DCIT, Bangalore V. M/s Siemens Information Processing Services Pvt. Ltd., Bangalore

ITA 1063/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60774 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 11-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3); 80HHC; 10B

Judgement Text

PAGE 1 OF 10 ITA NOS.1062 & 1063BANG /2011 & C.O.NOS.8 & 9/BANG/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NOS.1062 & 1063/BANG/2011 (ASSESSMENT YEARS 2005-06 & 2006-07) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 12(3), BANGALORE. VS M/S SIEMENS INFORMATION PROCESSING SERVICES PVT., OZONE MANAY TECH PARK, BLOCK-A, 6 TH FLOOR, G B PALYA, HOSUR ROAD, BANGALORE-68. PA NO.AAFCS1164H (APPELLANT) (RESPONDENT) C.O.NOS.8 & 9/BANG/2012 (ASST. YEARS 2005-06 & 2006-07) (BY ASSESSEE) DATE OF HEARING : 27.06.2012 DATE OF PRONOUNCEMENT : 29.06.2012 REVENUE BY : SMT. SUSAN THOMAS JOSE, JC IT ASSESSEE BY : SHRI ROHIT JAIN, C.A. ORD ER PER BENCH : THESE APPEALS INSTITUTED BY THE DEPARTMENT AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DIRECTED AGAINS T THE SEPARATE ORDERS OF THE CIT(A)-III, BANGALORE, BOTH DATED 10 TH AUGUST, 2011. THE RELEVANT ASSESSMENT YEARS ARE 2005-06 AND 2006-07. PAGE 2 OF 10 ITA NOS.1062 & 1063BANG /2011 & C.O.NOS.8 & 9/BANG/2012 2 2. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEA LS AND THE CROSS OBJECTIONS AND THEY PERTAIN TO THE SAME ASSESSEE, TH EY WERE HEARD TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. IN THE DEPARTMENTS APPEALS, THE SOLITARY ISSUE THAT ARISE FOR OUR CONSIDERATION IS WHETHER THE CIT(A) IS JUSTIFIE D IN DIRECTING THE ASSESSING OFFICER TO EXCLUDE TELECOMMUNICATION CHAR GES AND TRAVELLING EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SECTION 1 0A OF THE IT ACT, 1961. 3.1 IN THE CROSS OBJECTION, THE ONLY ISSUE RAISED I S WHETHER THE CIT(A) IS RIGHT IN NOT ADJUDICATING THE GROUND RELA TING TO THE EXCLUSION OF TELECOMMUNICATION CHARGES AND TRAVELLING EXPENSES I NCURRED IN FOREIGN CURRENCY FROM THE EXPORT TURNOVER WHILE COMPUTING DE DUCTION UNDER SECTION 10A OF THE IT ACT, 1961. 4. BRIEFLY STATED THE FACTS ARE AS FOLLOWS:- THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE B USINESS OF PROVIDING SERVICES RELATING TO BACK-OFFICE OPERATIO NS AND CALL CENTRE SERVICES TO ITS CUSTOMERS. FOR THE ASSESSMENT YEAR 2005-06, RETURN OF INCOME WAS FILED DECLARING A TOTAL INCOME AT RS.16,39,214/-. THE ASSESSEE HAD CLAIMED EXEMPTION UNDER SECTION 10A OF THE ACT AMOUNTING TO RS.6,17,69,699/- AND RS.35,03,515/- FOR ITS STP UNITS LOCATED IN BANGAL ORE AND CHENNAI RESPECTIVELY. ASSESSMENT UNDER SECTION 143(3) WAS C OMPLETED VIDE ORDER DATED 31/10/2008, WHEREIN DEDUCTION UNDER SECTION 1 0A WAS RECALCULATED BY PAGE 3 OF 10 ITA NOS.1062 & 1063BANG /2011 & C.O.NOS.8 & 9/BANG/2012 3 REDUCING TELECOMMUNICATION EXPENSES AND TRAVELLING EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE EXPORT TURNOVER WITHOUT MA KING A CORRESPONDING ADJUSTMENT IN THE TOTAL TURNOVER. 