Section 10-A export turnover computation excludes delivery-related freight, telecommunication, insurance and foreign currency expenses.

While computing deduction under Section 10-A of the Income-tax Act, communication expenses, freight, insurance, telecommunication expenses and foreign currency expenses attributable to delivery of software or technical services outside India are to be excluded from export turnover. The same items are not part of export turnover because they relate to delivery outside India, and the computation must follow the earlier Karnataka High Court position on Section 10-A. On that basis, the Tribunal's view was held consistent with the settled legal position, and the issue was answered in favour of the assessee and against the Revenue.

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Issues: Whether, while computing deduction under Section 10-A of the Income-tax Act, 1961, communication expenses, freight, insurance, telecommunication expenses and expenses incurred in foreign currency are to be excluded from total turnover and correspondingly reduced from export turnover.

Analysis: The issue was answered by applying the earlier decision of the same Court on the computation of export turnover under Section 10-A. The expenses attributable to delivery of articles or software outside India, including freight, telecommunication charges, insurance and foreign currency expenses incurred in providing technical services outside India, were held not to form part of export turnover. The Tribunal's view was found to be in conformity with that declared position of law.

Conclusion: The question was answered in favour of the assessee and against the Revenue.

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