TMI Blog2020 (9) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. - Decided in favour of assessee. Amortization of capital expenditure - Tribunal was right in restoring the issue with regard to amortization of capital expenditure to the file of the assessing officer for fresh adjudication in the light of the Special Bench decision in the assessee's own case when the issue of disallowance of amortised business acquisition expenses has not been dealt in the Special Bench decision? - HELD THAT:- Question No.2 remit back to the learned Tribunal for deciding the issue once again on merits and in accordance with law after giving opportunity to both the sides. - T.C.A. Nos. 134 and 135 of 2012 - - - Dated:- 16-9-2020 - THE HON'BLE DR.JUSTICE VINEET KOTHARI And THE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY For the Appellant : Mr.M.Swaminathan Senior Standing Counsel For the Respondent : Mr.S.Gopalakrishnan JUDGMENT ( Judgment of the Court was delivered by DR. VINEET KOTHARI , J ) These two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee submitted that question No.1 may be decided in favour of the Assessee while the question No.2 may be remitted back to the learned Tribunal for deciding the issue afresh. 5. We have heard both the learned counsels. The relevant portion of the order passed in the case of the Assessee on question No.1 in T.C.A.Nos.312 and 385 of 2011 dated 20.02.2020 is extracted below for ready reference. 4. The learned Tribunal decided in favour of the Assessee the question that the expenditure incurred by the Assessee in foreign currency in the foreign country where they exported computer software will be included in the '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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding technical services outside India in connection with the development or production of computer software then expenses if any incurred in foreign exchange in providing technical services outside India is liable to be deducted out of export turnover. The said provision has no application in the case of export out of India of computer software or its transmission from India to a place outside India by any means. The law makes a distinction between technical services rendered in connection with export of computer software and export of technical services for the purpose of development or production of computer software outside India. If the technical services rendered by the assessee's Engineers is in connection with the export of computer software for the purpose of testing, installation and monitoring of software such a turnover do not fall within clause (ii) of subsection (1) of section 80HHE of the Act. Such a turnover falls within sub-clause (i) of subsection (1) of Section 80HHE of the Act, that is export out of India of computer software or its transmission from India to a place outside India by any means. The expenditure incurred in the form of foreign exchange for suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended to provide incentives to promote exports. The incentive is to exempt profits relatable to exports. In the case of combined business 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 a component or part of a denominator, the other component being the domestic turnover. In other words, to the extent of export turnover, there would be a commonality between the numerator and the denominator of the formula. In view of the commonality, the understanding should also be the same. In other words, if the expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal itself has stated that the issue stands covered in favour of the Assessee by the decision of the Special Bench dated 02.11.2010 in assessee's own case. The relevant portion of the order of the Tribunal is extracted hereunder for ready reference. 6. At the time of hearing, it was found that his issue also stands covered in favour of the assessee by the decision of the Special Bench dated 2.11.2010 in assessee's own case. In this regard, we reproduce herein below relevant Para Nos.20 21 of the above order: 20. There is no dispute about the fact that the assessee is a company engaged in business of development of software both by way of on site development and off shore development and also that it has branch in USA for which separate accounts were maintained. There is also no dispute about the fact that there is approval of the authorized dealer namely Central Bank of India, Chennai for opening the overseas branch at New Jersy, USA. 21. Now we are called upon to adjudicate whether the Assessing Officer and the learned CIT (A) were right in excluding from the export turnover ₹ 3,33,46,592/- incurred by the assessee outside India in foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X
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