2015 (9) TMI 169

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....d others had remanded one of the grounds of appeal raised by the assessee for fresh consideration. The ground remanded is as follows: "Whether the telecommunication expenses, insurance charges, personnel expenses, professional expenses, branch office expenses and other expenses incurred in foreign exchange should not be excluded from the export turnover for the purpose of computing deduction under section 10B of the Income Tax Act,1961?" 3. In view of the same, these appeals are re-fixed for hearing. It is the case of the assessee that the Assessing Officer(AO) and the CIT(A) had excluded the travelling expenses incurred in foreign exchange from the export turnover while computing deduction u/s 10A of the Income-tax Act, 1961 [hereinafter....

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....s this Tribunal are filed before us. As seen from the assessment order for the assessment year 2006-07, the AO has examined the details of the expenditure incurred in foreign exchange while computing deduction u/s 10A of the Act and observed that these expenses included salary payment, travelling and stay expenses of deputed employees etc. Before the AO, the assessee submitted that these expenses represent the salary payment outside India in foreign currency to the employees on deputation abroad which comes to Rs. 34,07,89,280/- while travelling expenses of the employees for being deputed abroad in providing software services comes to Rs. 2,49,87,302/-. The AO held that the services rendered by the engineers abroad would squarely fall withi....

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....sting, installation and monitoring of software such a turnover do not fall within clause (ii) of subsection (1) of section 80HHE of the Act. Such a turnover falls within sub-clause (i) of subsection (1) of section 80HHE of the Act, that is export out of India of computer software or its transmission from India to a place outside India by any means. The expenditure incurred in the form of foreign exchange for such services cannot be excluded in computing the export turnover as it forms part of the export turnover. In the instant case as is clear from the order of the Assessing Authority, he proceeds on the assumption that the assessee is a company engaged in rendering technical services outside India in connection with production of said sof....

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....075/2008 and 196/9 dated 01/08/2014 wherein the issue was the exclusion of expenditure incurred in foreign currency for providing software development services outside India for computation of deduction u/s 10B of the Act. The Hon'ble High Court has followed the decision of the coordinate bench of the Hon'ble High Court in the case of Motor Industries Co. Ltd. (cited supra) and also its own decision in the case of CIT & another vs. Tata Elxsi Ltd. reported in (2012) 349 ITR 98(Kar.) in answering the substantial question of law in favour of the assessee and further holding that if the expenditure is to be excluded from the export turnover then the same has to be excluded from the total turnover as well. Respectfully following the judgment of....