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TMI Blog2012 (5) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of deduction u/s 10A of the I T Act, 1961. 3. Briefly stated the facts are as follows:- The assessee is a Company. It is engaged in the business of information technology services. For the concerned asst. year, return of income was filed on 28th November, 2006 declaring a total income of Rs.6,74,61,729/- after claiming deduction u/s 10A of the Act. Scrutiny assessment was completed u/s 143(3) of the Act vide order dated 23/12/2009. The AO recomputed the deduction allowable u/s 10A of the Act by reducing the expenses incurred on telecommunication expenses from the export turnover. The AO, however, did not reduce the same expenditure from the total turnover while computing deduction u/s 10A of the Act. Consequent to re-co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us Jewellery India Ltd. 330 ITR 175 and the order of the Special Bench in the case of ITO v M/s Sak Soft Ltd. 313 ITR 353. 10. We have heard the rival submissions and perused the material on record. The Hon'ble Mumbai High Court in the case of Gem Plus Jewellery India Ltd. (supra), in identical circumstances, held that since the export turnover forms part of the total turnover, if an item is excluded from the export turnover, the same should also be reduced from the total turnover to maintain parity between numerator and denominator while calculating deduction u/s 10A of the Act. The relevant finding of the Hon'ble Mumbai High Court reads as follows:- "Held: The total turnover of the business carried on by the undertaking wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er" has been defined. The definition of "export turnover" excludes freight and insurance. Since export turnover has been defined by Parliament and there is a specific exclusion of freight and insurance, the expression "export turnover" cannot have a different meaning when it forms a constituent part of the total turnover for the purposes of the application of the formula. Undoubtedly, it was open to Parliament to make a provision which has been enunciated earlier must prevail as a matter of correct statutory interpretation. Any other interpretation would lead to an absurdity. If the contention of the Revenue were to be accepted, the same expression viz. 'export turnover' would have a different connotation in the application of the same form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed by the assessment u/s 10B of the Act. 10.2 In light of the above facts, the Special Bench held as under:- "For the above reasons, we hold that for the purpose of applying the formula under sub-section (4) of section 10B, the freight, telecom charges or insurance attributable to the delivery of articles or things or computer software outside India or the expenses, if any, incurred in foreign exchange in providing the technical services outside India are to be excluded both from the export turnover and from the total turnover, which are the numerator and the denominator respectively in the formula. The appeals filed by the department are thus dismissed". Although the order of Special Bench is in the context of se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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