TMI Blog2010 (12) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... s finding of the AO but he has only directed the AO to exclude the same from the total turnover also - If it is found that the export turnover is computed on the basis of cost + mark up, then this amount is to be included as part of the cost and consequently as part of export turnover and also total turn over - In the result, the assessee's appeal is partly allowed - ITA Nos.692 to 694(Bang)/2010, ITA Nos.875 and 876(Bang)/2010 - - - Dated:- 23-12-2010 - P. Madhavi Devi, A. Mohan Alankamony, JJ. Jacinta Zimik Vashai for the Appellant Kaushik Mukerjee for the Respondent ORDER Per: P Madhavi Devi: The issues raised in the assessee's appeals for assessment year 2005-06 and 2006-07 are common and the issues raised in the revenue's appeal for assessment years 2004-05 to 2006-07 are also common and therefore the appeals were heard together and are disposed of by this consolidated and common order for the sake of convenience. 2. The assessee has raised the following grounds of appeal in its appeal for assessment year 2005-06: "The grounds mentioned herein below are without prejudice to each other 1(a) That the learned CIT(A) erred in upholding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is due but continued to be reflected in the books of account of the company. He held that the assessee-company has re-valued payment to be received in foreign exchange and claimed the gain on notional basis and therefore it is not justifiable to be included in the export turnover. He accordingly disallowed the same and reduced it from the exempt income computed u/s 10A of the Act. Aggrieved, the assessee preferred an appeal before the CIT(A) stating that the exchange gain is on account of exports made by the assessee and, therefore, it has direct nexus with the export activity and it should be considered as export turnover. In support of his contention, he also placed reliance upon the following decisions of the Tribunal: i. Renaissance Jewellery (P) Ltd. vs. ITO ii. Changepond Technologies P Ltd. vs. ACIT (119 TTJ 18) iii. Priyanka Gems vs. ACIT (94 TTJ 557) iv. Sujata Grover vs. DCIT (74 TTJ 347) (Del ) v. Discover India Tours (P) Ltd. vs. AO (104 TTJ 298) (Del ) 4. On appeal, after considering the assessee's submissions, the CIT(A) held that there is no nexus between the assessee's software business development of the eligible undertaking and the earnin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons on this issue nor has he brought any evidence on record to show that this foreign exchange gain is on actual receipt of export proceeds. As defined under clause (iv) to Explanation 2 to section 10A of the Act, 'export turnover' means the consideration in respect of export by the undertaking of articles or things or computer software received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section (3), but does not include 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. Thus, it can be seen that the consideration has to be received or brought into India to be included in the export turnover. But in the case before us, the AO has clearly brought out that this gain has not been received or brought into India . In view of the same, we restore the order of the AO to the effect that it is not includible in the export turnover. 7. As regards the second ground of appeal, brief facts of the case are that the assessee has incurred an expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Changepond Technologies (P) Ltd. vs. ACIT (119 TTJ (Chennai)18). A copy of the said order is also placed before us. Learned Departmental Representative, on the other hand, submitted that the assessee has stated that this is expenditure incurred by the assessee on training of its employees abroad and therefore it is clear that the expenditure is incurred in foreign exchange outside India and therefore does not fall within the nature of turnover. She submitted that the claim of the assessee that the export turnover is computed on the cost + mark up basis cannot be accepted without there being any proper proof and evidence to this effect. 11. Having heard both the parties and having considered the rival contentions, we find that the assessee's claim has always been that the expenditure is incurred on training of its personnel abroad. It is the finding of the AO that these employees have rendered technical services outside India and the CIT(A) has also upheld this finding of the AO but he has only directed the AO to exclude the same from the total turnover also. As is evident from the invitation letter filed by the assessee at pages 7 to 10 of the paper book, the employees ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be restored. 15. Brief facts of the case are that while examining the computation of export turnover and the total turnover for the purpose of allowing deduction u/s 10A of the Act, the AO observed that the telecommunication charges and the insurance expenses have not been reduced from the export turnover. He, accordingly, reduced the same by applying the provisions of Explanation 2(iv) to section 10A of the Act. On appeal, the CIT(A) confirmed the order of the AO. But however, following various judicial decisions, directed the AO to reduce the same from the total turnover also. Aggrieved by the relief given by the CIT(A), the revenue is in appeal before us. 16. Having heard both the parties and having gone through the material on records, we find that the issue is covered in favour of the assessee by various decisions which have been followed by the CIT(A) including the decision of the Special Bench in the case of ITO vs. Sak Soft Ltd. (313 ITR 353). Learned Departmental Representative had submitted that the department has not accepted this decision and has filed further appeal before the Hon'ble High Court of Madras. However, having regard to the fact that this decision h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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