TO ASSESSMENT YEAR 2001-02; B) SETTING OFF OF UNABSORBED DEPRECIATION AND UNABSOR BED BUSINESS LOSS BROUGHT FORWARD FROM ASSESSMENT YEAR 2003-04 BEFORE ALLOWING DEDUCTION U/S 10A OF THE INCOME TAX ACT 1961 (THE ACT) THE REBY REDUCING THE QUANTUM OF DEDUCTION CLAIMED U/S 10A OF THE ACT. 3. THE REVENUE IS AGGRIEVED BY THE DECISION O F LD CIT(A) IN HOLDING THAT THE EXPENSES INCURRED IN FOREIGN CURRENCY FOR PROVIDING TECHNICAL SERVICES OUTSIDE INDIA IS NOT REQUIRED TO BE DEDUCTED FROM THE AMOUN T OF EXPORT TURNOVER WHILE COMPUTING THE DEDUCTION U/S 10A OF THE ACT. 4. FACTS RELATING TO THE ABOVE SAID ISSUES ARE STAT ED IN BRIEF. THE ASSESSEE COMPANY IS A TECHNOLOGY ORIENTED SOFTWARE SERVICES COMPANY PROVIDING SOLUTIONS TO CLIENTS TO BUILD SOFTWARE PRODUCTS. DU RING THE YEAR UNDER CONSIDERATION THE ASSESSEE DECLARED GROSS RECEIPTS OF SOFTWARE CHARGES AT RS.11 98 48 073/- WHICH INCLUDED EXPORT TURNOVER O F RS.11 68 40 798/-. THE ASSESSEE ALSO CLAIMED DEDUCTION OF RS.2 90 62 126/- U/S 10A OF THE ACT FROM THE BUSINESS INCOME. THE AO NOTICED THAT THE ASSESSEE H AD INCURRED TRAVELLING EXPENSES OF RS.56 33 408/- AND SOFTWARE DEVELOPMENT CHARGES OF RS.29 83 459/- AGGREGATING TO RS.95 64 698/- IN FOR EIGN CURRENCY BUT DID NOT DEDUCT THE SAME FROM THE AMOUNT OF EXPORT TURNOVER WHILE COMPUTING DEDUCTION U/S 10A OF THE ACT IN TERMS OF EXPLANATION 2(IV) GI VEN U/S 10A OF THE ACT. ACCORDINGLY THE AO RECOMPUTED THE DEDUCTION U/S 10 A BY DEDUCTING THE ABOVE SAID EXPENSES OF RS.95 64 698/- FROM THE EXPORT TUR NOVER. IT IS PERTINENT TO NOTE THAT THE AO DID NOT MAKE CORRESPONDING DEDUCTION FROM THE TOTAL TURNOVER. 5. THE AO FURTHER NOTICED THAT THE ASSESSEE HAD CLA IMED SET OFF OF UNABSORBED DEPRECIATION OF RS.6 40 171/- BROUGHT FO RWARD FROM THE ASSESSMENT YEAR 2001-02 AGAINST BUSINESS INCOME. HOWEVER DU RING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED A LETTE R REQUESTING THE AO TO ALLOW SET OFF OF BROUGHT FORWARD LOSS TO THE TUNE OF RS.6 40 171/- IN PLACE OF SET OFF OF UNABSORBED DEPRECIATION SINCE SECTION 72(2) PROVID ES FOR SET OFF OF BROUGHT ITA NOS.5558/MUM/2009 & 0THER FIVE APPEALS 4 FORWARD LOSS BEFORE SETTING OF UNABSORBED DEPRECIAT ION. THE AO HOWEVER REJECTED BOTH THE CLAIMS AND IN THIS REGARD HE DREW SUPPORT FROM THE PROVISIONS OF SECTION 10A(6)(II) OF THE ACT WHICH READ AS UNDER : SEC 10A(6)(II) NO LOSS REFERRED TO IN SUB-SECTION (1) OF SECTIO N 72 OR SUB-SECTION (1) OR SUB SECTION (3) OF SECTION 74 I N SO FAR AS SUCH LOSS RELATES TO THE BUSINESS OF THE UNDERTAKING SHALL B E CARRIED FORWARD OR SET OFF WHERE SUCH LOSS RELATES TO ANY OF THE RELEVANT ASSESSMENT YEARS ENDING BEFORE THE 1 ST DAY OF APRIL 2001 THE AO TOOK THE VIEW THAT THE ASSESSEE IS NOT ENTIT LED TO CLAIM SET OFF EITHER UNABSORBED DEPRECIATION OR UNABSORBED BUSINESS LOSS PERTAINING TO ASSESSMENT YEAR 2001-02. ACCORDINGLY THE AO REJECTED THE CLAIM MADE BY ASSESSEE. 