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TMI Blog2017 (4) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue is set aside to the record of the Assessing Officer for limited purpose of verification of the facts of double deduction of certain expenses as claimed by the assessee. Disallowance made under Section 14A - Held that:- It is apparent that as far as the interest expenditure is concerned there is a reduction in the investment during the year under consideration and therefore no interest bearing fund was used for investment during the year under consideration. Even otherwise the Assessing Officer has not given a finding that the assessee has used borrowed fund for the purpose of making investment. Further it is not dear that in which year and how much of investment was made. Therefore having regard to these facts when there is a reduction in the investment during the year under consideration then without giving the specific finding of using the borrowed fund as well as no disallowance in the year of investment on account of interest expenditure, we are of the view that the Assessing Officer is not justified in making the disallowance on account of interest expenditure under Section 14A of the Act. As regards the disallowance on account of indirect administrative expenditure there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allotment of shares. Hence we are of the view that when this money was paid by the assessee to the AE and it was very much available to the assessee for utilization for business purpose of the AE then this transaction of payment of money to the AE against which no shares were allotted till the end of the financial year relevant to the assessment year under consideration will constitute an international transaction as per the provisions of Section 92B of the Act as it has a direct bearing on the profit and loss as well as the assets of the enterprises. Further as per the Explanation to Section 92B(1) of the Act till the date of allotment it will constitute as capital financing/advance to the AE. We find substance so far as the applicability of LIBOR because the remittance has been made in foreign currency and therefore it is appropriate to apply the LIBOR rate for determining the arm's length interest. Further the computation of the interest has to be from the date of remittance till the end of the financial year. Accordingly, we direct the TPO/A.O. to recompute the arm's length interest in respect of this transaction by taking into consideration LIBOR and the period from the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for relief under section 10A: 3.1 The learned AO and the Hon'ble DRP erred in re-apportioning expenses by not considering the fact that the Appellant had apportioned common expenses incurred involving insurance, miscellaneous expenses, office expenses, printing and stationery, security charges and vehicle maintenance between STPI unit and non-STPI unit. 3.2 The learned AO and the Hon'ble DRP erred in contending that expenses pertaining to membership and subscription, corporate expenses and deduction claimed under section 35D are common expenses required to be apportioned while such expenses were not connected in anyway to STPI unit. Disallowance under section 14A, of the Act read with Rule 8D: 4. The learned AO and the Hon'ble DRP erred in law by disallowing a sum of ₹ 41,94,650/- under section 14A while computing the taxable income under the Act. More specifically the objections are as follows: 4.1 The learned AO and the Hon'ble DRP erred in rejecting the submission of the Appellant that section 14A would not be applicable in its case since it has not incurred any expenditure in relation to exempt income, 4.2 The learned AO and the Hon'ble DRP erre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection of comparable companies thereby making the arm's length price determined by the TPO for the transactions involving provision of software development services as incorrect in law. 9.2 Without prejudice to the above, the learned AO and the Hon'ble DRP erred in confirming the order of the learned TPO that involved selecting companies as comparables even though they are not comparable in respect of the factors of comparability as provided in Rule 10B i.e. functions performed, risks assumed, assets employed, capital size, companies with super normal profits etc. 10. Computation of operating margins of comparables chosen by learned TPO: 10.1 The learned AO/TPO and the Hon'ble DRP erred in not considering the amount of foreign exchange gain/loss and miscellaneous income earned by comparables for computing the operating margins. 10.2 The learned AO and the Hon'ble DRP erred in confirming the order of the TPO without considering the objection raised by the Appellant before the Hon'ble DRP pertaining to erroneous non-consideration of the provision for doubtful debts or advances as operating in nature for the purpose of computing operating margins of the compara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of interest as the SBI Prime Lending rate as per the order of the learned TPO without giving effect to the directions of the Hon'ble DRP wherein the rate of interest is directed to be considered as LIBOR adjusted for risk premium of spread rate and forex cover. 14.2 Without prejudice to the above ground, the learned AO and the Hon'ble DRP also erred in adjusting the LIBOR for risk premium of spread rate by considering the transaction equivalent to BBB rated bonds. 14.3 Without prejudice to the above grounds, the learned AO and the Hon'ble DRP also erred in enhancing the rate of interest 100 basis points as a cover for fluctuation in foreign exchange. 