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TMI Blog2019 (12) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... s export turnover for the purpose of the numerator would have to be the export turnover for the purpose of denominator as well and export turnover cannot assume two different characteristics for two parts of the same formula. In the present case, the quantum of export turnover has been taken to be the actual remittances of foreign exchange after excluding the unrealised foreign exchange. This then would be the same figure to be adopted so far as the denominator is concerned as well. In fine, total turnover for purposes of the formula would be the actual sale receipts excluding unrealised foreign exchange as adopted for export turnover . This conclusion is also supported by the reasoning that the provisions of Section 10A/10B are beneficial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins the eligible activity. 9. In the present case, the eligibility of the assessee to this relief is not disputed. The mode of computation of the relief is set out in terms of subsection (4) of section 10A by way of a formula. 10.Sub-section (4) is extracted below: (4) For the purposes of sub-sections (1) and (1A), the profits derived from export of articles or things or computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but also be deemed to be part of turnover and included in the denominator, i.e. total turnover of the company. 14. He relies on two decisions of this Court in the case of Galaxy Granites (P) Ltd. V. Commissioner of Income-tax ((2012) 27 taxmann.com) 31 (Mad) which relates to computation of deduction under Section 80 HHC of the Act and Pentasoft Technologies Ltd. V. The Deputy Commissioner of Income Tax (T.C.(A)Nos.1135 and 1196 of 2008 dated 25.11.2013). 15. In the case of Galaxy Granites (supra) the Bench considers the following question: 'Whether the Appellate Tribunal is right in law in holding that unrealised export turnover should be included in the "Total Turnover" while it is not treated as "Export Turnover" for purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the case of the Revenue as far as the scheme of section 10A or 10B is concerned. 18. In the case of Pentasoft (supra), the Bench decided the claim for exclusion of unrealised sales proceeds against the assessee since no such claim had been made at the time of assessment, and the assessee therein had raised the claim only by way of additional ground at the stage of first appeal. Since there was no challenge to the exclusion of unrealised sale proceeds from 'export turnover' but inclusion of the same in 'total turnover' at the time of assessment, the Bench held that it was not open to the assessee to question the interpretation of the formula at a later stage. 19. The assessee therein had also raised alternate grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded/reduced from the numerator would stand excluded/reduced from the denominator as well. Paragraphs 18 to 21 of the judgement are relevant and are extracted below: '18) Accordingly, the formula for computation of the deduction underSection10A of the Act would be as follows: Export Profit = total Profit of the Business X Export turnover as defined in Explanation 2 (IV) of Section 10A of IT Act ------------------------------- Export turnover as defined in Explanation 2(IV) of Section 10A of the IT Act + domestic sale proceeds 19) In the instant case, if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software under Section10A of the IT Act are allowed only in Export Turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of export turnover/numerator plus proceeds from domestic sales. Thus what is 'export turnover' for the purpose of the numerator would have to be the 'export turnover' for the purpose of denominator as well and 'export turnover' cannot assume two different characteristics for two parts of the same formula. 24. In the present case, the quantum of 'export turnover' has been taken to be the actual remittances of foreign exchange after excluding the unrealised foreign exchange. This then would be the same figure to be adopted so far as the denominator is concerned as well. In fine, 'total turnover' for purposes of the formula would be the actual sale receipts excluding unrealised foreign exchange as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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