INCOME TAX ACT, 1961

Section 10A

Deduction under section 10A - Computation - Interest expenses for export of software, whether deductible from total turnover also -

Assessee incurred an amount towards internet expenses for export of Software and contended before AO that as the amount was excluded from export turnover, the same should be reduced from the total turnover also. AO rejected this contention and added the same amount to the total turnover. Held: Supreme Court judgment in the case of CIT V. HCL Technologies Ltd. (2018) 93 Taxmann.com 33 (SC) : 2018 TaxPub(DT) 2138 (SC)] has held that if deductions of expenses incurred on freight, telecommunication and insurance attributable to the delivery of computer software under section 10A are allowed only in Export Turnover, but not from the Total Turnover, then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to assessee which could have never been the intention of legislature. When object of the formula was to arrive at profit from export business, expenses excluded from export turnover have to be excluded from total turnover also.

Followed:CIT v. HCL Technologies Ltd. (2018) 93 taxmann.com 33 (SC) : 2018 TaxPub(DT) 2138 (SC), CIT v. Sak Soft Ltd. [TCA. Nos.1257 & 1258 of 2009, dt. 10-1-2019], ITO v. Sak Soft Limited (2009) 121 TTJ 865 (Chen-Trib) : 2009 TaxPub(DT) 1533 (Chen-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2005-06

INCOME TAX ACT, 1961

Section 260A Section 10A

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