4.1 FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSEE FILED RETURN OF INCOME ON 29.11.2006 DECLARING TOTAL INCOME OF RS.2 8,06,390/-. IT HAD CLAIMED EXEMPTION UNDER SECTION 10A OF THE ACT AMOU NTING TO RS.8,11,45,041/- ANDRS.1,01,10,049/- FOR ITS STPI U NITS LOCATED IN BANGALORE AND CHENNAI RESPECTIVELY. SCRUTINY ASSESSMENTS WERE COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 14/12/20 09 REDUCING THE EXPORT TURNOVER DECLARED IN THE ASSESSEES RETURN BY RS.3,0 2,49,251/- AND RS.1,13,52,547/- TOWARDS TELECOMMUNICATION AND TRAV ELLING EXPENSES INCURRED IN FOREIGN CURRENCY WHILE COMPUTING DEDUCTION UNDER SECTION 10A OF THE ACT. THE ASSESSING OFFICER HOWEVER DID NOT MAKE SIMILAR ADJUSTMENT FROM THE TOTAL TURNOVER DECLARED IN THE RETURN OF INCOME FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SECTION 10A OF THE A CT. 5. AGGRIEVED BY THE RE-COMPUTATION OF DEDUCTION UND ER SECTION 10A OF THE ACT BY REDUCING THE ABOVE SAID EXPENSES F ROM THE EXPORT TURNOVER AND NOT MAKING SIMILAR ADJUSTMENT FROM THE TOTAL TURNOVER WHILE COMPUTING DEDUCTION UNDER SECTION 10A OF THE ACT, T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORI TY IN RESPECT OF THE ABOVE SAID TWO ASSESSMENT YEARS. 6. BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS CON TENDED THAT THE ASSESSING OFFICER HAS ERRED IN REDUCING TELECOMMUNI CATION EXPENSES AND PAGE 4 OF 10 ITA NOS.1062 & 1063BANG /2011 & C.O.NOS.8 & 9/BANG/2012 4 TRAVELLING EXPENSES INCURRED IN FOREIGN CURRENCY FRO M THE EXPORT TURNOVER CONTRARY TO THE PROVISIONS OF LAW. ALTERNATIVELY IT WAS SUBMITTED THAT IF THE ABOVE SAID EXPENSES ARE REDUCED FROM THE EXPORT TUR NOVER, NECESSARILY THE SAME SHOULD ALSO BE REDUCED FROM THE TOTAL TURNOVER WHILE COMPUTING DEDUCTION UNDER SECTION 10A OF THE ACT. 7. THE CIT(A) DID NOT CONSIDER THE ASSESSEES MAIN SUBMISSION. HOWEVER, THE ALTERNATIVE SUBMISSION OF THE ASSESSEE NAMELY, WHEN THE EXPENSES ARE REDUCED FROM THE EXPORT TURNOVER, THE SAME FIGURE SHOULD ALSO BE REDUCED FROM THE TOTAL TURNOVER WHILE COMPUTING DEDUCTION UNDER SECTION 10A OF THE ACT, WAS DECIDED IN FAVOUR OF THE ASSESS EE. THE APPEAL OF THE ASSESSEE ON ITS ALTERNATIVE SUBMISSIONS WAS ALLOWED BY THE CIT(A) BY FOLLOWING THE ORDER OF THE SPECIAL BENCH OF THE TRI BUNAL IN THE CASE OF ITO V SAK SOFT LTD. (313 ITR 353) (CHENNAI) AND THE JUGEM ENT OF THE HONBLE MUMBAI HIGH COURT IN THE CASE OF CIT V GEM PLUS JEW ELLERY INDIA LTD. (330 ITR 175). 8. REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 9. THE LEARNED DR SUPPORTED THE ORDERS OF THE ASSE SSING OFFICER. 10. THE LEARNED AR SUBMITTED THAT THE ISSUE IN QUE STION IS SQUARELY COVERED BY THE JUDGEMENT OF THE HONBLE KARNATAKA HI GH COURT IN THE CASE OF CIT V M/S TATA ELXSI LTD. & OTHERS (2011-TIOL-68 4-HC-KAR-II), HONBLE MUMBAI HIGH COURT IN THE CASE OF CIT V GEM PLUS JEW ELLERY INDIA LTD. 330 ITR 175 AND THE ORDER OF THE SPECIAL BENCH IN THE C ASE OF ITO V M/S SAK SOFT LTD. 313 ITR (AT) 353. PAGE 5 OF 10 ITA NOS.1062 & 1063BANG /2011 & C.O.NOS.8 & 9/BANG/2012 5 11. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSE D THE MATERIAL ON RECORD. THE HONBLE KARNATAKA HIGH COURT IN THE C ASE OF CIT V M/S TATA ELXSI LTD. & OTHERS HAD HELD THAT WHILE COMPUTING T HE EXEMPTION U/S 10A, IF THE EXPORT TURNOVER IN THE NUMERATOR IS TO BE ARRIV ED AT AFTER EXCLUDING CERTAIN EXPENSES, THE SAME SHOULD ALSO BE EXCLUDED FROM THE TOTAL TURNOVER IN THE DENOMINATOR. THE RELEVANT FINDING OF THE HON BLE JURISDICTIONAL HIGH COURT READS AS FOLLOWS:- ..SECTION 10A IS ENACTED AS AN INCENTIVE TO EXP ORTERS TO ENABLE THEIR PRODUCTS TO BE COMPETITIVE IN THE G LOBAL MARKET AND CONSEQUENTLY EARN PRECIOUS FOREIGN EXCHAN GE FOR THE COUNTRY. THIS ASPECT HAS TO BE BORNE IN MIN D. WHILE COMPUTING THE CONSIDERATION RECEIVED FROM SUC H EXPORT TURNOVER, THE EXPENSES INCURRED TOWARDS FREI GHT, TELECOMMUNICATION CHARGES, OR INSURANCE ATTRIBUTABL E TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA, OR EXPENSES IF ANY INCURRED IN FOREIGN EXCHANGE, IN PROVIDING THE TECHNICAL SERVIC ES OUTSIDE INDIA SHOULD NOT BE INCLUDED. HOWEVER, THE WORD TOTAL TURNOVER IS NOT DEFINED FOR THE PURPOSE OF TH IS SECTION. IT IS BECAUSE OF THIS OMISSION TO DEFINE TOTAL TURNOVER, THE WORD TOTAL TURNOVER FALLS FOR INTERPRETATION BY THIS COURT; ..IN SECTION 10A, NOT ONLY THE WORD TOTAL TURNOVE R IS NOT DEFINED, THERE IS NO CLUE REGARDING WHAT IS TO BE EXCLUDED WHILE ARRIVING AT THE TOTAL TURNOVER. HOW EVER, WHILE INTERPRETING THE PROVISIONS OF SECTION 80HHC, THE COURTS HAVE LAID DOWN VARIOUS PRINCIPLES, WHICH ARE INDEPENDENT OF THE STATUTORY PROVISIONS. THERE SHOU LD BE UNIFORMITY IN THE INGREDIENTS OF BOTH THE NUMERATOR AND THE DENOMINATOR OF THE FORMULA, SINCE OTHERWISE IT WOULD PRODUCE ANOMALIES OR ABSURD RESULTS. SECTION 10A I S A BENEFICIAL SECTION WHICH INTENDS TO PROVIDE INCENTI VES TO PROMOTE EXPORTS. IN THE