6. THE AO ALSO NOTICED THAT THE ASSESSEE HAS CLAIME D DEDUCTION U/S 10A OF THE ACT BEFORE SETTING OFF OF BROUGHT LOSSES AND B ROUGHT FORWARD DEPRECIATION. THE AO NOTICED THAT THE ASSESSEE HAD UNABSORBED DEP RECIATION OF RS.51 79 844/- AND UNABSORBED BUSINESS LOSS OF RS .1 69 69 616/- AGGREGATING TO RS.2 21 49 460/- AND BOTH THE LOSSES PERTAINED T O AY 2003-04. THE AO TOOK THE VIEW THAT THE UNABSORBED LOSS AND UNABSORBED D EPRECIATION REFERRED ABOVE SHOULD BE DEDUCTED FROM THE BUSINESS INCOME BEFORE ALLOWING DEDUCTION U/S 10A OF THE ACT. IN THIS REGARD HE PLACED RELIANCE O N THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF IPCA LABORATORIES LTD REPORTED IN 266 ITR 521. ACCORDINGLY HE DEDUCTED UNABSORBED DEPRECIATION LO SS REFERRED ABOVE WHICH RESULTED IN BUSINESS PROFIT OF RS.75 52 837/-. ACCO RDINGLY HE RESTRICTED THE DEDUCTION U/S 10A OF THE ACT TO RS.75 52 837/-. 7. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) DIR ECTED THE AO NOT TO EXCLUDE TRAVELLING EXPENSES AND SOFTWARE DEVELOPMENT CHARGE S INCURRED IN FOREIGN EXCHANGE FROM THE AMOUNT OF EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10A OF THE ACT. WITH REGARD TO THE REJECTION OF CLAIM OF SET OFF OF UNABSORBED DEPRECIATION BROUGHT FORWARD FROM AY 200 1-02 THE LD. CIT(A) CONCURRED THE VIEW TAKEN BY THE AO. WITH REGARD T O ISSUE RELATING TO SET OFF OF BOUGHT FORWARD LOSS AND UNABSORBED DEPRECIATION OF AY 2003-04 BEFORE ALLOWING DEDUCTION U/S 10A ALSO THE LD. CIT(A) CONCURRED W ITH THE VIEW TAKEN BY THE AO. HENCE THE REVENUE IS AGGRIEVED BY THE DECISION OF LD.CIT(A) WITH REGARD TO NON- ITA NOS.5558/MUM/2009 & 0THER FIVE APPEALS 5 DEDUCTION OF EXPENSES INCURRED IN FOREIGN CURRENCY FROM EXPORT TURNOVER FOR COMPUTING DEDUCTION U/S 10A OF THE ACT. THE ASSESSE E IS AGGRIEVED BY THE DECISION OF LD. CIT(A) WITH REGARD TO ISSUES RELATI NG TO REJECTION OF CLAIM OF SET OFF OF LOSS/UNABSORBED DEPRECIATION PERTAINING TO AY 20 01-02 AND ALLOWING SET OFF OF UNABSORBED DEPRECIATION/LOSS PERTAINING TO AY 2003- 04 BEFORE ALLOWING DEDUCTION U/S 10A OF THE ACT. 8. WITH REFERENCE TO THE APPEAL FILED BY THE REVE NUE THE ASSESSEE HAS FILED AN ADDITIONAL GROUND WHEREIN IT IS SUBMITTED THAT IF THE EXPENSES ARE TO BE EXCLUDED FROM EXPORT TURNOVER THE SAME SHOULD ALSO BE EXCLUDED FROM THE TOTAL TURNOVER. 9. THE FIRST ISSUE URGED IN THE APPEAL OF THE AS SESSEE RELATES TO REJECTION OF CLAIM OF SET OFF OF UNABSORBED DEPRECIATION PERTAIN ING TO AY 2001-02. THE LD A.R SUBMITTED THAT THE PROVISIONS OF SEC. 10A(6) IT SELF SHALL APPLY TO THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE LAST OF THE RELEVANT ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEARS FALLING THE REAFTER I.E. AFTER EXPIRY OF THE PERIOD DURING WHICH THE DEDUCTION U/S 10A WAS A LLOWABLE. IN THIS REGARD HE DREW SUPPORT FROM THE DECISION RENDERED BY THE MUMB AI BENCH OF TRIBUNAL