| The Tax Publishers2020 TaxPub(DT) 0458 (SC) : (2020) 269 TAXMAN 0003 INCOME TAX ACT, 1961,
Section 261 Section 10B
Where the Department preferred SLP to appeal against the judgment of Karnataka High Court in CIT v. Mphasis Ltd. [IT Appeal Nos. 1075 of 2008 & 196 of 2009, dt. 1-8-2014] : 2019 TaxPub(DT) 0939 (Karn-HC), whereby the High Court held that as the assessee was engaged in the business of export out of India of computer software and its transmission to places outside India, wherein software engineers of assessee were deputed abroad to do testing, installation, etc., though the said services were technical in nature, it does not fall within clause (ii) of sub-section (1) of section 80HHE. It falls under sub-clause (i) of sub-section (1) of section 80HHE and thus, the expenditure incurred by assessee could not be excluded in computing export turnover for the purpose of computation of deduction under section 10B and that 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 services outside India. Thus, if the export turnover in the numerator was 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, the Supreme Court dismissed the SLP.
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Appeal (Supreme Court) - Special leave petition - Computation of total turnover - Treatment of Telecommunication expenses
Department preferred SLP to appeal against the judgment of Karnataka High Court in CIT v. Mphasis Ltd. [IT Appeal Nos. 1075 of 2008 & 196 of 2009, dt. 1-8-2014] : 2019 TaxPub(DT) 0939 (Karn-HC), whereby the High Court held that as the assessee was engaged in the business of export out of India of computer software and its transmission to places outside India, wherein software engineers of assessee were deputed abroad to do testing, installation, etc., though the said services were technical in nature, it does not fall within clause (ii) of sub-section (1) of section 80HHE. It falls under sub-clause (i) of sub-section (1) of section 80HHE and thus, the expenditure incurred by assessee could not be excluded in computing export turnover for the purpose of computation of deduction under section 10B and that 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 services outside India. Thus, if the export turnover in the numerator was 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. Held: Counsel appearing for both parties were in agreement that SLP(C) No. 2373/2015 preferred by the Revenue in respect of connected ITA No. 196 of 2009 : 2019 TaxPub(DT) 0939 (Karn-HC) which was disposed of by the very same common Order, dated 1-8-2014, was dismissed by this Court on 28-1-2019 having taken note of similar grounds raised in the special leave petition, hence taking note of the fact that in respect of common judgment this Court has already dismissed SLP(C) No. 2373 of 2015 relating to the assessment year 2004-05 and in the present case except that issue relates to assessment year 2003-04 all other aspects are on the very same point. The court was not inclined to entertain the instant petition. Accordingly, SLP was dismissed
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