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| The Tax Publishers2021 TaxPub(DT) 1191 (Mad-HC) INCOME TAX ACT, 1961
Section 10A
If the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing export turnover as a component of total turnover in denominator.
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Deduction under section 10A - Computation of total turnover - Exclusion of telecommunication charges as well as expenses incurred in foreign currency from export turnover - Exclusion of same from total turnover
Assessee claimed deduction under section 10A and excluded telecommunication charges from total turnover as well as the expenses incurred in foreign currency while computing deduction under section 10A. For the assessment year 2005-06, software expenses have also been claimed as revenue expenditure. AO, while making the adjustments, relied on Explanation 2(iv) wherein, it was provided that export turnover would not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things where computer software outside India or expenses. AO pointed out that words in a taxing statute had to be construed in the same way in which they are understood in common parlance. Assessee contended that meaning given to the term 'total turnover' in section 80HHE would be applicable to section 10A also. AO rejected the contention of assessee and computed the deduction under section 10A making the adjustments. Held: When the statute prescribes a formula and in the said formula, 'export turnover' is defined, and when the 'total turnover' includes export turnover, the very same meaning given to the export turnover by the legislature is to be adopted while understanding the meaning of the total turnover, when the total turnover includes export turnover. If the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator.
Followed:CIT v. Tata Elxsi Ltd. [2012] 17 Taxmann.com 100/204 Taxman 321 (Karn-HC) : (2012) 349 ITR 98 (Karn-HC) : 2011 TaxPub(DT) 1960 (Karn-HC), Tax Case (Appeal) Nos.312 & 385 of 2011 : 2020 TaxPub(DT) 1471 (Mad-HC) [The Commissioner of Income Tax, Chennai v. Zylog Systems Limited] and S. Mphasis Ltd. [Formerly Known as Mphasis as Mphasis BFL Ltd.] [Special Leave to Appeal (C) No.2373/2015, dt. 28-1-2019].
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2005-2006
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