IN THE CASE OF WNS GLOBAL SERVICES (P) LTD VS. ADDL. CIT ( 9 ITR (TRIB) 662). HE SUBMITTED THAT THE IMPUGNED ASSESSMENT YEAR IS THE FOURTH YEAR FALLING WITHIN THE RELEVANT ASSESSMENT YEAR AND FURTHER THE ASSESSING OFFICER HIMSELF HAS ALLOWED DEDUCTION U/S 10A OF THE ACT. WE FIND MERIT IN THE SAID CONTENTIONS. THE OPENING PORTION OF SEC. 10A(6) READS AS UNDER:- 10A(6) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IMMEDIATELY SUCCEED ING THE LAST OF THE RELEVANT ASSESSMENT YEARS OR OF ANY PREVIOUS YEAR RELEVANT TO ANY SUBSEQUENT ASSESSMENT YEAR--. A PERUSAL OF THE ABOVE PROVISION WOULD SHOW THAT TH E PROVISIONS OF SEC. 10A(6) SHALL COME INTO EFFECT ONLY WHILE COMPUTING THE TOT AL INCOME OF THE ASSESSEE FOR ANY OF THE ASSESSMENT YEARS SUCCEEDING THE LAST OF THE RELEVANT ASSESSMENT YEAR. THE EXPRESSION RELEVANT ASSESSMENT YEAR IS DEFINED UNDER EXPLANATION 2(VI) TO SEC. 10A AS UNDER:- ITA NOS.5558/MUM/2009 & 0THER FIVE APPEALS 6 RELEVANT ASSESSMENT YEAR MEANS ANY ASSESSMENT YEA R FALLING WITHIN A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS REFERRED TO IN THIS SECTION IT IS PERTINENT TO NOTE THAT THE DEDUCTION U/S 10A IS ALLOWED FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS MEANING THEREBY THE P ROVISIONS OF SEC. 10A(6) SHALL NOT APPLY TO ANY OF THE ASSESSMENT YEAR FALLI NG WITHIN THE PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS. THE PRESENT ASSESSMEN T YEAR FALLS WITHIN THE PERIOD OF RELEVANT ASSESSMENT YEAR. HENCE THE RE STRICTION PROVIDED IN SEC. 10A(6) SHALL NOT APPLY TO THIS YEAR. ACCORDINGLY W E ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO CLAIM SET OFF OF BUSINESS L OSS/UNABSORBED DEPRECIATION PERTAINING TO AY 2001-02. ACCORDINGLY WE SET ASID E THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF UNABSORBED LOSS/UNABSORBED DEPRECIATION PERTAINING TO AY 2001-02. 10. THE NEXT ISSUE RELATES TO ISSUE VIZ. WHETHE R THE UNABSORBED DEPRECIATION AND UNABSORBED BUSINESS LOSS ARE REQUIRED TO BE DED UCTED BEFORE OR AFTER ALLOWING DEDUCTION U/S 10A OF THE ACT. THE LD A.R PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS. BLACK AND VEATCH CONSULTING PVT LTD (2012)(348 ITR 72) AND SUBMITTED THAT THE JURISDICTIONAL HIGH COURT HAS HELD THAT THE BRO UGHT FORWARD UNABSORBED DEPRECIATION AND LOSSES OF THE UNIT THE INCOME OF WHICH IS NOT ELIGIBLE FOR DEDUCTION U/S 10A CANNOT BE SET OFF AGAINST THE CU RRENT PROFITS OF THE ELIGIBLE UNIT FOR COMPUTING DEDUCTION U/S 10A OF THE ACT. 11. ON THE CONTRARY THE LD D.R PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF HIMATSINGKA SE IDE LTD VS. CIT (CIVIL APPEAL NO.1501 OF 2008 DATED SEPTEMBER 19 2013) WH EREIN THE HONBLE APEX COURT HAS DISMISSED THE APPEAL FILED BY THE ASSESSE E CHALLENGING THE ORDER PASSED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. HIMATASINGIKE SEIDE LTD (286 ITR 255). IN THE ABOVE SAID CASE T HE HONBLE