INCOME TAX ACT, 1961

Section 10A

Deduction under section 10A - Computation of total turnover - Treatment of amount excluded from export turnover -

Issue arose for consideration as to whether Tribunal was right in holding that the travelling expenditure incurred in foreign currency was to be reduced from the total turnover also for purpose of computation of deduction under section 10A. Held: As decided in case of CIT v. SRA Systems Ltd., [T.C.A. No.975 of 2010 ; 2021 TaxPub(DT) 1688 (Mad-HC)], it was held that if deductions on freight, telecommunication and insurance attributable to the delivery of computer software under section 10A are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to assessee which could have never been the intention of legislature. Even in common parlance, when the object of formula is to arrive at profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Thus, following the same deduction shall be allowed to assessee for travelling expenses from the total turnover in same proportion as well.

Followed:CIT v. SRA Systems Ltd., [T.C.A. No.975 of 2010 ; 2021 TaxPub(DT) 1688 (Mad-HC)] and CIT Vs. HCL Technologies Ltd. [(2018) 93 Taxmann.com 33 (SC) : 2018 TaxPub(DT) 2138 (SC)].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2005-2006

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