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TMI Blog2021 (7) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... n from the current year profit of the eligible 10A unit of the assessee u/s.72 of the Act, and thereafter, granted deduction u/s.10A of the Act for the remaining profit. The Assessing Officer had also excluded the entire telecommunication expenses incurred outside India in foreign exchange and in Indian currency from the export turnover, however, the same was not excluded from the total turnover while computing eligible deduction u/s.10A of the Act. 3.Challenging the order passed by the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) and the Appellate Authority allowed the appeal of the assessee. Aggrieved over the order passed by the Commissioner of Income Tax (Appeals), the Revenue filed an appeal before the Income Tax Appellate Tribunal, which also dismissed the appeal. 4.Challenging the order passed by the Income Tax Appellate Tribunal, the Revenue has filed the above appeal. 5.The above appeal was admitted on the following substantial questions of law : "1.Whether on the facts and in the circumstances of the case, the Tribunal was right in directing the Assessing Officer to recompute the income in the light of the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect as if it also included any sum referred to in clauses (iiia), (iiib), (iiic), (iiid) and (iiie) of section 28;" 9.It is also pertinent to mention here the relevant terminologies which are as under: "Export Turnover: Explanation 2(iv) of Section 10A of the IT Act defines "export turnover" to mean the consideration that has been received for export of articles/things/computer software. Normally the consideration will include the freight/telecommunication charges/insurance which had been incurred to deliver the article/things/computer software outside India. However the Explanation 2(iv) specifically seeks to exclude these three categories of expenditure incurred for delivering the export of articles/things/computer software. It also seeks to exclude expenses for providing technical service, etc. outside India. Therefore, where an Indian technician goes abroad and receives fees for service, the foreign client will normally be required to reimburse the expenses as well. Therefore, out of the consideration received, the portion representing reimbursement of expenditure has to be excluded. Export Turnover and Total turnover: The "total turnover" has been defined in sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside India. On appeal, learned CIT (Appeals) again made a detailed analysis of the activity of the Respondent and arrived at a conclusion that the Assessing Officer failed to bring any evidence which can indicate that Respondent was providing technical services outside India and it has incurred expenses towards salary etc. rendering such services. Inspite that, learned CIT (Appeals), estimated 10% of software development charge as charges incurred for technical services provided outside India. 12.It is undisputed fact that the Respondent was engaged in the business of software development for its customers engaged in different activities at software development centres of the Respondent. However, in the process of such customized software development, certain activities were required to be carried out at the sight of customers on site, located outside India for which the employees of the branches of the Respondent located in the country of the customers are deployed. It is true that it is not defined that which activity will be termed as providing technical services outside India. Moreover, after delivery of such softwares as per requirement, in order to make it fully function ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of any statute. An interpretation which makes the enactment a consistent whole, should be the aim of the Courts and a construction which avoids inconsistency or repugnancy between the various sections or parts of the statue should be adopted. 16.In Commissioner of Income Tax vs. J.H. Gotla, (1985) 23 Taxman 14J (SC) this Court has held as under: "46.Where the plain literal interpretation of a statutory provision produces a manifestly unjust result which could never have been intended by the Legislature, the Court might modify the language used by the Legislature so as to achieve the intention of the Legislature and produce a rational construction. The task of interpretation of statutory provision is an attempt to discover the intention of the Legislature from the language used.... 47..If the purpose of a particular provision is easily discernible from the whole scheme of the Act which, in the present case, was to counteract, the effect of the transfer of assets so far as computation of income of the Respondent was concerned, then bearing that purpose in mind, the intention should be found out from the language used by the Legislature and if strict literal, construction l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the Respondent which could have never been the intention of the legislature. 20.Even in common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well. 21.On the issue of expenses on technical services provided outside, we have to follow the same principle of interpretation as followed in the case of expenses of freight, telecommunication etc., otherwise the formula of calculation would be futile. Hence, in the same way, expenses incurred in foreign exchange for providing the technical services outside shall be allowed to exclude from the total turnover. 22.In view of above discussion, we are of the considered view that these instant appeals are devoid of merits and deserve to be dismissed. Accordingly, all the connected matters and interlocutory applications, if any, are disposed of with no order as to costs." 7.Further, the learned Senior Standing Counsel submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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