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2020 (8) TMI 767 - HC - Income TaxDeductions u/s 10B and Section 10AA computation - excluding expenditure incurred in foreign currency from export turnover under Section 10B and Section 10AA of the IT Act when the Appellant is engaged in software development - HELD THAT:- CIT(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 Section 10B of the Act, the expression 'export turnover' does not include any expenses incurred in foreign exchange in providing technical services outside India. The assessee has incurred expenditure in foreign currency from export turnover for software development. Similarly, the telecommunication charges attributable to delivery of computer software outside India could not have been excluded from the export turnover in view of Explanation 1(i) to Section 10AA of the Act. It is also noteworthy that Explanation 2 to Section 10AA provides that profits and gains derived from; on site development of computer software (including services for development of software) outside India shall be deemed to be the profits and gains derived from the export of computer software outside India. In the case of assessee itself, for the Assessment year 2009-10, the expenditure incurred in foreign currency was not reduced from export turnover and total turnover, which is evident from the order dated 31.01.2017 passed by the Assistant Commissioner of Income Tax. A bench of this court in Tata Elxsi Limited [2016 (3) TMI 460 - KARNATAKA HIGH COURT] has also taken a view that technical services rendered by the assessee's engineers in connection with export of computer software, cannot be excluded in computing the export turnover as it forms part of export turnover. - Decided in favour of assessee.
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