CASE OF COMBINED BUSINESS OF AN PAGE 6 OF 10 ITA NOS.1062 & 1063BANG /2011 & C.O.NOS.8 & 9/BANG/2012 6 ASSESSEE, HAVING EXPORT BUSINESS AND DOMESTIC BUSIN ESS, THE LEGISLATURE INTENDED TO HAVE A FORMULA TO ASCER TAIN THE PROFITS FROM EXPORT BUSINESS BY APPORTIONING THE TOTAL PROFITS OF THE BUSINESS ON THE BASIS OF TURNO VERS. APPORTIONMENT OF PROFITS ON THE BASIS OF TURNOVER W AS 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 ASSXCESSEE, WHEREAS IN SECTION 10-A, THE EXPORT PRO FIT IS TO BE DERIVED FROM THE TOTAL BUSINESS OF THE UNDERT AKING. EVEN IN THE CASE OF BUSINESS OF AN UNDERTAKING, IT MAY INCLUDE EXPORT BUSINESS AND DOMESTIC BUSINESS, IN O THER WORDS, EXPORT TURNOVER AND DOMESTIC TURNOVER. TO T HE EXTENT OF EXPORT TURNOVER, THERE WOULD BE A COMMONA LITY BETWEEN THE NUMERATOR AND THE DENOMINATOR OF THE FORMULA. IF THE EXPORT TURNOVER IN THE NUMERATOR I S TO BE ARRIVED AT AFTER EXCLUDING CERTAIN EXPENSES, THE SAME SHOULD ALSO BE EXCLUDED IN COMPUTING THE EXPORT TUR NOVER AS A COMPONENT OF TOTAL TURNOVER IN THE DENOMINATOR . THE REASON BEING THE TOTAL TURNOVER INCLUDES EXPORT TUR NOVER. THE COMPONENTS OF THE EXPORT TURNOVER IN THE NUMERA TOR AND THE DENOMINATOR CANNOT BE DIFFERENT. THEREFORE , THOUGH THERE IS NO DEFINITION OF THE TERM TOTAL TU RNOVER IN SECTION 10A, THERE IS NOTHING IN THE SAID SECTIO N TO MANDATE THAT, WHAT IS EXCLUDED FROM THE NUMERATOR T HAT IS EXPORT TURNOVER WOULD NEVERTHELESS FORM PART OF THE DENOMINATOR. WHEN THE STATUTE PRESCRIBED A FORMULA AND IN THE SAID FORMULA, EXPORT TURNOVER IS DEFINED, AND WHEN THE TOTAL TURNOVER INCLUDES EXPORT TURNOVER, THE VERY SAME MEANING GIVEN TO THE EXPORT TURNOVER BY THE LEGISLATURE IS TO BE ADOPTED WHILE UNDERSTANDING TH E MEANING OF THE TOTAL TURNOVER, WHEN THE TOTAL TURNO VER INCLUDES EXPORT TURNOVER. IF WHAT IS EXCLUDED IN COMPUTING THE EXPORT TURNOVER IS INCLUDED WHILE ARR IVING AT THE TOTAL TURNOVER, WHEN THE EXPORT TURNOVER IS A COMPONENT OF TOTAL TURNOVER, SUCH AN INTERPRETATION WOULD RUN COUNTER TO THE LEGISLATIVE INTENT AND IMPERMISSIBLE. THUS, THERE IS NO ERROR COMMITTED B Y THE PAGE 7 OF 10 ITA NOS.1062 & 1063BANG /2011 & C.O.NOS.8 & 9/BANG/2012 7 TRIBUNAL IN FOLLOWING THE JUDGEMENTS RENDERED IN TH E CONTEXT OF SECTION 80HHC IN INTERPRETING SECTION 10 A WHEN THE PRINCIPLE UNDERLYING BOTH THESE PROVISIONS IS ONE AND THE SAME. 11.1 THE HONBLE MUMBAI HIGH COURT IN THE CASE OF GEM PLUS JEWELLERY INDIA LTD. (SUPRA), IN IDENTICAL CIRCUMSTA NCES, HELD THAT SINCE THE EXPORT TURNOVER FORMS PART OF THE TOTAL TURNOVER, I F AN ITEM IS EXCLUDED FROM THE EXPORT TURNOVER, THE SAME SHOULD ALSO BE R