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2007 (6) TMI 256 - AT - Income TaxComputation of total turnover for the section 10A - expenses incurred in foreign currency - excluded from the total turnover - section 10A is akin to section 80HHE - HELD THAT:- We find that section 10A also is a beneficial section. It is intended to provide incentive to promote exports. In fact section 10A is meant to provide a larger benefit than that provided by section 80HHE by providing the tax holiday to the assessee. If the expenditure incurred in foreign currency are excluded from export turnover but not from total turnover, the benefit granted by section 10A would be considerably reduced. This, in our opinion, cannot be the scheme of the Act. In this regard the apex court in the case of K.P. Varghese v. ITO [1981 (9) TMI 1 - SUPREME COURT] held that a literal construction that leads to absurdity, unjust result or mischief should be avoided. Similarly the apex court in the case of Bajaj Tempo Ltd. v. CIT [1992 (4) TMI 4 - SUPREME COURT] with respect to relief for new industrial undertaking u/s 15C of the Indian Income-tax Act, 1922 has held that such provisions should be construed liberally. Very literal construction which defeats the very purpose of enacting the provision should be avoided. Thus, these expenditures incurred in foreign currency which are excluded from the export turnover should also be excluded from the total turnover in order to properly work out and grant relief that is intended by this section. Hence, in our opinion, these items which are to be excluded from the export turnover cannot be included in the total turnover while calculating the relief u/s 10A. Hence, we uphold the order of the ld CIT (A) in this regard and decide the issue in favour of the assessee. In the result, this appeal by the Revenue is dismissed.
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