14.4 Without prejudice to the above grounds, the order of the learned AO, based on the directions of the Hon'ble DRP suffers from infirmities in that the Hon'ble DRP has not considered the objections raised by the Appellant with regards to the computation of interest on the aggregate amount of remittance during the year as against TPO's own order stating that the interest should be computed on monthly outstanding balances of such remittances. On the above and such other grounds as may be urged at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled as "Incomes which do not form part of the total income". It may be noted that when s. 10A was recast by the Finance Act, 2001 (sic-2000), the Parliament was aware of the character of relief given in Chapter III. Chapter III deals with incomes which do not form part of total income. If the Parliament intended that the relief under s. 10A should be by way of deduction in the normal course of computation of total income, it could have placed the same in Chapter VI-A which houses the sections like 80HHC, 80-IA, etc. The Parliament was aware of the various restricting and limiting provisions like s. 80A and s. 80AB which were in Chapter VI-A which do not appear in Chapter III. The fact that even after its recast, the relief has been retained in Chapter III indicates the intention of Parliament that it is to be regarded as an exemption and not a deduction. The Act of the Parliament in consciously retaining this section in Chapter III indicates its intention that the nature of relief continues to be an exemption. Chapter VII deals with the incomes forming part of the total income on which no income-tax is payable. These are the incomes which are exempted from charge, but a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year relevant to the assessment year immediately succeeding the last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment year, sub-s. (2) of s. 32, cl. (ii) of sub-s. (iii), s. 32A cl. (ii) of sub-s. (3) of s. 32A, cl. (ii) of sub-s. (2) of s. 33 and sub-s. (4) of s. 35 of the Act or the second proviso to cl. (ix) of sub-s. (1) of s. 36 shall not be applicable in relation to any such allowance or deduction. Similarly no loss as referred to in sub-s. (1) or in s. 72 or sub-s. (1) or sub-s. (3) of s. 74 insofar as such loss relates to the business of the undertaking was permitted to be carried forward or set off where such loss relates to any of the relevant assessment years. 21. It is in this background the Finance Act, 2003 was introduced by inserting the words "the year ending up to the first day of April, 2001", for that in cls. (1) and (2) of sub-s, (6) restricting the disallowance only up to the first day of April, 2001 and granting the benefit, of those provisions even in respect of units to which ss. 10A and 10B are applicable. The Finance Act, 2003, amended this sub-section with retrospective effect from 1st April, 2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l computation of business income and the depreciation as per the provisions of the Act should be made for each year of the tax holiday period, While so computing, attention will have to be given to provisions of ss. 70, 71, 72 and s. 32(2). The amount of depreciation and business loss remaining unabsorbed at the end of the tax holiday period should be determined so that the same may be set off against the income post tax holiday period.' 5.4 We further note that this view has been reiterated by the Hon'ble jurisdictional High Court in the case of Aurigene Discovery Technologies Ltd. (supra). A similar view was considered by the co-ordinate bench of this Tribunal in the case M/s. Biocon Ltd. (supra) and held in paras 23 to 26 as under: '23. We have given a very careful consideration to the rival submissions. The issue raised by the assessee in ground No. 21 is identical to the ground raised by the assessee in Biocon (supra). The facts of the case before the Tribunal in the case of Biocon (supra) were that the assessee during the previous year had four units which were entitled to claim deduction u/s. 10B of the Act viz., CMZ Unit, SAP Unit, RHI Unit and IFP Unit The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (Appeals) noticed that the aforesaid decision was followed by the ITAT Bangalore Bench in the case of Intelnet Technologies India Pvt. Ltd. v. ITO, ITA No. l021/Bang/2009 dated 12.3.2010. Similar view expressed by the Delhi Bench of the Tribunal in the case of Global Vantage Pvt. Ltd. v. DCIT, 2010 TIOL 24 ITAT (DELHI) was also referred to by the CIT (A). A contrary view was expressed by the Bangalore Bench of the Tribunal in the case of KPIT Cummins Info Systems (Bangalore) Pvt. Ltd. v. ACIT, 120 TO 956. The CIT (A) found that in the case of Global Vantage Pvt. Ltd. (supra) decided by the Delhi Tribunal this decision has been held to be not in tune with the decision of the Hon'ble High Court of Karnataka in the case of Himatasingike Seide Ltd. (supra). The CIT (A) also referred to the decision of the Chennai Bench of the Tribunal in the case of Sword Global India Pvt. Ltd. v. ITO, 306 ITR 286 (AT), wherein the provisions of sections 10A and 10B have been held to be deduction provisions and not exemption provisions. For all the above reasons, the CIT (Appeals) confirmed the order of the Assessing Officer. Against the order of the CIT (A), the Assessee was in appeal before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst loss of either another STP undertaking or a non-STP undertaking. The Hon'ble Court thereafter held that though the expression used in Sec. 10A was "Deduction" but in effect it was only an exemption section. These conclusions clearly emanate from para 17 of the Hon'ble Court's judgment. 