TMI Blog2011 (8) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... RGE MATHAN, JJ Represented By: Shri Shaji P. Jacob for the Appellant. Dr. Smt. Anita Sumanth for the Respondent. Shri Abraham P. George, These are appeal of the Revenue and cross-objection of the assessee, both directed against order dated 17.3.2008 of Commissioner of Income Tax (Appeals)-III, Chennai, for assessment year 2004-05. Since the issues involved are inter-related, both the appeal and cross-objection are disposed of through this consolidated order. 2. Cross-objection filed by the assessee is delayed by 73 days. Assessee has filed affidavit in which number of reasons have been cited for the delay including the recessionary problems faced by it. No serious objection was raised by the learned D.R. We find the reasons to be acceptable. Delay is condoned. 3. In the appeal filed by the Revenue, there are five grounds out of which, 1 and 5 are general needing no adjudication. Vide its ground No.2, Revenue's grievance is that ld. CIT (Appeals) held gain on account of exchange fluctuation in respect of amounts transferred from EEFC account to Indian Rupee account to be eligible for deduction under Section 10B of Income-tax Act, 1961 (in short "the Act"). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mumbai Bench of this Tribunal in the case of Rishabh International (supra) would not be relevant in view of the decision of Hon'ble Bombay High Court in the case of CIT v. Shah Originals [2010] 327 ITR 19. 7. Per contra, the learned A.R. supporting the order of ld. CIT (Appeals), submitted that the decision given by the Hon'ble Bombay High Court in the case of Shah Originals (supra) was in the context of Section 80HHC of the Act where conversion of balance in EEFC account to Indian Rupee account had happened in a year later to the year of credit of export proceeds. According to her, in the case of the assessee here, the conversion from EEFC account to Indian Rupee account had taken place in the same previous year. 8. We have perused the orders and heard the rival contentions. Deduction under Section 10B of the Act, as per sub-section (1) thereof, is on the profits and gains derived by a 100% export oriented undertaking from the export of articles or things or computer software. If we have a look at Section 80HHC of the Act, sub-section (1) thereof clearly mentions that deduction thereunder is available only on the profits derived by the assessee from export of goods or merc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments, learned A.R. submitted that she was not pressing ground No.2 of the cross-objection, relating to exclusion of expenditure incurred in foreign currency for computation of deduction under Section 10B of the Act. 10. During the course of assessment, it was noted by the Assessing Officer that assessee had debited a sum of Rs. 1,93,13,446/-as data transmission charges. He also noted that assessee had incurred in foreign currency expenses of 217291/- British Pounds equivalent to Rs. 1,76,22,308/- which were reimbursed to it by its customers abroad. As per the A.O., the definition of "export turnover" given in sub-clause (iv) of Explanation 2 to Section 10A clearly stipulated exclusion of freight, telecommunication or insurance attributable to delivery of articles or things or computer software outside India and also expenses incurred in foreign currency for providing technical service outside India. Therefore, in his opinion, these two amounts could not be considered part of export turnover, for the purpose of calculating deduction under Section 10B of the Act. At the same time, A.O. did not exclude such amounts from total turnover for calculating such deduction. The result was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to learned A.R., the A.O. as well as ld. CIT (Appeals) had incorrectly applied the definition of export turnover which specified only exclusion of telecommunication charges but, never any reduction. 14. In reply, the learned D.R. submitted that insofar as issue of telecommunication charges were concerned, it was an accepted position that these were incurred for delivery of computer software outside India. Hence, according to him, in view of the definition of "export turnover" as given in clause (iii) of Explanation 2 to Section 10B of the Act, such telecommunication charges were to be excluded from the export turnover. 15. We have perused the orders and heard the rival contentions. Though the A.O. has considered definition of "export turnover" as given in sub-clause (iv) of Explanation 2 to Section 10A of the Act, assessee here had claimed deduction under Section 10B, and therefore, definition of the said term as given in Section 10B will be more appropriate. Definition of "export turnover" as given in clause (iii) of Explanation 2 to Section 10B of the Act runs as under:- (iii) " 'export turnover' means the consideration in respect of export [by the undertaking] of articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o differentiate between 'exclusion' and 'reduction' is, in our opinion, an endeavour to stretch interpretation of ordinary words to out of ordinary meanings. Special Bench in the case of Sak Soft Ltd. (supra) held as under at para 27 of its order:- "27. At this juncture, it is necessary to refer to one aspect of the matter. It may be an easy task to exclude the freight, telecom charges or insurance attributable to the delivery of computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India from the export turnover and the total turnover if they are separately mentioned in the invoice raised by the assessee. In the course of the arguments addressed on behalf of M/s Sak Soft Ltd. a question arose as to what would happen if these items are not separately shown in the invoice and are included in the total amount raised by the invoice. It was conceded on behalf of the assessee by its learned representative that in such a case, the A.O. will have the power to go behind the invoice and find out how much of the invoice amount pertains to the recovery of the aforesaid items. We are also of the view that in an appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X
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