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TMI Blog2016 (4) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Formula will be Profits of the business of the undertaking × Export turn over / (Export turnover + domestic turn over) Total Turn Over - I.T. (T.P) A. No.392/Bang/2013 - - - Dated:- 8-3-2016 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For The Appellant : Shri G.R. Reddy, CIT-I (D.R) For The Respondent : Shri Vishnu Moorthy, C.A. ORDER Per Shri Vijay Pal Rao, J.M. : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses from the export turnover as well as total turnover. While completing the assessment, the Assessing Officer has reduced the expenses incurred in foreign currency towards tour and travel from export turnover for the purpose of computing the deduction under Section 10A of the Income Tax Act, 1961 (in short 'the Act'). On appeal, the CIT (Appeals) by following the decision of Hon'ble jurisdictional High Court in the case of CIT Vs. Tata Elxsi Ltd. 349 ITR 98 directed the Assessing Officer to exclude the said expenditure form total turnover as well. 4. We have heard the learned A.R. as well as learned D.R. and considered the relevant material on record. At the outset, we note that this issue is covered by the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e undertaking The total turnover of the business carried on by the undertaking would consist of the turnover from export and the turnover from local sales. The export turnover constitutes the numerator in the formula prescribed by sub-section (4). Export turnover also forms a constituent element of the denominator in as much as the export turnover is a part of the total turnover. The export turnover, in the numerator must have the same meaning as the export turnover which is constituent element of the total turnover in the denominator. The legislature has provided a definition of the expression export turnover in Expln.2 to s.10A which the expression is defined to mean the consideration in respect of export by the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 excluded from export turnover for the purposes of the numerator would be brought in as part of the export turnover when it forms an element of the total turnover as a denominator in the formula. A construction of a statutory provision which would lead to an absurdity must be avoided. The Special Bench of the Tribunal, in the case of ITO Vs. Sak Soft Ltd. (2009) 313 ITR (AT) 353 (Chennai) (SB) (2009-TIOL-187-ITAT-MAD-SB) also had an occasion to consider the meaning of the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he business on the basis of turnovers. Apportionment of profits on the basis of turnover was accepted as a method of arriving at export profits. In the case of section 80HHC, the export profit is to be derived from the total business income of the assessee, whereas in section 10A, the export profit is to be derived form 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. The export turnover would be a component or part of a denominator, the other component being the domestic turnover. In other words, to the extent of export turnover, there would be a commonality between the numerator and the denomin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the legislature, they would have expressly stated so. If they have not chosen to expressly define what the total turnover means, then, when the total turnover includes export turnover, themeaning assigned by the legislature to the export turnover is to be respected and given effect to, while interpreting the total turnover which is inclusive of the export turnover. Therefore the formula for computation of the deduction under section 10A, would be as under : Profits of the business of the undertaking x Export turn over (Export turnover + domestic turn over) Total Turnover 11. In that view of the matter, we do not see any error committed by the Tribunal in following the judgments rendered in the context of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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