65. The situation with which we are concerned in the present case is a situation where there is positive income of the eligible unit then the same should be allowed deduction u/s. 10B of the Act without setting of the loss of non-eligible unit. The Hon'ble Karnataka High Court in the case of Yokogawa (supra) was concerned with similar situation as set out above. In view of the aforesaid decision of the Hon'ble Karnataka High Court, we are of the view that the claim as made by the Assessee for carry forward of loss of the non-eligible unit had to be allowed without set off of profits of the 10A/10B unit. We hold accordingly and allow the relevant grounds of appeal of the Assessee. 66. We may also observe that the Hon'ble Karnataka High Court's decision in the case of Himatasingike Seide (supra) has held that unabsorbed depreciation (and business loss) of sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff against income post tax holiday which means that they need not be so set off as mandated in the decision of the Hon'ble Karnataka High Court in the case of Himatasingike Seide Ltd. (supra). As we have already seen, in Yokogawa India Ltd. 341 ITR 385 (Kar.), it was held that even after s. 10A/10B were converted into a "deduction" provision w.e.f 1.4.2001, the benefit of relief u/s. 10A/10B is in the nature of "exemption" with reference to "commercial profits" and that as the income of the s. 10A unit has to be excluded at source itself before arriving at the gross total income, the question of setting off the loss of the current year's or the brought forward business loss (and unabsorbed depreciation) against the s. 10A profits does not arise. Therefore the decision of the Hon'ble Karnataka High Court in the case of Himatasingike Seide (supra) will not apply to the facts of the present case." 26. In view of the aforesaid decision, we are of the view that the claim made by the assessee deserves to be accepted. We may also observe that CBDT circular No. 7 dated 16.07.2013, on the facts and circumstances of the present case is not a be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction of certain expenses as claimed by the assessee. 10. Ground No. 4 is regarding disallowance made under Section 14A of the Act. The assessee has earned dividend income of ₹ 1,57,88,043 during the year under consideration. The assessee claimed that it has not incurred any expenses in respect of the dividend income and therefore the question of invoking the provisions of Section 14A of the Act does not arise. The Assessing Officer did not accept this contention of the assessee. The Assessing Officer noted that the assessee has claimed expenses of ₹ 19,57,430 on account of interest of working capital facility. Accordingly, the Assessing Officer has made the disallowance of ₹ 7,98,531 on account of proportionate indirect interest. The Assessing Officer has also made disallowance on account of indirect administrative expenses being 0.5% on average investment amounting to ₹ 33,96,119. Thus the Assessing Officer made a total disallowance of ₹ 41,45,650 under Section 14A of the Act. 11. Before us, the learned Authorised Representative has reiterated the contention as raised before the authorities below that the assessee has not incurred any expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which consist of mutual funds, equity shares and inter-corporate deposits. Therefore when the assessee has taken the decision for selling and fresh investment during the year under consideration which involves a high level decision making process then the claim of the that no expenditure has been incurred for earning the dividend income is not acceptable. Accordingly, we uphold the disallowance on account of indirect administrative expenses being 0.5% of the average investment made under Section 14A of the Act. 15. Ground No. 5 is regarding disallowance of deduction in respect of Employees Contribution to PF and ESI. The Assessing Officer has made disallowance of deduction claimed by the assessee under Section 36(1)(vi)(va) r.w.s. 40B(b) with respect to Employees Contribution to PF as well as ESI. The DRP has also confirmed the disallowance proposed by the Assessing Officer. 16. Before us, the learned Authorised Representative of the assessee has submitted that this issue is covered by the decision of the Hon'ble jurisdictional High Court in the case of CIT v. Sabari Enterprises [2008] 298 ITR 141 (Kar.) as well as in the case of Essae Teraoka (P.) Ltd. v. Dy. CIT [2014] 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 2(24)(x) of the Act makes it clear that the employee's contribution which the employer deducts from his salary before it is paid into the fund, is treated as the income of the employer, and the employer by contributing can get the deduction. That payment must be made within the due date i.e., the due date prescribed under Section 139(1) of the Act. Because it was causing lot of problem as discussed in the judgment of the Apex Court, on a representation made by the industry, subsequent amendment was carried out to mitigate the difficulties caused to the employer under Section 43B of the Act. Though such contributions are not paid within the time prescribed under the relevant Act, if those contributions are paid before the due dated prescribed under Section 139(1) of the Act, the employer shall be entitled to the deductions as provided under Section 36(1) of the Act, While extending such benefit, the Parliament has not made any distinction between the employee's contribution and the employer's contribution. It is for the simple, reason, under the provident fund scheme, an employer has to pay both the contribution and then recover from the salary