TMI Blog2014 (1) TMI 1538X X X X Extracts X X X X X X X X Extracts X X X X ..... the business carried on under Section 80HHE namely the business of software - Neither the profits of Section 10A units nor the turnover of 10A units could be added to find out the profit from export of computer software under Section 80HHE. Once the assessee has been given the benefit of total exemption from payment of tax under Section 10A in respect of these two units to which Section 10A is attracted, neither the profit and gains of that business nor the turnover of that business could be added to the business of which Section 10A is not applicable - The third unit of the assessee is eligible for deduction in respect of export turnover of computer software under Section 80HHE – While computing the profits of the said unit, the turno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-Tax in his revisional jurisdiction under Section 263 of the Act held that while computing deduction under Section 80HHE(3), the turnover which should be adopted by the assessee is the whole turnover and not merely the turnover of units eligible for deduction under Section 80HHE(3) of the Act. Accordingly, he directed the Assessing Officer to modify the assessment by recomputing the deduction allowable under Section 80HHE(3) by taking the turnover of the business as a whole including those units which are eligible for exemption under Section 10A of the Act. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal. The Tribunal held that as regards the units eligible for deduction under Section 10A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue assailing the impugned order contended that Section 80HHE is similar to Section 80 HHC. Sub-Section 4 of Section 80HHE gives a formula for calculation of profit earned by the assessee under Section 80HHE. Therefore, the total turnover of the business referred to under sub-section (3) of Section 80HHE cannot be restricted to total turnover of the assessee in export business only. It should be the total turnover of all the export business carried on by the assessee apart from the business referred to under Section 80HHE. Therefore, he submits that the order passed by the Commissioner was just and proper and the Tribunal committed a serious error in interfering with the said order. 4. Per contra, the learned Senior Counsel appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment or production of computer software, there shall, in accordance with and subject to the provisions of this Section, be allowed, in computing the total income of the assessee, [a deduction to the extent of the profits, referred to in sub-section(1B),] derived by the assessee from such business: A reading of the aforesaid provision makes it clear that the Section deals with deduction in respect of profits from the export of computer software etc. In order to attract the benefit of the said provision, the following conditions must be satisfied:- (a) The assessee is engaged in the business of export out of India of computer software or its transmission from India to a place outside India by any means; or providing technical s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sub-section(1). Further, it also makes it clear that the profit derived from the business referred to in that subsection means the business of computer software. Then in order to determine the profits derived from the export of computer software the amount shall be the amount which bears to the profits of the business, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. Therefore, the total turnover of the business referred to under Sub-Section(3) cannot be construed as the total turnover of the business carried on by the assessee. The total turnover refers only to the business carried on under Section 80HHE namely the business of software. Therefore, if the assessee is carryi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year and shall in no case exceed the profits and gains of such undertaking or unit or enterprise or eligible business, as the case may be. 9. This provision is inserted by Finance (No.2) Act, 2009, which came into retrospective effect from 1.4.2003 applicable to the assessment year 2003-04. In the case on hand, it relates to assessment year 2001- 02. Nonetheless, this provision is explanatory in nature. The principle underlining the said provision makes it clear that when the profits and gains of an undertaking is allowed as deduction, the said benefit cannot be over again allowed under any other provisions. Consequently, the said profits and gains cannot be added under any provision also. If profits and gains cannot be added, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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