KARNATAKA HIGH COURT HAD HELD THAT THE UNABSORBED DEPRECIATION SHO ULD BE TAKEN INTO CONSIDERATION WHILE COMPUTING THE DEDUCTION U/S 10B OF THE ACT AND THE SAME HAS BEEN UPHELD BY THE HONBLE SUPREME COURT. THE LD D.R SUBMITTED THAT THERE IS A DIFFERENCE BETWEEN UNABSORBED LOSS AND UNABSORBED DEPRECIATION. HE SUBMITTED THAT AS PER THE PROVISIONS OF SEC. 32 (2) OF THE ACT THE UNABSORBED ITA NOS.5558/MUM/2009 & 0THER FIVE APPEALS 7 DEPRECIATION SHALL BE ADDED TO THE AMOUNT OF DEPREC IATION ALLOWABLE FOR THE FOLLOWING YEAR AND SHALL BE DEEMED TO BE PART OF TH AT ALLOWANCE. ACCORDINGLY THE LD D.R SUBMITTED THAT THE DEDUCTION U/S 10A SHALL B E ALLOWED AFTER SETTING OFF UNABSORBED DEPRECIATION. 12. THE DECISION RENDERED BY HONBLE SUPREME COUR T IN THE CASE OF HIMATSINGKA SEIDE LTD (SUPRA) APPROVES THE DECISION RENDERED BY HONBLE KARNATAKA HIGH COURT WHEREIN THE HONBLE KARNATAKA HIGH COURT HAD HELD THAT THE UNABSORBED DEPRECIATION SHOULD BE TAKEN INTO CO NSIDERATION WHILE COMPUTING THE DEDUCTION U/S 10B OF THE ACT. ACCORDINGLY IN TERMS OF THE DECISION OF HONBLE SUPREME COURT WE HOLD THAT THE UNABSORBED DEPRECIAT ION SHALL FORM PART OF CURRENT YEAR DEPRECIATION AND THE SAME IS REQUIRED TO BE DEDUCTED BEFORE ALLOWING DEDUCTION U/S 10A OF THE ACT. HOWEVER TH E UNABSORBED BUSINESS LOSS HAS TO BE DEDUCTED ONLY FROM THE PROFIT AVAILABLE A FTER ALLOWING DEDUCTION U/S 10A OF THE ACT. ACCORDINGLY WE MODIFY THE ORDER OF LD CIT(A) AND DIRECT THE AO TO COMPUTE THE TOTAL INCOME IN TERMS OF THE ABOVE SAID DISCUSSION. 13. IN THE APPEAL PREFERRED BY THE REVENUE FOR AY 2004-05 THE ONLY ISSUE URGED RELATES TO THE EXCLUSION OF TRAVELLING EXPENS ES AND SOFTWARE DEVELOPMENT CHARGES INCURRED IN FOREIGN CURRENCY FROM THE AMOUN T OF EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10A OF THE ACT. EVENTHOUGH THE LD CIT(A) HELD THAT THE ABOVE SAID EXPENSES ARE NOT REQUIRED TO BE EXCLUDED FROM THE AMOUNT OF TURNOVER YET THE LD A.R SUBMITTED THAT H E WOULD NOT HAVE GRIEVANCE OVER THE CLAIM OF THE REVENUE IF THE CORRESPONDING AMOUNT IS EXCLUDED FROM THE TOTAL TURNOVER ALSO WHILE COMPUTING DEDUCTION U/S 1 0A OF THE ACT. WE NOTICE THAT THE HONBLE BOMBAY HIGH COURT HAS HELD IN THE CASE OF CIT VS.GEM PLUS JEWELLERY INDIA LTD (2011)(330 ITR 175) THAT THE IT EMS EXCLUDED FROM THE EXPORT TURNOVER ARE REQUIRED FROM THE TOTAL TURNOVER ALSO. ACCORDINGLY BY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT WE HOLD THAT THE AMOUNT OF TRAVELLING EXPENSES AND SOFTWARE DEVELOPMENT CHARGES INCURRED IN FOREIGN CURRENCY IS REQUIRED TO BE EXCLUDED BOTH FROM EXPORT TURNOVER A ND TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10A OF THE ACT. WE ORDER ACCORDINGLY. ITA NOS.5558/MUM/2009 & 0THER FIVE APPEALS 8 14. WE SHALL NOW TAKE UP THE APPEAL FILED BY TH E REVENUE FOR AY 2005-06. THE ONLY GROUND URGED BY THE REVENUE RELATES TO THE EXC LUSION OF TRAVELLING EXPENSES