TaxTMI 
TaxTMI 
2019 (3) TMI 578
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....d relates to the exclusion of unrealised sale proceeds from 'total turnover' in the formula for computation of relief under section 10A of the Income Tax Act, 1961 (in short 'Act'). 3. The assessee filed a return of income returning a loss that was initially accepted under section 143(1). The assessment was taken up for scrutiny and completed under s.143(3) on 27.12.2002. A notice for reassessment was issued thereafter on the ground that income had escaped assessment. The reasons for re-assessment were two pronged, both relating to the computation of eligible deduction under section 10A. 4. The assessee had included two amounts, Rs. 16,50,75,000/- being sales effected to one M/s.AI Yusuff and Rs. 2,89,96,894/- being sales ....
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....ng that unrealised sale proceeds in foreign exchange within the prescribed period amounting to Rs. 2,89,96,894/- had to be included in the total turnover while computing the deduction under Section 10A of the I.T. Act?' 8. Section 10A of the Act is a special provision enacted to provide for a deduction in respect of income derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins the eligible activity. 9. In the present case, the eligibility of the assessee to this relief is not disputed. The mode of computation of the relief is set out in terms of subsection (4) o....
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....s intended to provide a benefit only for those engaged in the activity of export and gaining foreign exchange. 13. He points out that the very object of the section is to improve foreign exchange inflows into the Country and thus in a situation where an assessee is unable to bring into the Country foreign exchange by way of export turnover, such non-realisation should not only stand excluded from the numerator, but also be deemed to be part of turnover and included in the denominator, i.e. total turnover of the company. 14. He relies on two decisions of this Court in the case of Galaxy Granites (P) Ltd. V. Commissioner of Income-tax ((2012) 27 taxmann.com) 31 (Mad) which relates to computation of deduction under Section 80 HHC of the Act ....
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....lly received' would also stand included within the ambit of denominator i.e, 'total turnover'. 17. This position hinges on the scheme of deduction under section 80HHC, which is specific to the provisions set out therein. The provisions of section 10B do not contain a definition of 'total turnover' and therefore the interpretation of the Court in the context of section 80HHC would not advance the case of the Revenue as far as the scheme of section 10A or 10B is concerned. 18. In the case of Pentasoft (supra), the Bench decided the claim for exclusion of unrealised sales proceeds against the assessee since no such claim had been made at the time of assessment, and the assessee therein had raised the claim only by way of ....
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....9;export turnover', such as freight, telecommunication charges or insurance as provided for in the definition would also stand reduced from 'total turnover' was the subject matter of consideration by the Supreme Court in the case of CIT V. HCL Technologies [2018] (404 ITR 719) and the issue was held in favour of the assessee. The conclusion of the Bench was to the effect that items excluded/reduced from the numerator would stand excluded/reduced from the denominator as well. Paragraphs 18 to 21 of the judgement are relevant and are extracted below: '18) Accordingly, the formula for computation of the deduction under Section10A of the Act would be as follows: Export turnover as defined in Explanation 2 (IV)....
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....s to distinguish the above judgment stating that the rationale thereof would be applicable only to the items of exclusion at issue before the Supreme Court and cannot be extended to the question of unrealised sale proceeds, which is the issue in the present case. 23. We see no valid distinction as sought to be pointed out before us. The components of the total turnover/denominator in the formula would be the quantum of export turnover/numerator plus proceeds from domestic sales. Thus what is 'export turnover' for the purpose of the numerator would have to be the 'export turnover' for the purpose of denominator as well and 'export turnover' cannot assume two different characteristics for two parts of the same formul....