TaxTMI 
TaxTMI 
2011 (1) TMI 1114
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....ome. During the assessment year 1999-2000 the assessee claimed benefit of Section 80HHE which entitles it for deduction of the profit earned from the export of computer software. Sub-section (3) of Section 80HHE provides that the deduction admissible on the profit on export of computer software is the amount which bears to the profit of the business as the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. Even though Explanation (d) to Section HHE specifically provide that eligible deduction of profit on export should be computed by reducing from the total profit 90% of the receipts by way of brokerage, commission, rent, charges or any other receipt of a similar nature i....
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....he Tribunal, counsel appearing for the assessee raised a contention that being a pure legal question touching upon the jurisdiction of the officer to revise assessment under Section 147, the assessee be permitted to raise this ground in the appeal filed before this court under Section 260A of the Income Tax Act. We have permitted counsel for the assessee to advance arguments on the validity of reassessment and we have heard him on this issue as well. 3. On the merits counsel for the appellant contended that the decision of the Supreme Court referred above relied on by the Tribunal is not applicable to the facts of this case because what was considered was processing charges received by cashew exporter and 90% thereof was ordered t....
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....g charges, which are part of gross total income, form an item of independent income like rent, commission, brokerage, etc., and therefore 90% of the processing charges has also to be reduced from the gross total income to arrive at the business profits." 4. While considering the issue we have to keep in mind that the deduction admissible is only the profit derived from export business. If the assessee is engaged only in export business, then the entire profit is allowable as deduction, whether it be under Section 80HHC or under Section 80HHE. However, dispute arises only when assessee is engaged in local business as well as export business and it has common profit and loss account. The whole exercise provided in the statutory prov....
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.... 80 HHE. The exclusion clause contained in Explanation (d) specifically makes it clear that income by way of consultancy charges received for consultancy services rendered in India, which has no connection export of software, is an item of income similar to other incomes like brokerage, commission and rent which are not attributable to export business. So much so, we feel the Tribunal rightly held that the decision of the Supreme Court in RAVINDRANATHAN NAIR's case referred above applies to consultancy charges received in India which is unrelated to the business of export of computer software and so much so, 90% of the income by way of consultancy charges received in India should be excluded under Explanation (d) to Section 80HHE in the com....