EDUCED FROM THE TOTAL TURNOVER TO MAINTAIN PARITY BETWEEN NUMERATOR AND DE NOMINATOR WHILE CALCULATING DEDUCTION U/S 10A OF THE ACT. THE RELE VANT FINDING OF THE HONBLE MUMBAI HIGH COURT READS AS FOLLOWS:- THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY TH E UNDERTAKING WOULD CONSIST OF THE TURNOVER FROM EXPO RT AND THE TURNOVER FROM LOCAL SALES. THE EXPORT TURNOVER CONSTITUTES THE NUMERATOR IN THE FORMULA PRESCRIBED BY SUB-SECTION (4). EXPORT TURNOVER ALSO FORMS A CONS TITUENT ELEMENT OF THE DENOMINATOR IN AS MUCH AS THE EXPORT TURNOVER IS A PART OF THE TOTAL TURNOVER. THE EXPO RT TURNOVER, IN THE NUMERATOR MUST HAVE THE SAME MEANI NG AS THE EXPORT TURNOVER WHICH IS CONSTITUENT ELEMENT OF THE TOTAL TURNOVER IN THE DENOMINATOR. THE LEGISLATURE HAS PROVIDED A DEFINITION OF THE EXPRESSION EXPORT TUR NOVER IN EXPLN.2 TO S.10A WHICH THE EXPRESSION IS DEFINED TO MEAN THE CONSIDERATION IN RESPECT OF EXPORT BY THE UNDERT AKING OF ARTICLES, THINGS OR COMPUTER SOFTWARE RECEIVED I N OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE FO REIGN EXCHANGE BUT SO AS NOT TO INCLUDE INTER ALIA FREIGH T, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES, THINGS OR SOFTWARE OUTSIDE INDIA. THEREFORE IN COMPUTING THE EXPORT TURNOVER THE LEGI SLATURE HAS MADE A SPECIFIC EXCLUSION OF FREIGHT AND INSURA NCE CHARGES. THE SUBMISSION WHICH HAS BEEN URGED ON BE HALF OF THE REVENUE IS THAT WHILE FREIGHT AND INSURANCE CHA RGES ARE PAGE 8 OF 10 ITA NOS.1062 & 1063BANG /2011 & C.O.NOS.8 & 9/BANG/2012 8 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 D EFINED AT ALL BY PARLIAMENT FOR THE PURPOSES OF S.10A. HOW EVER, THE EXPRESSION EXPORT TURNOVER HAS BEEN DEFINED. THE DEFINITION OF EXPORT TURNOVER EXCLUDES FREIGHT AN D INSURANCE. SINCE EXPORT TURNOVER HAS BEEN DEFINED BY PARLIAMENT AND THERE IS A SPECIFIC EXCLUSION OF FRE IGHT 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 PARLIAMENT TO MAKE A PROVISION WHICH HAS BEEN ENUNCIATED EARLIER MUST PR EVAIL AS A MATTER OF CORRECT STATUTORY INTERPRETATION. ANY OT HER INTERPRETATION WOULD LEAD TO AN ABSURDITY. IF THE C ONTENTION OF THE REVENUE WERE TO BE ACCEPTED, THE SAME EXPRES SION VIZ. EXPORT TURNOVER WOULD HAVE A DIFFERENT CONNO TATION IN THE APPLICATION OF THE SAME FORMULA. THE SUBMISSIO N OF THE REVENUE WOULD LEAD TO A SITUATION WHERE FREIGHT AND INSURANCE, THOUGH THESE HAVE BEEN SPECIFICALLY EXCLU DED FROM EXPORT TURNOVER FOR THE PURPOSES OF THE NUME RATOR WOULD BE BROUGHT IN AS PART OF THE EXPORT TURNOVER WHEN IT FORMS AN ELEMENT OF THE TOTAL TURNOVER AS A DENOMIN ATOR IN THE FORMULA. A CONSTRUCTION OF A STATUTORY