Softsol India Ltd, Hyderabad vs Commissioner Of Income Tax, ...
2022 Latest Caselaw 5588 Tel

         THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN
                                       AND
          THE HON'BLE SRI JUSTICE C.V.BHASKAR REDDY


                          I.T.T.A.No.10 of 2006

JUDGMENT: (Per the Hon'ble the Chief Justice Ujjal Bhuyan)


       Heard Mr. Challa Gunaranjan, learned counsel for

the appellant and Mr. J.V.Prasad, learned Standing

Counsel for Income Tax Department appearing for the

respondent.

2. This appeal has been preferred under Section 260A of

the Income Tax Act, 1961 (briefly, "the Act" hereinafter)

assailing the order dated 27.08.2004 passed by the Income

Tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad

(briefly, "the Tribunal" hereinafter) in

I.T.A.No.642/Hyd/2003 for the assessment year 2001-

2002.

3. From the docket proceedings we find that though the

appeal was admitted on 15.02.2006, substantial questions

of law were not framed.

4. Be that as it may, learned counsel for the appellant

submits that two questions were proposed as substantial

questions of law by the appellant in the memo of appeal.

out of which one question covers the controversy.

5. The proposed substantial question of law reads as

under:

Whether on the facts and in the circumstances of the case, provisions relating to exemption under Section 10B of the Act granted to 100% export oriented unit would also include the unrealised part of sale proceeds?

6. Both the assessing officer as well as the first

appellate authority had rejected the claim of the appellant

that unrealised sale proceeds should also be included for

granting exemption to 100% export oriented units like the

appellant under Section 10B of the Act. In appeal before

the Tribunal, the above ground was rejected by affirming

the views taken by the assessing officer as well as by the

first appellate authority.

7. Learned counsel for the appellant submits that issue

raised in this appeal is no more res integra. In

Commissioner of Income Tax, Central-III, New Delhi v.

HCL Technologies Limited1 Supreme Court has held that

what is excluded from "export turnover" must also be

excluded from "total turnover", since one of the

components of "total turnover" is export turnover.

Therefore, such deduction should be allowed from the total

turnover in the same proportion.

8. Madras High Court in Commissioner of Income Tax

v. Maars Software International Limited2 referred to the

aforesaid decision of the Supreme Court in HCL

Technologies Limited (supra) and reiterated that

components of total turnover/denominator in the formula

would be the quantum of export turnover/numerator plus

proceeds from domestic sales. Total turnover for the

purpose of the formula would be the actual sale receipts

excluding unrealised foreign exchange as adopted by

export turnover.

(2018) 16 SCC 709

2018 SCC Online Mad 10907

9. In the light of the aforesaid two judicial

pronouncements, Central Board of Direct Taxes (CBDT)

has issued Circular No.4/2018 dated 14.08.2018 declaring

that all charges/expenses specified in Explanation 2(iv) to

Section 10A of the Act are liable to be excluded from the

total turnover also for the purpose of computation of

deduction under Section 10A of the Act. Income Tax

Department has been instructed not to file appeals

henceforth on the above settled issue and to withdraw

those appeals already filed.

10. It is submitted at the bar that provisions of Section

10A and 10B of the Act insofar this issue is concerned, are

in pari materia.

11. In view of the above, the substantial question of law,

as framed above, is answered in favour of the assessee and

against the revenue.

12. Appeal is accordingly allowed.

Miscellaneous applications pending, if any, shall

stand closed. However, there shall be no order as to costs.

______________________________________ UJJAL BHUYAN, CJ

______________________________________ C.V.BHASKAR REDDY, J 02.11.2022 vs