TaxTMI 
TaxTMI 
2011 (8) TMI 723
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.... be acceptable. Delay is condoned. 3. In the appeal filed by the Revenue, there are five grounds out of which, 1 and 5 are general needing no adjudication. Vide its ground No.2, Revenue's grievance is that ld. CIT (Appeals) held gain on account of exchange fluctuation in respect of amounts transferred from EEFC account to Indian Rupee account to be eligible for deduction under Section 10B of Income-tax Act, 1961 (in short "the Act"). 4. Short facts apropos are that assessee engaged in the business of export of computer software, had included as part of its business income, Foreign Exchange Realization Gain. From the details furnished by the assessee, Assessing Officer noted that some such gains arose on account of transfer of accumulated foreign exchange in EEFC account to Indian Rupee account. As per the A.O., this was different from a gain arising out of fluctuation in foreign exchange on account of difference in rates as on the date of invoice and as on the date of realization of export proceeds. He held an opinion that gain arising to the assessee on account of exchange rate difference at the point of time of transfer of amounts held in EEFC account to Indian Rupee accoun....
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....e orders and heard the rival contentions. Deduction under Section 10B of the Act, as per sub-section (1) thereof, is on the profits and gains derived by a 100% export oriented undertaking from the export of articles or things or computer software. If we have a look at Section 80HHC of the Act, sub-section (1) thereof clearly mentions that deduction thereunder is available only on the profits derived by the assessee from export of goods or merchandise. So, both the Sections 10B and 80HHC of the Act specifically stipulate that the profit for being eligible for deduction, should be derived from the export. In this respect, there is no difference between these two sections. Hence, we cannot accept the argument of the learned A.R. that the decision of the Bombay High Court in Shah Originals case (supra) given in the context of Section 80HHC would not have any applicability. It was clearly held by Hon'ble Bombay High Court in the case of Shah Originals (supra) that exchange fluctuation in EEFC account arising after completion of export activity, did not bear a proximate and direct nexus with the export transaction so as to fall within the expression "derived" by the assessee. No differen....
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....e to delivery of articles or things or computer software outside India and also expenses incurred in foreign currency for providing technical service outside India. Therefore, in his opinion, these two amounts could not be considered part of export turnover, for the purpose of calculating deduction under Section 10B of the Act. At the same time, A.O. did not exclude such amounts from total turnover for calculating such deduction. The result was that numerator in the formula applied for working out deduction under Section 10B of the Act, these amounts were excluded but not in the denominator. 11. Assailing this treatment given by the A.O., assessee moved in appeal before ld. CIT (Appeals) wherein its argument was that the telecommunication expenditure incurred for providing BPO services were never included by it in its export turnover. According to assessee, the invoices raised by it to its customers abroad did not include any telecommunication expenditure at all. Therefore, the realization on account of export proceeds never included any telecommunication expenditure incurred by the assessee. Hence, exclusion of the amount was not called for. Alternatively, it was argued by the ....
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....port turnover" as given in sub-clause (iv) of Explanation 2 to Section 10A of the Act, assessee here had claimed deduction under Section 10B, and therefore, definition of the said term as given in Section 10B will be more appropriate. Definition of "export turnover" as given in clause (iii) of Explanation 2 to Section 10B of the Act runs as under:- (iii) " 'export turnover' means the consideration in respect of export [by the undertaking] of articles or things or computer software received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section (3), but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India." As per learned A.R., the definition of "export turnover" does not mandate any reduction of telecommunication charges, but, only stipulates exclusion of such telecommunication charges. Such telecommunication charges were never part of the amounts invoiced by the assessee and hence there could be no exclusion thereof from expor....