Section 10A computation requires foreign currency sales commission excluded from export turnover to be excluded from total turnover.

For section 10A computation, sales commission incurred in foreign currency for technical services outside India had to be excluded from both export turnover and total turnover. The ITAT Chennai followed the Special Bench ruling in Sak Soft Ltd., which held that an amount reduced from export turnover must also be removed from total turnover to maintain a consistent computation base. On that basis, the Commissioner (Appeals)'s direction was upheld and the Revenue's appeals failed.

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Issues: Whether sales commission incurred in foreign currency for providing technical services outside India was to be excluded from both export turnover and total turnover while computing deduction under section 10A.

Analysis: The assessee's claim was supported by the Special Bench decision in Sak Soft Ltd., which held that amounts excluded from export turnover for the purpose of section 10A computation must also be excluded from total turnover. The order of the Commissioner (Appeals) had followed that view, and no infirmity was found in that approach.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Final Conclusion: The Revenue's appeals failed, and the Commissioner (Appeals)'s direction on exclusion of sales commission from both export turnover and total turnover was sustained.

Ratio Decidendi: For computation under section 10A, an amount excluded from export turnover on account of foreign currency sales commission cannot be included in total turnover.

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