PROFESSIONAL CHARGES AND SOFTWARE DEVELOPMENT CHARG ES FROM THE AMOUNT OF EXPORT TURNOVER WHILE COMPUTING DEDUCTION U/S 10A O F THE ACT. IN THE IMMEDIATELY PRECEDING YEAR WE HAVE HELD BY FOLLOW ING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF GEM PLUS J EWELLERY INDIA LTD (SUPRA) THAT THE CORRESPONDING AMOUNT IS REQUIRED TO BE EXCLUDED FROM THE TOTAL TURNOVER ALSO WHILE COMPUTING DEDUCTION U/S 10A OF THE ACT. ACCO RDINGLY BY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT WE HOLD THAT THE AMOUNT OF TRAVELLING EXPENSES PROFESSIONAL CHARGES AND SOFTWARE DEVELOP MENT CHARGES INCURRED IN FOREIGN CURRENCY IS REQUIRED TO BE EXCLUDED BOTH FR OM EXPORT TURNOVER AND TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10A OF THE ACT. WE ORDER ACCORDINGLY. 15. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE A SSESSEE FOR THE AY 2006- 07 WHEREIN THE ASSESSEE HAS FILED CONCISE GROUNDS OF APPEAL. THE LD A.R DID NOT PRESS THE GROUND NUMBERED 1.1 RELATING TO VALI DITY OF DEDUCTION OF EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE AMOUNT OF EX PORT TURNOVER WHILE COMPUTING DEDUCTION U/S 10A OF THE ACT. ACCORDINGL Y THE SAID GROUND IS DISMISSED AS NOT PRESSED. THE LD A.R SUBMITTED THA T THE GROUND NUMBERED AS 1.2 RELATING TO THE CLAIM FOR DEDUCTION OF THE EXPE NSES INCURRED IN FOREIGN CURRENCY BOTH FROM EXPORT TURNOVER AS WELL AS TOTAL TURNOVER SHALL NOT SURVIVE SINCE THE LD CIT(A) HAS ALLOWED THE SAID CLAIM IN H IS ORDER DATED 31.7.2013 PASSED U/S 154 OF THE ACT. ACCORDINGLY THE SAID GR OUND IS DISMISSED AS INFRUCTUOUS. 16. THE GROUND NUMBERED AS 2.1 AND 2.2 RELATES TO THE DISALLOWANCE OF REPAIRS EXPENSES AMOUNTING TO RS.3 19 458/- TREATIN G THE SAME AS CAPITAL EXPENDITURE. THE LD A.R SUBMITTED THAT THE ASSESSE E WOULD NOT BE AGGRIEVED BY THE ABOVE SAID DISALLOWANCE IF THE ALTERNATIVE CLAI M OF DEPRECIATION IS ALLOWED. ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO ALL OW APPLICABLE DEPRECIATION ON THE ABOVE SAID AMOUNT OF RS.3 19 458/-. ITA NOS.5558/MUM/2009 & 0THER FIVE APPEALS 9 17. THE GROUND NUMBERED AS 3 RELATES TO THE VALIDI TY OF THE ACTION OF THE AO IN REDUCING THE UNABSORBED BUSINESS LOSS AND UNABSORBE D DEPRECIATION FROM THE BUSINESS PROFITS BEFORE ALLOWING DEDUCTION U/S 10A OF THE ACT. WE HAVE CONSIDERED AN IDENTICAL ISSUE IN AY 2004-05 SUPRA A ND HAVE HELD THAT THE UNABSORBED DEPRECIATION SHOULD BE TAKEN AS PART OF CURRENT DEPRECIATION AND THE SAME IS REQUIRED TO BE DEDUCTED BEFORE ALLOWING DED UCTION U/S 10A OF THE ACT. HOWEVER THE UNABSORBED BUSINESS LOSS HAS TO BE DED UCTED ONLY FROM THE PROFIT AVAILABLE AFTER ALLOWING DEDUCTION U/S 10A OF THE A CT. WE DIRECT THE AO TO COMPUTE THE TOTAL INCOME ACCORDINGLY. 18. