TMI Blog2020 (3) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... [ 2014 (8) TMI 690 - KARNATAKA HIGH COURT] and the Hon'ble Supreme Court [ 2019 (2) TMI 122 - SC ORDER] has held that such expenditure incurred by the Assessee in foreign currency will be includible in the definition of 'export turnover' for the purpose of computing deduction under Section 10B of the Act. - Decided against revenue - Tax Case (Appeal) Nos. 312 And 385 of 2011 - - - Dated:- 20-2-2020 - Dr. Justice Vineet Kothari And Mr. Justice R. Suresh Kumar For the Appellant : Mrs.V.Pushpa Senior Standing Counsel For the Respondent : No appearance JUDGMENT DR.VINEET KOTHARI, J . The Revenue Department is represented by the Senior Standing Counsel and none appears for the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'export turnover', on which the Assessee is entitled to the benefit of deduction under Section 10B of the Income Tax Act. The relevant portion of the order of the learned Tribunal is quoted below for ready reference. 6.The next issue raised vide Ground No.IV relates to confirming the action of the Assessing Officer in excluding ₹ 4,43,19,916/- as not forming part of export turnover who has excluded this amount on the reasoning that the amount represented expenses incurred in foreign exchange in providing technical services outside India. The facts of this issue have already been narrated above. 7. After hearing both sides on this issue, we find that in view of the Special Bench decision (supra) in assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the assessee is not liable to pay any income tax on such consideration received from export of computer software. However the said export turnover does not include freight, telecommunication charges or insurance attributable to the delivery of computer software outside India or expenses if any incurred in foreign exchange in providing technical service outside India. In other words out of the said export turnover the following amounts have to be deducted; a. freight b. telecommunication charges c. insurance attributable to the delivery of computer software outside India;d. expenses, if any, incurred in foreign exchange in providing technical services outside India; 19. If the assessee is engaged in the business of providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with production of said software. Therefore the expenditure incurred in foreign exchange in providing such technical services outside India of ₹ 62.7 lakhs was excluded in computing the export turnover and total turnover for arriving at deduction under Section 80HHE of the Act. The assesee is engaged in the business of export out of India of computer software and its transmission to places from India outside India. Before a computer software is exported, the Software Engineers of the assessee would have initial discussion with regard to the requirements, specifications etc. Thereafter computer software is manufactured and then it is transmitted from India to a place outside India. The software Engineers deputed abroad who amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of an assessee, having export business and domestic business, the legislature intended to have a formula to ascertain the profits from export business by apportioning the total profits of the business on the basis of turnovers. Apportionment of profits on the basis of turnover was accepted as a method of arriving at export profits. In the case of Section 80HHC, the export profit is to be derived from the total business income of the assessee, whereas in Section 10-A, the export profit is to be derived from the total business of the undertaking. Even in the case of business of an undertaking, it may include export business and domestic business, in other words, export turnover and domestic turnover. The export turnover would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover includes export turnover. If what is excluded in computing the export turnover is included while arriving at the total turnover, when the export turnover is a component of total turnover, such an interpretation would run counter to the legislative intent and impermissible. If that were the intention of the legislature, they would have expressly stated so. If they have not chosen to expressly define what the total turnover means, then, when the total turnover includes export turnover, the meaning assigned by the legislature to the export turnover is to be respected and given effect to, while interpreting the total turnover which is inclusive of the export turnover. Therefore the formula for computation of the deduction under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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