2011 (11) TMI 687 - HC - Income Tax

Summary

Issues involved: Interpretation of Section 10A of the Income Tax Act, 1961 regarding the treatment of expenditure in computing relief under the section.

The High Court of Karnataka considered the question of whether the Tribunal was correct in holding that the expenditure incurred by the assessee should not form part of the total turnover when computing relief under Section 10A of the Income Tax Act, 1961, and should be excluded from the total turnover if reduced from export turnover. The Court referred to a previous case and emphasized the need for uniformity in the ingredients of the formula for calculating export profits under Section 10A. It highlighted that the export turnover should be excluded from the total turnover in both the numerator and the denominator of the formula to align with the legislative intent of promoting exports and providing incentives. The Court concluded that the interpretation of the formula for computation of the deduction under Section 10A should exclude the expenditure from the total turnover, as it is inclusive of the export turnover. Therefore, the appeal was dismissed, and the substantial question of law was answered in favor of the assessee and against the revenue.