TMI Blog2019 (12) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of denominator as well and 'export turnover' cannot assume two different characteristics for two parts of the same formula. In the present case, the quantum of 'export turnover' has been taken to be the actual remittances of foreign exchange after excluding the unrealised foreign exchange. This then would be the same figure to be adopted so far as the denominator is concerned as well. In fine, 'total turnover' for purposes of the formula would be the actual sale receipts excluding unrealised foreign exchange as adopted for 'export turnover'. This conclusion is also supported by the reasoning that the provisions of Section 10A/10B are beneficial in nature and seek to encourage an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision enacted to provide for a deduction in respect of income derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins the eligible activity. 9. In the present case, the eligibility of the assessee to this relief is not disputed. The mode of computation of the relief is set out in terms of subsection (4) of section 10A by way of a formula. 10.Sub-section (4) is extracted below: (4) For the purposes of sub-sections (1) and (1A), the profits derived from export of articles or things or computer software shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to provide a benefit only for those engaged in the activity of export and gaining foreign exchange. 13. He points out that the very object of the section is to improve foreign exchange inflows into the Country and thus in a situation where an assessee is unable to bring into the Country foreign exchange by way of export turnover, such non-realisation should not only stand excluded from the numerator, but also be deemed to be part of turnover and included in the denominator, i.e. total turnover of the company. 14. He relies on two decisions of this Court in the case of Galaxy Granites (P) Ltd. V. Commissioner of Income-tax ((2012) 27 taxmann.com) 31 (Mad) which relates to computation of deduction und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, in addition to actual receipts, what was 'receivable' or 'not actually received' would also stand included within the ambit of denominator i.e, 'total turnover'. 17. This position hinges on the scheme of deduction under section 80HHC, which is specific to the provisions set out therein. The provisions of section 10B do not contain a definition of 'total turnover' and therefore the interpretation of the Court in the context of section 80HHC would not advance the case of the Revenue as far as the scheme of section 10A or 10B is concerned. 18. In the case of Pentasoft (supra), the Bench decided the claim for exclusion of unrealised sales proceeds against the assessee sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India; 21. The issue of whether the items reduced from 'export turnover', such as freight, telecommunication charges or insurance as provided for in the definition would also stand reduced from 'total turnover' was the subject matter of consideration by the Supreme Court in the case of CIT V. HCL Technologies [2018] (404 ITR 719) and the issue was held in favour of the assessee. The conclusion of the Bench was to the effect that items excluded/reduced from the numerator would stand excluded/reduced from the denominator as well. Paragraphs 18 to 21 of the judgement are relevant and are extracted be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided outside, we have to follow the same principle of interpretation as followed in the case of expenses of freight, telecommunication etc., otherwise the formula of calculation would be futile. Hence, in the same way, expenses incurred in foreign exchange for providing the technical services outside shall be allowed to exclude from the total turnover.' 22. Learned Counsel for the Revenue seeks to distinguish the above judgment stating that the rationale thereof would be applicable only to the items of exclusion at issue before the Supreme Court and cannot be extended to the question of unrealised sale proceeds, which is the issue in the present case. 23. We see no valid distinction as sought t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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