TMI Blog2012 (6) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... from the total turnover - in favour of assessee. - ITA No.477/Bang/2011 - - - Dated:- 15-2-2012 - N K Saini, George George K, JJ. For Appellant: Shri Saravanan R, Jt.CIT For Respondent: Shri Maltesh G Soratur, Sr. Accounts Officer ORDER Per: George George K: This appeal instituted by the revenue is directed against the order of the Ld. CIT(A), Hubli dated 18.01.2011. The relevant assessment year is 2007-08. 2. The effective grounds read as under:- i) The learned CIT(A) erred in directing the Assessing Officer to exclude the expenses of Rs.43,37,002/- which were deducted from the export turnover, correspondingly also from the total turnover for the purpose of determining the exemption under section 10B of the I T A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a result of re-computation of income, the Assessing Officer arrived at the total income at Rs.80,72,650/- as against the returned income of Rs.15,41,506/-. 4. Aggrieved, the assessee carried the matter in appeal before the first appellate authority. 5. The first appellate authority allowed the appeal of the assessee and directed the Assessing Officer to exclude the expenses of Rs.43,37,002/- both from the export turnover as well as from the total turnover while computing deduction under section 10B of the Act. The CIT(A) placed reliance on the orders of the Tribunal in assessee s own case for the assessment years 2003-04 and 2004-05 (ITA Nos.941 and 942/Bang/2008). The CIT(A) also relied on the order of the Special Bench of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequently earn precious foreign exchange for the country. This aspect has to be borne in mind. While computing the consideration received from such export turnover, the expenses incurred towards freight, telecommunication charges, or insurance attributable to the delivery of the articles or things or computer software outside India, or expenses if any incurred in foreign exchange, in providing the technical services outside India should not be included. However, the word total turnover is not defined for the purpose of this section. It is because of this omission to define total turnover , the word total turnover falls for interpretation by this Court; ..In section 10A, not only the word total turnover is not defined, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The components of the export turnover in the numerator and the denominator cannot be different. Therefore, though there is no definition of the term total turnover in section 10A, there is nothing in the said section to mandate that, what is excluded from the numerator that is export turnover would nevertheless form part of the denominator. When the statute prescribed a formula and in the said formula, export turnover is defined, and when the total turnover includes export turnover, the very same meaning given to the export turnover by the legislature is to be adopted while understanding the meaning of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total turnover in the denominator. The legislature has provided a definition of the expression export turnover in Expln.2 to s.10A which the expression is defined to mean the consideration in respect of export by the undertaking of articles, things or computer software received in or brought into India by the assessee in convertible foreign exchange but so as not to include inter alia freight, telecommunication charges or insurance attributable to the delivery of the articles, things or software outside India. Therefore in computing the export turnover the legislature has made a specific exclusion of freight and insurance charges. The submission which has been urged on behalf of the revenue is that while freight and insurance charges ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a receipt such as freight and insurance which does not have any element of profit cannot be included in the total turnover. Freight and insurance charges do not have any element of turnover. For this reason in addition, these two items would have to be excluded from the total turnover particularly in the absence of a legislative prescription to the contrary CIT v Sudarshan Chemicals Industries Ltd. (2000) 163 CTR (Bom) 596: (2000) 245 ITR 769 (Bom) applied; CIT v Lakshmi Machine Works (2007) 210 CTR (SC) 1: (2007) 290 ITR 667 (SC) and CIT v Catapharma (India) (P) Ltd. (2007) 211 CTR (SC) 83: (2007) 292 ITR 641 (SC) relied on 9.2. In the case of Sak Soft Ltd. (supra), the assessee was engaged in the business of exporting c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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