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TMI Blog2015 (3) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... and insurance charges were not recovered and not included in the export turnover, the Assessing Officer shall not reduce the same from the export turnover. Further, from the submissions made before the Assessing Officer it is submitted that insurance charges were paid to protect the assessee against the risk of bankruptcy of the overseas customers and it was not incurred for the purpose of export of computer software. The Assessing Officer is directed to verify this aspect and reduce the insurance charges only if the said expenditure is incurred for the purpose of export of computer software. - I.T.A. Nos. 398, 1074 & 1410/Bang/2012 - - - Dated:- 20-3-2015 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER Appellant By : Shri Sudheendra, C.A. Respondent By : Shri Farhat Hussain Qureshi, CIT (D.R) O R D E R Per Shri Jason P. Boaz : These three appeals by the assessee for Assessment Years 2006-07, 2007-08 and 2008-09 are fixed for hearing on account of one of the issues being remanded to the Tribunal for reconsideration. 2. The Hon'ble High Court of Karnataka vide its judgement dt.16.9.2014 in ITA Nos.69 of 2013 (A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.1075/2008 and ITA No.196 of 2009 dt.1.8.2014 and the decision of the co-ordinate bench of this Tribunal in Softek India P. Ltd. V ITO in IT(TP)A No.222/Bang/2014 dt.31.10.2014 wherein following the decision of the Hon'ble High Court of Karnataka in ITA No.776/2007 dt.13.6.2014, it was held that expenses incurred in foreign currency should not be reduced from export turnover while computing the deduction under Section 10A of the Act. 4. The learned Departmental Representative filed written submissions and was heard in the matter. The learned Departmental Representative contended that the decision of the Hon'ble High Court of Karnataka in the assessee's own case (supra) has not been accepted by the Department and on SLP had been filed before the Hon'ble Apex Court. In the written submissions filed it was contended that the delivery of computer software of the nature provided by the assessee company is definitely methodological, mechanical, practical, procedural, scientific and technological which cannot be provided by any layman without special training for doing so and therefore providing services relating to software development and consultancy fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the learned CIT(A) it is clear that the assessee who is engaged in the business of development of software has deputed it s personal abroad for providing software development services and incurred various expenses in foreign currency for the purpose of development of software. On similar facts, the Hon'ble High Court of Karnataka in the case of Motor Industries Co. Ltd. (supra), considering the definition of export turnover under Section 80HHE of the Act has held as under at para 19 of its order : 19. If the assessee is engaged in the business of providing technical services outside 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Mphasis Ltd. (supra) and it was held that even for the purposes of section 10B of the Act, expenses incurred in foreign currency should be reduced from export turnover. The decision in Motor Industries Co. Ltd. (supra) case was followed by the Hon'ble High Court of Karnataka in the assessee's own case for Assessment Years 2001-02 to 2004-05 vide orders dt.16.9.2014 and 20.10.2014 (cited supra) and it was held therein that expenses incurred in foreign currency should not be reduced from export turnover for the purposes of computing deduction under Section 10A of the Act. The co-ordinate bench of this Tribunal in the case of Softech India Pvt. Ltd. V ITO in IT(TP)A No.222/Bang/2014 dt.31.10.2014 , following the above decisions held that travelling expenses incurred in foreign currency should not be reduced from export turnover for the purpose of computing the deduction under Section 10A of the Act. 5.5 Respectfully following the decision of the Hon'ble High Court of Karnataka in the assessee's own case for Assessment Years 2001-02 to 2004-05 (supra), we hold that expenses incurred in foreign currency should not be reduced from export turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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