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Issues involved: Appeal against order of Income-tax Appellate Tribunal regarding deduction under section 10B for assessment year 200001 in a case involving export of computer software.
Summary: The High Court of Madras dismissed the appeal filed by the Revenue against the order of the Income-tax Appellate Tribunal. The case revolved around the interpretation of deduction under section 10B for an assessee engaged in the business of exporting computer software. The Assessing Officer had initially included domestic turnover in export turnover for computation of deduction under section 10B. However, the Commissioner revised the order under section 263, leading to a reduction in the benefit of deduction under section 10B. The Tribunal, on appeal by the assessee, ruled in favor of the assessee stating that domestic turnover should be considered as part of export turnover for the purpose of the deduction under section 10B. The Revenue raised two substantial questions of law in the appeal: 1. Whether the Tribunal was correct in considering domestic turnover as part of export turnover for deduction under section 10B. 2. Whether the Tribunal was justified in relying on the second proviso to section 10B(1) for deciding the issue related to export turnover. The Tribunal's order highlighted that the domestic turnover did not exceed 25 per cent of the total sales, meeting the requirements specified in the second proviso to section 10B(1). This provision stated that profits from domestic sales not exceeding 25 per cent of total sales would be deemed as profits from export. The High Court, based on this finding, concluded that there was no substantial question of law to be considered and hence dismissed the appeal. In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of meeting the specified criteria under section 10B for claiming deductions related to export turnover in the case of computer software exports.
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