2012 (5) TMI 282 - HC - Income Tax

Deduction u/s 10A - Reduction of expenditure incurred towards communications expenses as well as travelling, boarding and conveyance expenses from the total turnover while computing deductions under Section 10A of the Act. - held that - no error committed by the Tribunal in following the judgments rendered in the context of Section 80HHC in interpreting Section 10-A when the principle underlying both these provisions is one and the same. Therefore, we do not see any merit in these appeals. The substantial question of law framed is answered in favour of the assessee and against the revenue.

Summary

Issues:
Interpretation of deductions under Section 10A of the Act for communication and travel expenses.

Analysis:
The High Court considered an appeal by the revenue challenging the Tribunal's decision on reducing communication and travel expenses from total turnover for computing deductions under Section 10A of the Act. The Court referred to a previous case involving similar issues and held that there should be uniformity in the formula for computing deductions under Section 10A to avoid anomalies. Section 10A aims to provide incentives for promoting exports by exempting profits related to exports. The Court emphasized the importance of apportioning profits based on turnovers in cases of combined export and domestic businesses. It highlighted that the components of export turnover in the numerator and denominator of the formula should be the same, meaning that expenses excluded from the numerator should also be excluded from the denominator. The Court stressed that the interpretation of 'total turnover' should align with the context and legislative intent, respecting the meaning assigned to export turnover. Ultimately, the Court found no error in the Tribunal's decision, citing similarities between Section 10A and Section 80HHC, and ruled in favor of the assessee, dismissing the revenue's appeal.

In conclusion, the High Court determined that no substantial question of law arose in the appeal, leading to the dismissal of the case. The judgment emphasized the need for consistency in interpreting provisions related to deductions under Section 10A to ensure fairness and adherence to legislative intent in promoting export businesses.