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2014 (10) TMI 858 - HC - Income TaxRendering technical services outside India in connection with the export of computer software - whether the Appellate Tribunal erred in confirming the order of the Assessing Authority that the marketing expenses incurred by the appellant outside India to prospect its business also form part of export turnover within the meaning of Explanation 2 to Section 10A? - Held that - This Court had an occasion to consider the substantial questions of law in the case of The Commissioner of Income Tax & another v/s. Motor Industries Co. Ltd. 2015 (7) TMI 876 - KARNATAKA HIGH COURT , wherein it was held that if the technical services rendered by the assessee s engineers is in connection with the export of computer software, such expenses cannot be excluded in computing the export turnover, as it forms part of the export turnover. Following the said judgment, in the case of the assessee itself, for the assessment year 2001-02, we have answered the said substantial questions of law in favour of the assessee and against the revenue. Computer software sales - whether such sales do not fall under the expression export turnover for the purpose of deduction under Section 10A of the Income Tax Act, 1961? - Held that - A relying on assessee s own case 2015 (10) TMI 634 - KARNATAKA HIGH COURT the issue is to be decided in favour of the assessee and against the revenue.
Issues:
1. Whether technical services rendered by the appellant outside India in connection with the export of computer software are considered part of the export turnover. 2. Whether marketing expenses incurred by the appellant outside India to prospect its business form part of the export turnover. 3. Whether computer software sales to a specific company fall under the expression 'export turnover' for the purpose of deduction under Section 10A of the Income Tax Act. 4. Applicability of a previous Tribunal order in a similar case to the appellant's situation. Analysis: 1. The High Court addressed the first, second, and fourth substantial questions of law together, as they were interconnected. Referring to a previous judgment, the Court held that if technical services are in connection with the export of computer software, such expenses cannot be excluded from the export turnover. Citing precedents, the Court ruled in favor of the appellant, stating that the technical services provided outside India do form part of the export turnover. The Tribunal's order was overturned, and the substantial questions were answered in favor of the appellant against the revenue. 2. Regarding the third substantial question of law, the Court considered a similar case involving the appellant and ruled in their favor. The Court held that the computer software sales to a specific company did fall under the expression 'export turnover' for the purpose of deduction under Section 10A of the Income Tax Act. Consequently, this substantial question was also answered in favor of the appellant against the revenue. 3. In the final order, the Court allowed the appeal, setting aside the impugned orders passed by the authorities. The appellant was deemed entitled to the benefit under Section 10A of the Income Tax Act. The judgment favored the appellant on all substantial questions of law raised in the appeal, providing a comprehensive analysis and legal reasoning for each issue, ultimately resulting in a favorable outcome for the appellant.
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