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TMI Blog2014 (1) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... with law and he is justified in directing the AO to exclude the expenses both from the export turnover as well as from the total turnover while calculating deduction u/s 10A of the Act – Decided against Revenue. - ITA No.1167/Bang/2012 - - - Dated:- 24-5-2013 - Shri N. V. Vasudevan And Shri Jason P Boaz,JJ. For the Appellant : Smt. Susan Thomas Jose, JCIT For the Respondent : Shri K. R. Vasudevan, Advocate ORDER Per Jason P Boaz :- This appeal by the revenue is directed against the order of the CIT(A)-III, Bangalore dated 19/6/2012 for the assessment year 2008- 2009. 2. The facts of the case in brief are as under:- 2.1 The assessee, a company, in business of manufacture and sale of connectors, filed its return of income for the assessment year 2008-09 declaring an income of Rs.14,86,91,468/-. The return was processed under section 143(1) of the Income Tax Act, 1961 ('the Act' in short) and the case was subsequently taken up for scrutiny. After examination, the assessment was completed by an order under section 143(3) of the Act dated 30/12/2011 in which the income of the assessee was determined at Rs.14,97,71,478/-. This was due to the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure and therefore, no adjudication is called for thereon. 5.1 In the grounds raised at S.Nos.2 and 3, revenue contends that the learned CIT(Appeals) erred in directing the Assessing Officer to recompute the allowable deduction under section 10A of the Act after reducing the travel expenses of Rs.18,19,524/- incurred in foreign currency both from export turnover and total turnover following the decision of the Hon'ble High Court of Karnataka in the case of CIT v Tata Elxsi Ltd. and others (2011) 247 CTR 334. The learned Departmental Representative supported the order of the Assessing Officer and sought reversal of the finding of the learned CIT (Appeals) on this issue. 5.2 The learned Authorized Representative supported the finding of the learned CIT (Appeals) in directing the Assessing Officer to recompute the deduction under section 10A of the Act by reducing the travel expenses incurred in foreign currency from both the export turnover as well as the total turnover. The learned Authorised Representative submitted that this issue as held by the learned CIT (Appeals) is squarely covered in favour of the assessee by the decision of the Hon'ble jurisdictional High Court of Karnat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit is to be derived from the total business income of the assessee, whereas in section 10-A, the export profit is to be derived from the total business of the undertaking. Even in the case of business of an undertaking, it may include export business and domestic business, in other words, export turnover and domestic turnover. To the extent of export turnover, there would be a commonality between the numerator and the denominator of the formula. If the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The components of the export turnover in the numerator and the denominator cannot be different. Therefore, though there is no definition of the term 'total turnover' in section 10A, there is nothing in the said section to mandate that, what is excluded from the numerator that is export turnover would nevertheless form part of the denominator. When the statute prescribed a formula and in the said formula, 'export turnover' is defined, and when the 'total turnover' includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be excluded in computing export turnover, a similar exclusion has not been provided in regard to total turnover. The submission of the revenue, however, misses the point that the expression "total turnover" has not been defined at all by Parliament for the purposes of s.10A. However, the expression "export turnover" 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 formula. The submission of the Revenue would lead to a situation where freight and insurance, though these have been specifically exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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