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TMI Blog2012 (6) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation (2) to section 10A defines 'export turnover' and also defines the items to be excluded from the turnover. 2. The CIT (A) has also erred in not appreciating the fact that it was never the intention of the legislature while incorporating explanation (2) to section 10A to extend similar treatment to both 'export turnover' and 'total turnover'. 3. The CIT (A) failed to appreciate that if it is the intention of the legislature to extend similar treatment to 'total turnover'. It should have explicitly provided to exclude freight, insurance, telecommunication charges and technical service expenses incurred in foreign exchange outside India attributable to the export of software even from the 'total turnover' as was done in the case of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the assessment order, filed an appeal before the CIT (A). Before the CIT (A), the assessee relying upon the following orders passed by different Benches of ITAT in the cases of Patni Telecom (P) Ltd. Vs. ITO (2009) 120 ITD 105 (Hyd- ITAT), DCIT vs. Softsol India Ltd (2008) 22 SOT 271 (Hyd- ITAT), Sak Soft Ltd. Vs. ITO, Ward-VI(1) (2009) 20 DTR 514 (Chennai)ITAT)(SB) and CIT Vs. Sudarshan Chemicals Industries Ltd 245 ITR 769 (Bom) contended that if the expenditure incurred under the head communication charges, insurance charges and professional fee are to be reduced from the export turnover then the same should also to be reduced from the total turnover in computing deduction u/s 10A of the Act. The CIT (A) following the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 423 held as follows:- "The formula for computation of the deduction under section lOA would be as under: Profits of the business x export turnover Total turnover From the aforesaid judgments, what emerges is that there should be uniformity in the ingredients of both the numerator and the denominator of the formula, since otherwise it would produce anomalies or absurd results. Section lO-A is a beneficial section. It is intended to provide incentives to promote section. It is intended to provide incentives to promote exports. The incentive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , though there is no definition of the term 'term turnover' in Section lOA, there is nothing in the said Section to mandate that, what is excluded from the numerator that is export turnover would nevertheless form part of the denominator. Though when a particular word is not defined by the legislature and an ordinary meaning is to be attributed to the same the said ordinary meaning to be attributed to such word is to be in conformity with the context in which it is used When the statute prescribes a formula and in said formula, 'export turnover' is defined, and when the 'total turnover' includes export turnover, the very same meaning given to the export turnover by the legislature is to be adopted while understanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .948/Hyd/2005 dated 18-1-2012 to which one of us is an author held that parity of constituents between the export turnover and total turnover needs to be maintained while computing deduction u/s 10A of the Act. For ready reference, the relevant observation of the Tribunal is extracted here under: "The above extracts contains the in depth analysis as to the formula for determining the allowable deduction, numerator-denominator analysis and finally, they arrive at the need for maintaining the 'parity' of the constituents between the 'export turnover' and 'total turnovers'. On the impugned issue of inclusion/exclusion, the judgments pronounced in the context of section 80HHC are equally relevant for the applicability of the section 10A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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