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TMI Blog2015 (10) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... cally stating it separately. By these gimmicks of the assessee, the provisions of the income-tax Act cannot be treated differently in both the situations. Therefore, we agree with the view of the Ld. Assessing Officer that the expenses incurred by the assessee towards delivery of computer software outside India has to be excluded from the export turnover, though it is not separately stated in the invoice. However, we also hereby hold by relying on the decision of Special Bench of the Tribunal in ITO Vs. Sak Soft Ltd., reported in (2009 (3) TMI 243 - ITAT MADRAS-D) that what is excluded from the export turnover has to be also deducted from the total turnover while computing deduction U/s.10A of the Act. Accordingly, we agree with the alternative prayer made by the Ld. A.R. Disallowance of the contribution made to unapproved Gratuity Fund (A.Y 2006-07) - Held that:- Direction of AO to allow the deduction for the payment to LIC on account of Gratuity Fund u/s.37 of the Act is appropriate as the payment made to the Gratuity Fund maintained with LIC where the appellant has no control over the irrevocable trust created exclusively for the benefit of the employees deduction shall be al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fund was eventually approved. For A.Y 2006-07 2.2.1 The Ld. CIT(A) had erred in deleting the disallowance of the contribution made to unapproved Gratuity Fund to the tune ₹ 87,83,824/- by holding that the fund was eventually approved. For A.Y 2007-08 2.3.1 The Ld. CIT(A) had erred in deleting the addition made by the Ld. A.O which has resulted due to the exclusion of ₹ 6,75,61,477/- (being 50% of expenses incurred on leased lines communication which is treated as expenses incurred for delivery of computer software outside India) from the export turnover by the Ld. Assessing Officer for the purpose of computing deduction U/s.10A of the Act. 2.3 Cross Objections The cross Objections raised by the assessee for all the three assessment years are concised herein below for adjudication. 2.3.1 Identical Cross Objections for all the three assessment years The Ld. CIT(A) had erred in disallowing the 1/3rd of expenditure incurred towards mediclaim for dependent family members of employees. 2.3.2 Additional ground for the assessment year 2007-08 The Ld. CIT(A) erred in upholding the order of the Ld. Assessing Officer who had excluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion that section 1 0A does not provide for excluding the expenses incurred in foreign exchange from the total turnover. Whenever, a term is not defined in the section, only its plain meaning should be considered. A plain meaning of total turnover does not exclude the expenses irrespective of whether such expenses were incurred in Indian currency or in foreign exchange. If the intention of the legislature was what the assesses wants to plead, then, there was necessity of defining Export Turnover , because both will always be equal except to the extent of domestic receipts. If that was so then the definition of export turnover have been something like this: Export turnover will mean total turnover of the business less the domestic turnover. Nothing more. Based on the above facts and circumstances of the case, it is clear that the of export turnover is different from total turnover. The legislature intentionally has not defined the total turnover in the Section I0A of the Income Tax Act. Hence, the assessee s contention of reduction of telecommunication expenses from both export turnover and total turnover is not accepted and the deduction u/s I OA will be cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export invoice raised. It is only a method of raising the invoice followed by the assessee i.e., either to include such expenses in the invoice on adhoc basis or by specifically stating it separately. By these gimmicks of the assessee, the provisions of the income-tax Act cannot be treated differently in both the situations. Therefore, we agree with the view of the Ld. Assessing Officer that the expenses incurred by the assessee towards delivery of computer software outside India has to be excluded from the export turnover, though it is not separately stated in the invoice. However, we also hereby hold by relying on the decision of Special Bench of the Tribunal in ITO Vs. Sak Soft Ltd., reported in 313 ITR (AT) 353 (Chennai)(SB) that what is excluded from the export turnover has to be also deducted from the total turnover while computing deduction U/s.10A of the Act. Accordingly, we agree with the alternative prayer made by the Ld. A.R. 5.1 Ground No.2 - Disallowance of the contribution made to unapproved Gratuity Fund (A.Y 2006-07) During the course of assessment proceedings the Ld. Assessing Officer observed that the assessee had paid ₹ 32,08,009/- to LIC towards unap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gor which will only supplement to the prudent management of the human resources in the organization to increase productivity and profit. Hence, these expenses are directly attributable to the income earned by the assessee company. Therefore we are of the view that the claim of the assessee is justified for granting deduction for these expenses incurred by the assessee. Thus this issue is decided in favour of the assessee. 7.1. Ground No.2 - The Ld. CIT(A) erred in upholding the order of the Ld. Assessing Officer who had excluded foreign travel expenses of ₹ 7,12,303/- from the export turnover for the purpose of computing deduction U/s.10A of the Act, thought the same was not forming part of the export invoice and also failed to deduct the same from the total turnover.(A.Y 2007-08) At the outset, this issue raised by the assessee is identical to the ground raised by the Revenue in ground No.1 Accordingly as held by us while addressing that ground, we hereby hold that the foreign travel expenses of ₹ 7,12,303/- though the same is not separately claimed in the export invoice, shall be deducted from the export turnover as well from the total turnover as held by the Sp ..... 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