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2013 (6) TMI 193 - HC - Income TaxDeduction u/s 80HHE - exclusion of the foreign exchange expenditure - held that:- while theoretically speaking, if the activity relates to the first part of sub-section (1) of Section 80HHE of the Act, it is one of export of computer software, whether actual or in deemed basis, by an on site development and delivery of software in a foreign location, the provisions of clause-(c) of the explanation to the section does say so, the difficulty we find in answering the questions is that such a finding of the tribunal is a finding not based on the actual position which the assessee had made good before the tribunal, either in terms of the actual transaction, which had produced the foreign exchange remittance, or by production of an agreement entered into at the relevant point of time, with its customer from whom remittance/payment had been received in foreign exchange. Tribunal in proceeding to allow the appeals and to reverse the finding of the appellate commissioner, had not really based its finding on any available and relevant material for giving its finding on the question as to whether the activity related to the first part of sub-section (1) of Section 80HHE or second part thereof and in the absence of the same, directing exclusion of the expenses becomes a hypothetical situation for excluding and it is because of this position Not agreed with the view that the deduction as claimed by the assessee under Section 80HHE of the Act should have been allowed without excluding the foreign exchange expenditure incurred by the assessee during the current assessment year. It is open to the assessee to place the materials relevant for the period related to the assessment year in question and the assessing officer to examine the same and to record a finding as to the nature of the activity keeping in view the legal position as we discussed above and answer the question related to exclusion of expenses strictly keeping in view the kind of amounts sought to be excluded in the case of export turnover being attributable to export of computer software, in which event, the exclusion being only freight, telecommunication charges or insurance attributable to the delivery of the computer software outside India and if it is the case of providing technical services outside India in connection with development of computer software, then the actual expenditure, if any, incurred in foreign exchange in providing technical services outside India should be excluded. This legal position equally applies to the other exclusion also and has to be strictly in conformity with the exclusion as provided for in clause (c) and (e) to the explanation to the Section 80HHE of the Act. - Matter remanded back with direction - Decided in favor of revenue.
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