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE ASSESSEE FOR AY 2007-08 WHEREIN THE ASSESSEE HAS FILED CONCISE GROUNDS OF A PPEAL. THE LD A.R DID NOT PRESS THE GROUND NUMBERED 1.1 RELATING TO VALIDITY OF DEDUCTION OF EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE AMOUNT OF EX PORT TURNOVER WHILE COMPUTING DEDUCTION U/S 10A OF THE ACT. ACCORDINGL Y THE SAID GROUND IS DISMISSED AS NOT PRESSED. THE LD A.R SUBMITTED THA T THE GROUND NUMBERED AS 1.2 RELATING TO THE CLAIM FOR DEDUCTION OF THE EXPE NSES INCURRED IN FOREIGN CURRENCY BOTH FROM EXPORT TURNOVER AS WELL AS TOTAL TURNOVER SHALL NOT SURVIVE SINCE THE LD CIT(A) HAS ALLOWED THE SAID CLAIM IN H IS ORDER DATED 31.7.2013 PASSED U/S 154 OF THE ACT. ACCORDINGLY THE SAID GR OUND IS DISMISSED AS INFRUCTUOUS. 19. THE NEXT GROUND RELATES TO THE VALIDITY OF RED UCING UNABSORBED DEPRECIATION OF RS.20 53 430/- BEFORE ALLOWING DEDU CTION U/S 10A OF THE ACT. IN THE EARLIER YEARS BY FOLLOWING THE DECISION OF HON BLE SUPREME COURT WE HAVE HELD THAT THE BROUGHT FORWARD UNABSORBED DEPRECIATI ON SHALL FORM PART OF CURRENT YEARS DEPRECIATION IN TERMS OF SEC. 32(2) OF THE A CT AND HENCE THE SAME IS REQUIRED TO BE DEDUCTED BEFORE ALLOWING DEDUCTION U /S 10A OF THE ACT. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF TAX AUTHORITIES ON THIS ISSUE. HOWEVER IF THE AMOUNT OF UNABSORBED DEPREC IATION UNDERGOES ANY CHANGE IN VIEW OF GIVING EFFECT TO OUR ORDERS PASSE D FOR THE PRECEDING YEARS THE ASSESSING OFFICER SHALL DEDUCT THE RECOMPUTED AMOUN T OF UNABSORBED DEPRECIATION. ITA NOS.5558/MUM/2009 & 0THER FIVE APPEALS 10 20. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE A SSESSEE FOR AY 2008-09. THE ASSESSEE HAS FILED CONCISE GROUNDS OF APPEAL. AT THE TIME OF HEARING THE LD A.R DID NOT PRESS GROUND NO.1. ACCORDINGLY THE SAI D GROUND IS DISMISSED AS NOT PRESSED. THE SECOND GROUND RELATES TO THE CLAIM FO R DEDUCTION OF THE EXPENSES INCURRED IN FOREIGN CURRENCY BOTH FROM EXPORT TURNO VER AS WELL AS TOTAL TURNOVER. THE SAID CLAIM IS IN ACCORDANCE WITH THE DECISION R ENDERED BY HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF GEM PLUS JEWELLERY INDIA LTD (SUPRA). ACCORDINGLY WE DIRECT THE ASSESSING OFFI CER TO EXCLUDE THE EXPENSES INCURRED IN FOREIGN CURRENCY BOTH FROM EXPORT TURNO VER AND TOTAL TURNOVER WHILE COMPUTING DEDUCTION U/S 10A OF THE ACT. THE ORDER OF LD CIT(A) ON THIS ISSUE IS ACCORDINGLY SET ASIDE. 21. IN THE RESULT ALL THE APPEALS FILED BY THE A SSESSEE ARE PARTLY ALLOWED AND BOTH THE APPEALS FILED BY THE REVENUE ARE ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COUR T ON 7TH NOV 2014. ()*+ $ -. / 0 7TH NOV 2014 ) # 1% 2 SD SD ( . . / H.L. KARWA) ( . . / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER - $ % MUMBAI: 7TH NOV 2014. . 7 . ./ SRL SR. PS !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ 8& ( ) / THE CIT(A)- CONCERNED 4. $ 8& / CIT CONCERNED 5. 6. 9: 1 7&7;< ' ;< + - $ % / DR ITAT MUMBAI CONCERNED 1 = % / GUARD FILE. > $ / BY ORDER TRUE COPY ? (ASSTT. REGISTRAR) ' ;< + - $ % /ITAT MUMBAI