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2022 (7) TMI 960 - HC - Income TaxDeduction u/s 10B - exclusion expenses incurred in foreign exchange, freight and clearing expenses incurred in foreign exchange in computing deduction - HELD THAT:- As substantial questions of law raised herein have been decided in favour of the assessee, in the decision of the Hon'ble Supreme Court in Commissioner of Income Tax vs. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT] held if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software under Section10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature. Even in common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well. On the issue of expenses on technical services provided outside, we have to follow the same principle of interpretation as followed in the case of expenses of freight, telecommunication etc., otherwise the formula of calculation would be futile. Hence, in the same way, expenses incurred in foreign exchange for providing the technical services outside shall be allowed to exclude from the total turnover - Decided against revenue.
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