Income derived from Training Fee and related Course Material, not entitled to Deduction u/s.10B: ITAT

Clipped from: https://www.taxscan.in/income-derived-from-training-fee-and-related-course-material-not-entitled-to-deduction-u-s-10b-itat/238317/?utm_source=izooto&utm_medium=push_notifications&utm_campaign=Income%20derived

By Yogitha S. Yogesh – On December 26, 2022 1:07 pm

training fee - Income - course material - deduction - ITAT - Income Tax - taxscan

In a recent ruling, the Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that the rental income derived from the lease of plant & machinery or equipment is taxable under the head ‘income from other sources’.

M/s.Pentasoft Technologies Ltd, the assessee company is engaged in the business of software development & services and is exporting software and services from Software Technology Park and claimed deduction u/s.10A of the Income Tax Act.  The assessee has filed its return of income for the AY 2004-05 on 01.11.2004 declaring a loss of Rs.26,62,56,653/-. 

The assessment has been completed u/s.143(3) of the Income Tax Act, by the total income of Rs.34,14,15,708/-, by making various additions and also re-computation of deduction claimed u/s.10A of the Income Tax Act.  The CIT(A) partly allowed the appeal filed by the assessee.

The AO assessed income from course material under the head ‘income from other sources’ and also denied deduction claimed u/s.10A of the Income Tax Act, on the ground that the receipts are not in the nature of profits & gains derived from the export unit.

It was contended by the assessee that the main business is to impart education and training in the field of software development & services and income from the sale of course material is assessable under the head ‘profits & gains of business’, but not under the head ‘income from other sources’

The assessee is in the business of software development & services and derived income from the export of software and services from Software Technology Park Units (“STP Units”).  The assessee also derived income from training and related course materials.  The assessee had declared income from course material under the head ‘other income’ in the P & L A/c. 

It was evident that income from the course material is not at all related to the business of export of software products & services.  The Tribunal viewed that there is no error in the reasons given by the AO and the CIT(A) to assess income from course material under the head ‘income from other sources’.

While rejecting the appeal, the ITAT upheld the findings of the CIT(A) and the AO. The assessee was represented by Sree Lakshmi Valli and the department was represented by Dr S Palanikumar.To Read the full text of the Order CLICK HERE

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