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TMI Blog2014 (3) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... firm engaged in the business of software development services. It declared total income of Rs.47,89,370/- after claiming deduction under section 10A amounting to Rs.35,89,81,654/-. While calculating deduction under section 10A, the A.O. excluded export receipts- not received within six months of Rs.70,03,197/-. In addition Insurance charges of Rs.21,54,790/- and Communication charges of Rs.85,04,860/- were also excluded. Thus, the total amount excluded from the export turnover was Rs.1,76,62,847/-. However, A.O. did not exclude the same from the total turnover thereby, reducing the claim of deduction under section 10A to Rs.35,46,08,590/-. 3.1. The assessee contended the same before the learned CIT(A) and relied on various cases. Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusion of export proceeds not received within six months whereas, learned D.R. objected to stating that communication charges and insurance charges are specifically excluded by the definition whereas, total turnover was not defined in the Act under the provisions of Section 10A. Therefore, the same is not applicable to the export proceeds not received. 5. In reply, learned Counsel relied on the decision of Hon'ble High Court of Kerala in the case of CIT vs. Abad Fisharies 125 Taxman 616 given in the context of section 80HHC and also the decision of Hon'ble Bombay High Court in the case of CIT vs. Gem Plus Jewellery India Ltd. 194 Taxman 192 in the context of section 10A that export turnover numerator must have same meaning as export tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as sale proceeds. While considering a similar provision in sec. 80HHC of the Income-tax Act, the Apex Court, in the case of CIT v. Lakshmi Machine Works (2007) 290 ITR 667, found that for the purpose of inclusion in the profit the receipt should have an element of turnover and profit. Even though the Apex Court considered the inclusion of soles lax and excise duly in the total turnover, the principle laid down in that case would equally be applicable to the present case. Furthermore, whatever is not included in the export turnover cannot form part of total turnover also. The expenditure which was excluded by the Assessing Officer while computing the "export turnover" does not have the element of turnover. Therefore, the same cannot be inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking." 5. Under sub-s. (4) the proportion between the export turnover in respect of the articles or things, or as the case may be, computer software exported, to the total turnover of the business carried over by the undertaking is applied to the profits of the business of the undertaking in computing the profits derived from export. In other words, the profits of the business of the undertaking are multiplied by the export turnover in respect of the articles, things or, as the case may be, computer software and divided by the total turnover of the business c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance charges. 7. The submission which has been urged on behalf of the Revenue is that while freight and insurance charges are liable 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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