TMI Blog2011 (8) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... led its return of income for the assessment year 2006-07 on 22-11-2006 declaring a total income of ₹ 59,90,038/-. The assessee also claimed deduction u/s 10B of the IT Act. During the assessment proceedings u/s 143(3) of the Act, the AO observed that out of the total export turnover of ₹ 2,68,55,904/-, a sum of ₹ 58,62,211/- is received towards providing consultancy services outside India. A sum of ₹ 4,93,972/- was received towards traveling expenses for providing consultancy services/technical services outside India and also a sum of ₹ 1,00,54,416/- was received after six months from the end of the financial year ending on 31-03-2006. 3. The AO observed that a sum of ₹ 58,62,211/- was received from Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware outside India and for providing consultancy services and accordingly, he reduced this amount from the export turnover for purpose of computing the deduction u/s 10B of the IT Act and thereafter assessed the income of the assessee. 5. Aggrieved, the assessee preferred an appeal before the CIT(A), who confirmed the addition of ₹ 58,62,211/- and also ₹ 4,93,92/- and ₹ 5,48,297/- incurred on foreign travel expenses and internet charges respectively, after observing that the assessee has not furnished the details relating to these expenditures. Alternatively, the assessee s contention was that if the same is excluded from the export turnover than it should also be excluded from the total turnover. On this alternate pray ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gning and developing of computer software and export of the same. He submitted that the nature of assessee s business demands that after designing and developing the computer software, the assessee has to export the said software and also has to render the consultancy services at the location of the client outside India, in order to facilitate its implementation and functioning. Thus, according to him, the consultancy services rendered outside India is only with regard to design developed by the assessee in India and it is not for any independent consultancy services rendered outside India. In support of his contention that the consultancy services delivered at the location of foreign client outside India is also eligible for deduction u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltancy provided by the assessee with regard to the software developed by it in India and exported outside India. However, this fact has not been verified by any of the authorities below. Further, it has been contended that the consultancy services have been rendered outside India by the assessee in order to sufficiently implement the software design developed by it and therefore, the same cannot be excluded from the export turnover for the purpose of computing deduction u/s 10B of the IT Act. This contention also was not considered by the authorities below. In view of the same, the AO is directed to verify whether it is for independent consultancy services rendered outside India or if it is for consultancy rendered at the site of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction u/s 10B of the Act. As regards the traveling expenses and expenditure incurred in foreign currency is concerned, we find that the assessee has not furnished any details of the purpose for which this expenditure was incurred. Therefore, the same also has to be excluded from the export and total turnover. 9. In the result, the assessee s appeal is partly allowed. 10. As regards the revenue s appeal, the learned DR placed reliance upon the order of the AO while the learned counsel for the assessee supported the orders of the CIT(A) and also placed reliance upon various judicial precedents on the issue. She also filed paper book containing the copies of the following judicial precedent which is as under; M/s Wipro Ltd., Vs DC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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