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TMI Blog2014 (8) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... uction u/s 80HHC of the Act – Decided against Revenue. Reduction of net interest income or gross interest income – Held that:- Following the decision in Commissioner of Income Tax and Another Vs. Krone Communication Ltd. [2010 (7) TMI 631 - Karnataka High Court] - in the definition in sub-section (4C) of section 80HHC of the Income-tax Act, 1961, it is specifically mentioned that what is to be reduced in 90 per cent of any receipts by way of commission "included in such profits" - clause (baa) to the Explanation is itself based on the assumption that 10 per cent of the income would be an expense – Decided against Revenue. Deduction u/s 80HHE - Expenses in foreign currency for providing technical services outside India – Held that:- The consideration in respect of computer software received in or brought into India by the assessee in convertible foreign exchange is deducted from the profits of the business - the assessee is not liable to pay any income tax on such consideration received from export of computer software - the export turnover does not include freight, telecommunication charges or insurance attributable to the delivery of computer software outside India or expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2014) 364 ITR 144 (SC) explaining the meaning of 'turnover' and what constitutes turnover has held as under: 17. To ascertain whether the turnover would also include sale proceeds from scrap, one has to know the meaning of the term turnover . The term turnover has neither been defined in the Act nor has been explained by any of the Central Board of Direct Taxes circulars. 18. In the aforestated circumstances, one has to look at the meaning of the term turnover in ordinary accounting or commercial parlance. 19. Normally, the term turnover would show the sale effected by a business unit. It may happen that in the course of the business, in addition to the normal sales, the business unit may also sell some other things. For example, an assessee who is manufacturing and selling stainless steel utensils, in addition to steel utensils, the assessee might also sell some other things like an old air-conditioner or old furniture or something which has outlived its utility. When such things are disposed of, the question would be whether the sale proceeds of such things would be included in the turnover . Similarly, in the process of manufacturing utensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced in 90 per cent. of any receipts by way of commission included in such profits . Therefore, it is clear that is not the receipt of 90 per cent. of the entire commission, it is 90 per cent. receipt of commission included in the profits and gains of business. Ultimately, clause (baa) to the Explanation is itself based on the assumption that 10 per cent. of the income would be an expense. This guidance value is not flowing from clause (baa) but from the scheme of section 80HHC read with the Memorandum to the Finance (No.2) Bill of 1991. 5. The said view of this Court has been affirmed by the Apex Court in the case of ACG Associated Capsules Pvt. Ltd. Vs. Commissioner of Income-Tax reported in (2012) 343 ITR 89 (SC): Under clause(1) of Explanation (baa) to section 80HHC of the Act, ninety per cent of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in any such profits are to be deducted from the profits of the business as computed under the head Profits and gains of business or profession . The expression included any such profits would mean only such receipts by way of brokerage, commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utside India in connection with the development or production of computer software then expenses if any incurred in foreign exchange in providing technical services outside India is liable to be deducted out of export turnover. The said provision has no application in the case of export out of India of computer software or its transmission from India to a place outside India by any means. The law makes a distinction between technical services rendered in connection with export of computer software and export of technical services for the purpose of development or production of computer software outside India. If the technical services rendered by the assessee's Engineers is in connection with the export of computer software for the purpose of testing, installation and monitoring of software such a turnover do not fall within clause (ii) of subsection (1) of section 80HHE of the Act. Such a turnover falls within sub-clause (i) of subsection (1) of Section 80HHE of the Act, that is export out of India of computer software or its transmission from India to a place outside India by any means. The expenditure incurred in the form of foreign exchange for such services cannot be exclu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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