of the employee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (24) of Section 2 of the IT Act provides that income includes any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of Employees' State-Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees. 10. On the basis of this provision, Mr. Aravind, learned counsel for the revenue, vehemently submitted that the employees' contribution to provident fund is also an income of the employer till he deposits the said amount along with his contribution with the fund, as contemplated under the provisions of Section 36(1)(va) of the IT Act. 11. From bare perusal of this provision, we do find ourselves in agreement with Mr. Aravind, learned counsel for the revenue. But in our opinion, that by itself is not sufficient to hold that the employer is not entitled for deduction as contemplated under Section 36(1)(va) of the IT Act r/w Section 43-B of the IT Act. 12. Section 36 provides for other deductions. Sub-section (1), thereof states that the deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return." 15. From bare perusal of this provision, it is clear that under the provision, for IT Act, an extension is given to the employer to make payment of contribution to provident fund or any other fund till the "due date" applicable for furnishing the return of income under sub-section (1) of section 139 of the IT Act in respect of the previous year in which the liability to pay such sum was incurred and the evidence of such payment is furnished by the assessee along with such return. In short, this provision states, notwithstanding anything contained in any other provision contained in this Act, a deduction otherwise allowable in this Act in respect of any sum payable by the assessee as an employer by way of contribution to any fund such as provident fund shall be allowed if it is paid on or before the due date as contemplated under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en days of the closure of every month pay. It is clear that the word "contribution" used in Clause (b) of Section 43B of the IT Act means the contribution of the employer and the employee. That being so, if the contribution is made on or before the due date for furnishing the return of income under sub-section (1) of Section 139 of the IT Act is made, the employer is entitled for deduction. 21. The submission of Mr. Aravind, learned counsel for the revenue that if the employer fails to deduct the employees' contribution on or before the due date, contemplated under the provisions of the PF Act and the PF Scheme, that would have to be treated as income within the meaning of Section 2(24)(x) of the IT Act and in which case, the assessee is liable to pay tax on the said amount treating that as his income, deserves to be rejected. 22. With respect, we find it difficult to endorse the view taken by the Gujarat High Court. We agree with the view taken by this Court in W.A. No. 4077/2013. 23. In the result, the appeal is allowed and the substantial question of law framed by us is answered in favour of the appellant-assessee and against the respondent-revenue. There shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20.28% 6 Sasken Communication Technologies Ltd (seg) 4,05,31,20,000 3,18,69,97,000 27.91% 7 Persistent Systems Ltd 5,19,69,10,000 3,67,52,70,000 41.40% 8 Zylog Systems Limited 7,34,93,51,475 6,81,69,98,160 7.81% 9 Mindtree Ltd (seg) 7,93,22,79,326 5,74,06,73,058 5.52% 10 Larsen and Toubro infotech 19,50,83,81,374 15,64,12,76,626 24.72% 11 Infosys Ltd 2,02,64,00,00,000 1,39,17,00,00,000 45.61% Average mean 24.32% After making negative working capital adjustment at - 0.71%, the adjusted margin has been worked out at 25.03%. Accordingly, the TPO has proposed an adjustment in respect of software development services segment under Section 92CA of ₹ 4,50,28,205. 20. Before us, the assessee is seeking exclusion of 3 companies from the set of comparables as under: (i) Bodhtree Consulting Ltd. (ii) KALS information Systems Ltd. and (iii) Sasken Communication Technology Ltd. (Seg) 21. The learned Authorised Representative of the assessee has submitted that Sasken Communication Technology Ltd. is required to be rejected by applying turnover filter of 10 times of assessee's turnover in the software development segment. He has pointed out that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation obtained u/s. 133(6) of the Act. This information which was not in the public domain ought not to have been used by the TPO, more so when the same is contrary to the Annual Report of the company, as pointed out by the learned Authorised Representative. We also find that the co-ordinate benches of this Tribunal in the assessee's own case for Assessment Year 2007-08 (supra) and in the case of Triology E-Business Software India (P.) Ltd. (supra) have held that this company was developing software products and was not purely or mainly a software service provider. Apart from relying of the above cited decisions of co-ordinate benches of the Tribunal (supra), the assessee has also brought on record evidence from various portions of the company's Annual Report to establish that this company is functionally dissimilar and different form the assessee and that since the findings rendered in the decisions of the co-ordinate benches of the Tribunal for Assessment Year 2007-08 (cited supra) are applicable for this year i.e. Assessment Year 2008-09 also, this company ought to be excluded from the list of comparables. In this view of the matter, we hold that this company i.e. KA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as an annexure to this order. It appears to us that the revenue recognition method followed by the assessee is the reason for the drastic variation in the profit margins of this company, in the given circumstances, we are of the view that it would be safe to exclude Bodhtree Consulting from the final list of comparables chosen by the assessee. We hold and direct accordingly." Following the above decision of the co-ordinate bench of this Tribunal in the case of Mindteck (India) Ltd. (supra), we direct that this company be excluded from the list of comparables.' Following the decision of the co-ordinate bench of this Tribunal, we direct the TPO/A.O. to exclude this company from the set of comparables. 