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2018 (11) TMI 1553 - HC - Income TaxComputation of deduction under Section 10A - exclusion of expenditure incurred in foreign currency in export of software, from the purview of 'Export Turnover' - Held that:- Element of 'technical services', have been rendered as integral part of the software development process. There was no material available before the Assessing Officer to split up the transaction into two or to bisect the transaction to find out an element of 'technical services'. As rightly pointed out by the assessee, this exercise has been done by the Assessing Officer based on the notes to the accounts in the financial statements, which would be impermissible. What is required to be examined is the nature of services rendered by the assessee to the foreign entity. Thus, we are fully satisfied that the 'technical services' rendered by the assessee is not on a 'standalone basis', but it is an integral part of the software development and up to step No.(8), as mentioned above, the assessee is bound to render all assistance to the foreign entity. Therefore, the artificial split up of the transaction by the Assessing Officer, that too without any materials on his file, is wholly unsustainable. - decided in favour of assessee Inclusion of the component of unrealised sale proceeds in total turnover while directing the exclusion of the same from export turnover - Held that:- These questions have been answered by the Hon'ble Supreme Court in the decision of the Commissioner of Income Tax, Central-III vs. HCL Technologies Ltd.[2018 (5) TMI 357 - SUPREME COURT] as held as the term 'total turnover' has been defined in the Explanation to Section 80HHC and 80HHE, wherein it has been clearly stated that ''for the purposes of this Section only'', it would be applicable only for the purpose of that Sections and not for the purpose of Section 10A. If denominator includes certain amount of certain type which numerator does not include, the formula would render undesirable results. Setting aside the issue of deduction of expenditure in connection with the earning of dividend income by tribunal - Held that:- Assessee contended that Section 14A(2) could not have been invoked, as during the relevant assessment year there is no power vested with the AO on account of the fact that Section 14A(2) was inserted by Finance Act, 2006, with effect from 01.04.2007. Therefore, as submitted this provision cannot be made applicable to the assessment years prior to the said date. Such a ground was never canvassed either before the Assessing Officer or before the CIT-A or before the Tribunal - while confirming the order passed by the Tribunal in remanding the matter for fresh consideration to the Assessing Officer, we direct the assessee to raise the contention which was raised before us with regard to the jurisdiction of the Assessing Officer to invoke Section 14A(2) of the Act and the same shall also be considered by the Assessing Officer along with other points in accordance with law - order of remand passed by the Tribunal is confirmed
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