2017 (2) TMI 1186

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....nt Year 2005-06 2. The assessee has raised following grounds of appeal:- "1 Ld. CIT (A) erred in law and on facts in confirming recomputation by AO of exempted profit u/s 10B of the Act. Both the lower authorities erred in not appreciating submissions that carriage, insurance & freight on goods sold on the facts of the case ought not to have been excluded from export turnover. The order Id. CIT (A) confirming exclusion of export freight from export turnover for computing exempted profit u/s 10B of the Act deserves to be set aside. It be so held now. 2 Ld. CIT (A) erred in law and on facts in confirming action of AO in not accepting alternate contention of the appellant that on principle of parity export freight if excluded from export ....

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....hereafter, the assessee filed appeal before theLd. CIT(A) against the order of assessing officer regarding re-computation of exempted profit u/s. 10B(4) of the act by making reduction of export freight of Rs. 1,29,44,675/- from export turn-over. The ld. CIT(A) has dismissed the appeal of the assessee by observing as under:- "6.11 Thus, as per explanation 2(iii) below section 10B export turnover means the consideration in respect of the export by the undertaking of articles or things or computer software received or brought into India in convertible foreign exchange, but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India. In view of this ....

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....puting exempted profit u/s. 10B of the act. In this connection, she relied on the order of the hon'ble high court of Karnataka (2010) 17 taxmann.com 100 (Karnataka) in the case of CIT vs. Tata Elexi Ltd. On the other hand the ld. departmental representative supported the order of ld. CIT(A). 5. After hearing both sides and perusal of material on record, we find that on identical issue hon'ble high court of Karnataka in the CIT vs. Tata Elexi Ltd supra held that while computing deduction u/s. 10A if export turnover numerator is to be arrived at after excluding certain expenses, such expenses are also to be excluded in computing export turnover as a component of total turnover in denominator. After perusal of the findings of hon'ble high cou....

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....between the numerator and the denominator of the formula. In view of the commonality, the understanding should also be the same. In other words, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The components of the export turnover in the numerator and the denominator cannot be different. Therefore, though there is no definition of the term 'total turnover' in Section 10-A, there is nothing in the said Section to mandate that, what is excluded from the numerator that is export turnover would nevertheless form p....