26. Ground Nos. 10 & 11 are regarding incorrect computation of operating profit margin of the assessee as well as comparables by considering foreign exchange gain or loss as non-operating in nature. 27. The learned Authorised Representative of the assessee has submitted that this Tribunal has taken a consistent view that the foreign exchange fluctuation gain/loss is operating in nature if it arises from sale proceeds. Thus it has to be part of the operating margin of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this respect. 32. Before us, the learned Authorised Representative submitted that the allotment of equity shares in the subsidiary cannot be classified as international transaction as defined in Section 92B of the Act. He has further contended that by remitting fund for subscribing the equity shares of the subsidiary of the assessee is not purchasing any shares as it is not an acquisition of an already existing asset. The issue of shares contemplates creation of shares as an asset. When the shares are issued by a company there is neither purchase nor sale of any share. Thus remittance of money for subscription of equity shares of the subsidiary cannot be classified as international transactions under Section 92B(1) of the Act In support of his contention, he has relied upon the following decisions : (i) Vijai Electricals Ltd. v. Addl. CIT 2013 (7) TMI 804 - ITAT HYDERABAD. (ii) Pan India Network Infravest (P.) Ltd. [IT Appeal Nos. 7025 & 7026/Mum/2013]. (iii) Bharti Airtel Ltd. v. Addl. CIT 2014 (3) TMI 495 - ITAT DELHI. The learned Authorised Representative has contended that the share application money cannot be considered as an advance and therefore no interest to be charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen it loses the character of share application money and therefore the rule as laid down by the various decisions of this Tribunal relied upon by the learned Authorised Representative will not be applicable in a case where the money is available to the AE and there is an extraordinary delay in allotment of shares. Hence we are of the view that when this money was paid by the assessee to the AE and it was very much available to the assessee for utilization for business purpose of the AE then this transaction of payment of money to the AE against which no shares were allotted till the end of the financial year relevant to the assessment year under consideration will constitute an international transaction as per the provisions of Section 92B of the Act as it has a direct bearing on the profit and loss as well as the assets of the enterprises. Further as per the Explanation to Section 92B(1) of the Act till the date of allotment it will constitute as capital financing/advance to the AE. We hold accordingly. 35. As regards the alternative plea of the assessee, we find substance so far as the applicability of LIBOR because the remittance has been made in foreign currency and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that may be urged at the time of hearing, it is humbly prayed that the order of the DRP be reversed and that of the Assessing Officer be restored. 6. The appellate craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal. 37. Ground No. l is general in nature and does not require any specific adjudication. 38. Ground No. 2 is regarding arm's length interest in respect of share application money. This ground is common to the grounds of 10 to 14 of assessee's appeal and in view of our finding on the issue involved in assessee's appeal, this ground of revenue's appeal stand dismissed. 39. Ground Nos. 3 & 4 are regarding exclusion of telecommunication expenses and expenses incurred in foreign currency from the export turnover as well as total turnover. 40. We have heard both sides and perused and carefully considered the material on record and the judicial decision cited. On perusal thereof we find that the issue before us for adjudication i.e. expenses incurred in foreign currency attributable to the delivery of computer software abroad is reduced from export turnover an equal amount should also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convertible foreign exchange but so as not to include inter alia freight, telecommunication charges or insurance attributable to the delivery of the articles, things or software outside India. Therefore in computing the export turnover the legislature has made a specific exclusion of freight and insurance charges. 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 part of the total turnover for the purposes of the application of the formula. Undoubtedly, it was open to Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la to ascertain the profits from export business by apportioning the total profits of the 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 denominator of the formula. in view of the commonality, the understanding should also be the same. In other words, if the export turnover in the numerator is to be arrived 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 includ ..... 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