INCOME TAX ACT, 1961

Section 10B

Deduction under section 10B - 100 per cent export-oriented undertaking - Expenditure incurred in foreign exchange for providing technical services outside India, whether includible in export turnover -

Issue arose as to whether expenditure incurred in foreign exchange for providing technical services outside India could not be excluded from the export turnover for purpose of computing deduction under section 10B. Held: As decided in assessee's own case, when 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 what is excluded in computing the export turnover is included while arriving at the total turnover, when the export turnover is a component of total turnover, such an interpretation would run counter to the legislative intent and impermissible. If that were the intention of the legislature, they would have expressly stated so. If they have not chosen to expressly define what the total turnover means, then, when the 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.

Followed:CIT v. M/s. Zylog Systems Limited 2020 TaxPub(DT) 1471 (Mad-HC) 20-2-2020

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2006-07 & 2007-08

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