2007 (10) TMI 630

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....the return of income a sum of Rs. 9,88,87,066 was deducted by the appellant while arriving at the figure of export turnover. In addition, the assessee has deducted a further sum of Rs. 4,13,33,000 in computing the export turnover. In the written submissions the appellant had submitted that even deducting the sum of Rs. 9,88,87,066 was not correct and appropriate relief be given.  (b)The expenditure incurred in foreign currency has been excluded only from export turnover and not from total turnover.  (c)A sum of Rs. 1,38,40,813 has been excluded from export turnover on the ground that the export proceeds have not been brought into India within the stipulated time.  (d)A sum of Rs. 350-51 lakhs has been excluded from export turnover being money received from M/s Texas Instruments (P) Ltd., on the ground that the sale is not an export sale." Aggrieved with this, assessee carried the matter before the learned CIT(A) where the action of the AO was confirmed. Still aggrieved assessee is now before this Tribunal. 3. Learned counsel for assessee submitted that the action of the AO in deducting expenditure in foreign currency while arriving at....

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....nover by the assessee should not have been done. Exclusion of part of expenditure incurred in foreign currency from the export turnover was obviously under the presumption that the assessee was involved in rendering technical services outside India. From the assessment order it transpires that the assessee was engaged in rendering technical services outside India. The AO, in his order at p. 4 had noted down the services rendered by the assessee outside India :  (a)The assessee company's business profile indicates that it is a high- technology driven company. Where overseas foreign companies are not in a position to maintain their own R&D units, they outsource the activity to the assessee company. Thus, the assessee company designs and develops software solutions specific to the requirements of the customers. This clearly is in the nature of providing technical solutions and not as export of software.  (b)The invoices raised by the assessee for all the sales clearly describes the work as either 'for providing technical services' or 'for providing software services'. No invoice is raised for sale of software.  (c)The agreements entered by t....

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....e action of the AO. It is ordered accordingly. 8. Alternatively, learned counsel for assessee had insisted for reduction of expenditure in foreign currency from the total turnover in case expenditure has to be reduced from export turnover. In our view, the alternative relief sought for by the assessee appears to be sound and proper. 9. The formula prescribed for computing the deduction under s. 10A is the same as prescribed in s. 80HHE. The formula provides for a deduction of profits from the business in the ratio of export turnover as compared to the total turnover. Sec. 10A has incorporated in entirety the philosophy of s. 80HHE. The definition of the terms 'computer software' and 'convertible foreign exchange' in s. 10A are the same as in s. 80HHE. However, from out of the three terms relevant for applying the formula, s. 10A defines only one term namely 'export turnover'. The other two terms 'profits of the business' and 'total turnover' are not defined. Since the section proceeds broadly on lines similar to s. 80HHE in the absence of the definition of any term in s. 10A, one could refer to the definition of a similar term in s. 80H....

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....at Earth Movers Ltd [2004] 188 CTR (Kar) 488 : [2004] 268 ITR 232 (Kar);  (iv) CIT v. Lakshmi Machine Works [2007] 210 CTR (SC) 1 : [2007] 290 ITR 667 (SC);  (v) CIT v. Lotus Trans Travels (P.) Ltd. [2007] 207 CTR (Del) 105 : [2007] 290 ITR 1 (Del). 11 (a ) In the case of CIT v. Sudarshan Chemicals Industries Ltd. (supra ) at p. 773 the Hon'ble Bombay High Court held as under : "Further, the meaning of export turnover in cl. ( b) of Expln. to s. 80HHC, therefore, clearly shows that export turnover did not include excise duty and sales-tax. The export turnover is the numerator in the above formula whereas the total turnover is the denominator. The above formula has been prescribed to arrive at the profits from exports. In the circumstances, the above two items, namely, sales-tax and excise duty cannot form part of the total turnover. In fact, if the denominator was to include the above two items and if the numerator excluded the above two items then the formula would become unworkable."  (emphasis, italicized in print, supplied). 11(b) In the case of CIT v. Chloride India Ltd. ( supra) at p. 630 the Hon'ble Calcutta High Cou....

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.... the AO and subsequently confirmed by the learned CIT(A). 13(a) The learned counsel for assessee submitted that this sale should be treated as deemed export. M/s Texas Instruments India Ltd., is a registered STP unit and sale to such company should be regarded as exports for the purpose of s. 10A. Sec. 10A has been introduced by the Government to encourage export sales for which Export and Import Policy has been formulated. As the sale by assessee to M/s Texas Instruments India Ltd., is regarded as an export sale under Exim Policy, the same meaning should be attached to understand the term 'export turnover' for the purpose of s. 10A also. Learned counsel for assessee also relied on the decision of the Hon'ble Supreme Court in the case of (i) Sunrise Biscuits Co Ltd. v. State of Assam 148 STC 58 (SC), Hon'ble Calcutta High Court in the case of Bourne & Shepherd v. Collector of Customs [1989] 2 CALLT 47 (Cal), Tribunal, Pune Bench in the case of Kinetic Honda Motor Ltd. v. Jt. CIT [2001] 72 TTJ (Pune) 72 : [2001] 77 ITD 393 (Pune) and Tribunal, Cochin Bench in the case of P.V. Basheer Ahammed v. ITO [1993] 44 ITD 604 (Coch). The learned counsel for assessee further....