TMI Blog2021 (6) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... f the agreement between the Assessee and Robert Bosch, Germany titled software project agreement (SPA) has been filed before us. We do not know as to whether the entire export turnover is in relation to this client alone or there were other clients for whom the Assessee rendered computer software development services. A perusal of the SPA filed before us shows that the Assessee agreed to carry out software development work for Robert Bosch Germany at Germany also. The terms of the agreement for rendering services on-site at clauses-5.2 to 5.2.6 of the agreement does not involve rendering of any technical services. The question as to whether the entire expenditure incurred in foreign exchange outside India relates to providing technical services outside India cannot be decided in the absence of the required information as stated above. If the claim of the Assessee that the entire expenditure incurred in foreign exchange outside India does not relate to providing technical services outside India, then the same cannot be excluded from the export turnover. Whether the amount deducted from export turnover is also required to be deducted from total turnover or not? - Since this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusively in software development services. 3. Having regard to the facts, the Learned CIT(A) erred in holding that the Appellant is also involved in the business of rendering of technical services. 4. Without prejudice to the above, the Learned CIT(A) while coming to the conclusion that the Appellant is also involved in rendering technical services has not specifically mentioned which part of the services would constitute technical service under the Agreement. 5. Without prejudice the above, both the Learned CIT(A) as well as the Learned AO have erroneously stated that the Appellant has excluded foreign currency expenses from its export turnover while computing deduction under section 10A of the Income-tax Act, 1961 ['the Act']. 6. That the Learned CIT(A) erred in not adjudicating the Ground No.4 raised by the Appellant that expenditure in foreign currency and Telecommunication charges, when reduced from export turnover, ought to be reduced from Total Turnover as well. 7. That the Learned CIT(A) erred in not direct5ing the AO to grant deduction u/s 10A in respect of export proceeds realized beyond 6 months from end of previous yer as contemplate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that the provisions of section 10A of the Act provide for a period of 6 months only for receiving the sale consideration. Accordingly, he held that the unrealized sale consideration of ₹ 5,30,985/- is required to be excluded from the amount of export turnover , while computing deduction u/s 10A of the Act. Accordingly, the A.O. allowed deduction of ₹ 183.70 crores only u/s 10A of the Act, as against the claim of ₹ 233.05 crores. 6. Before Ld. CIT(A), the assessee contended that the definition of export turnover given in sec.10A of the Act provides for reduction of freight, telecommunication charges and insurance attributable to delivery of articles or things or computer software outside India. The said definition provides for reduction of expenses if any, incurred in foreign exchange only in respect of proceeds received on providing technical services outside India . The assessee submitted that it is engaged in the business of development of software only and it did not provide any technical service outside India. Accordingly, it objected to exclusion of expenditure in foreign currency from the amount of export turnover . We noticed that the AO did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered by Hon ble Karnataka High Court as well as Hon ble Supreme Court. 9. The Ld. D.R., on the contrary, supported the order passed by Ld. CIT(A). 10. We heard the parties on this issue and perused the record. We notice that the issue whether the expenditure incurred in foreign currency is required to be excluded from the export turnover or not when the assessee is exporting only software, was examined by the coordinate bench in the assessee s own case in assessment year 2007-08 and the matter was restored to the file of the Ld. CIT(A) with the following observations: 16. We have considered the rival submissions. It is clear from the decision of the Hyderabad Bench of the ITAT that to exclude expenses incurred in foreign currency from the export turnover, the assessee should have obtained the benefit of section 10A on income from rendering technical services outside India. The admitted factual position in the present case is that the assessee is in the business of exporting computer software and therefore the expenses incurred in foreign exchange cannot be said to be one incurred by the assessee in connection with providing technical services outside India. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted from total turnover or not. Since this issue is related to computation of deduction u/s 10A, this issue also restored to the file of the Ld. CIT(A) with the direction to follow the decision rendered by Hon ble Karnataka High Court in the case of Tata Elixi Ltd., and also decision rendered by Hon ble Supreme Court in the case of HCL Technologies Ltd. 13. The next issue relates to deduction of unrealized amount of ₹ 5,30,985/- from the export proceeds, while computing deduction u/s 10A of the Act, on the ground that the same has not been realised within a period of 6 months. In this regard, the Ld. A.R. invited our attention to Master Circular No.9/2008-09 dated 1st July, 2008 issued by RBI. The Ld. A.R. submitted that the RBI has granted general permission to realize the export proceeds within a period of 12 months from the date of export on or after 1st September, 2004. We notice that the Ld. CIT(A) has not adjudicated this aspect. Accordingly, we restore this issue also to his file for examining the same afresh by considering the circular issued by RBI. 14. The Additional ground raised by the assessee relate to claim of foreign tax credit of ₹ 1.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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