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These are a set of four appeals; two appeals by the assessee for Assessment Years 2010-11 and 2011-12 and two cross appeals by the Revenue; directed against the separate orders of CIT(A)-15, Delhi dated 23.03.2017. Since common issues are involved, these appeals were heard together and we deem it appropriate to dispose them off together by way of this consolidated order, for the sake of convenience. Assessment Year 2010-11
2. Briefly stated, the facts of the case are as under:-
2.1 The assessee filed its return of income for Assessment Year 2010-11 on 15.10.2010 declaring income of Rs.1,64,29,700/ after claiming deduction under section 10A of the Income Tax Act, 1961 (in short ‘the Act’). Book profits under section 115JB of the Act were computed at Rs.30,49,80,031/-. The return was processed under section 143(1) of the Act and the case was subsequently taken up for scrutiny for Assessment Year 2010-11. The assessment was concluded under section 143(3) of the Act vide order dated 31.10.2014, where n the assessee’s income was determined at Rs.19,96,09,740/- in view of the following additions / disallowances:-
(i) Disallowance under section 40(a)(ia) of Export - Rs.4,18,21,648/- Commission claimed; for non deduction of tax at source.
(ii) Disallowance out of assessee’s claim of deduction - Rs.14,13,53,193/- u/s section 10A of the Act
(iii) Disallowance of capital loss under section 94(7) of the Act
2.2 On appeal, the CIT(A)-15, Delhi, disposed off the same; vide order dated 23.03.2017, allowing the assessee partial relief.
3. Both Revenue and the assessee, being aggrieved by the order of CIT(A)-15, Bangalore, dated 23.03.2017 for Assessment Year 2010-11, have filed cross appeals before the Tribunal, which we now proceed to dispose off hereunder.
Assessee’s appeal in ITA No.1519/Bang/2017 for Assessment Year 2010-11
4. In this appeal, the assessee has raised the following grounds:-
1. The order dated 31 March 2014 (`impugned order') passed by the Deputy Commissioner of Income Tax, Circle 16(1), New Delhi (hereinafter referred to as Ld. AO') under section 143(3) of the Income Tax Act, 1961 (Vice) and upheld by the Commissioner of Income-tax (Appeals)-15 Ld. CIT(A)1 is contrary to the facts and circumstances of the case and hence is bad in law. Reduction in deduction claimed under section 10A of the Act
2. The CIT(A) has erred on facts and in law in upholding the order of the Ld. AO restricting deduction under section 10A of the Act to INR 14,99,61,185 as against INR 29,16,64,872 as claimed by the Appellant.
3. On facts and in law, the Ld. CIT(A) erred in upholding the order of the Ld. AO reducing INR 37,61,94,696 from export turnover (`ET') on the ground of non-realization for the purposes of computing deduction under section 10A of the Act.
3.1 That That the CIT(A) has failed to appreciate that it is settled law that if no communication is received to a request made to a statutory authority or its nominee, the request is deemed to be allowed. The CIT(A) has erred in not realizing that even if no explicit approvals were received from the RBI/ Authorized Dealer, it has to be read as implicit approval since no communication has been forthcoming. In light of the implicit approval, the CIT(A) has erred in upholding the exclusion from ET on the ground of nonrealization.
3.2 Without prejudice to the above, the Ld. CIT(A) has erred in confirming the action of the Ld. AO to exclude export sales amounting to INR 3,37,06,901 from ET while computing the deduction under section 10A of the Act without appreciating the fact that the proceeds in respect of those sales were realised within the time limit prescribed under section 10A(3) of the Act.
3.3 Without prejudice to the above, the Ld CIT(A) has erred in not directing the Ld. AO to amend the assessment order in terms of section 155(11A) of the Act to allow deduction under section 10A of the Act in respect of the export proceeds amounting to INR 2,87,99,885 which were subsequently received in convertible foreign exchange in India.
4. On facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the action of the Ld. AO to exclude expenditure incurred in foreign currency amounting to INR 30,16,21,141 from ET while computing the deduction under section 10A of the Act without appreciating the fact that these amounts were neither included in the export invoices nor did they form part of ET.
5. On facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the action of the Ld. AO to re-compute the deduction allowable under section 10A of the Act on the returned business income instead of assessed business income. Disallowance of commission expense on account of non-deduction of tax at source
6. On the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the action of the Ld. AO to disallow export commission expense amounting to INR 4,17,10,537 and commission paid for hiring of apartments