PROVISIO N WHICH WOULD LEAD TO AN ABSURDITY MUST BE AVOIDED. MOREOVE R, A RECEIPT SUCH AS FREIGHT AND INSURANCE WHICH DOES NO T HAVE ANY ELEMENT OF PROFIT CANNOT BE INCLUDED IN THE TOTA L TURNOVER. FREIGHT AND INSURANCE CHARGES DO NOT HAV E ANY ELEMENT OF TURNOVER. FOR THIS REASON IN ADDITION, THESE TWO ITEMS WOULD HAVE TO BE EXCLUDED FROM THE TOTAL TURN OVER PARTICULARLY IN THE ABSENCE OF A LEGISLATIVE PRESCRI PTION TO THE CONTRARY CIT V SUDARSHAN CHEMICALS INDUSTRIES LTD. (2000) 163 CTR (BOM) 596: (2000) 245 ITR 769 (BOM) APPLIED; CIT V LAKSHMI MACHINE WORKS (2007) 210 CTR (SC) 1: (2007) 290 ITR 667 (SC) AND CIT V CATAPHARMA (IN DIA) (P) LTD. (2007) 211 CTR (SC) 83: (2007) 292 ITR 641 (SC) RELIED ON PAGE 9 OF 10 ITA NOS.1062 & 1063BANG /2011 & C.O.NOS.8 & 9/BANG/2012 9 11.2. IN THE CASE OF SAK SOFT LTD. (SUPRA), THE AS SESSEE WAS ENGAGED IN THE BUSINESS OF EXPORTING COMPUTER SOFTWARE AND CLAIMED DEDUCTION U/S 10B OF THE ACT. IN COMPLETING THE ASSESSMENT U/S 1 43(3) OF THE ACT, THE AO REDUCED THE EXPENDITURE INCURRED IN FOREIGN EXCH ANGE IN PROVIDING THE TECHNICAL SERVICES OUTSIDE INDIA, FROM THE EXPORT T URNOVER WITHOUT CORRESPONDING REDUCTION FROM TOTAL TURNOVER, THEREB Y REDUCING THE DEDUCTION CLAIMED BY THE ASSESSMENT U/S 10B OF THE A CT. 11.3 IN LIGHT OF THE ABOVE FACTS, THE SPECIAL BENC H HELD AS UNDER:- FOR THE ABOVE REASONS, WE HOLD THAT FOR THE PURPOS E OF APPLYING THE FORMULA UNDER SUB-SECTION (4) OF SECTIO N 10B, THE FREIGHT, TELECOM CHARGES OR INSURANCE ATTRIBUTA BLE TO THE DELIVERY OF ARTICLES OR THINGS OR COMPUTER SOFTW ARE OUTSIDE INDIA OR THE EXPENSES, IF ANY, INCURRED IN F OREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICES OUTSID E INDIA ARE TO BE EXCLUDED BOTH FROM THE EXPORT TURNOVER AN D FROM THE TOTAL TURNOVER, WHICH ARE THE NUMERATOR AND THE DENOMINATOR RESPECTIVELY IN THE FORMULA. THE APPEAL S FILED BY THE DEPARTMENT ARE THUS DISMISSED. 11.4 IN THE LIGHT OF THE ABOVE REASONING, WE ARE O F THE VIEW THAT THE ORDERS OF THE CIT(A) IS CORRECT AND IN ACCORDANCE W ITH LAW AND HE IS JUSTIFIED IN DIRECTING THE AO TO EXCLUDE THE ABOVE MENTIONED EXPENSES BOTH FROM THE EXPORT TURNOVER AS WELL AS FROM THE TOTAL TURNOVER WHILE CALCULATING DEDUCTION U/S 10A OF THE ACT. 12. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. 13. IN THE CROSS OBJECTION FILED BY THE ASSESSEE, T HE ONLY ISSUE TAKEN IS, THE CIT(A) HAS ERRED IN NOT ADJUDICATING THE GROUND REGARDING THE PAGE 10 OF 10 ITA NOS.1062 & 1063BAN G/2011 & C.O.NOS.8 & 9/BANG/2012 10 EXCLUSION OF THE TELECOMMUNICATION CHARGES AND TRAV ELLING EXPENSES FROM THE EXPORT TURNOVER WHILE COMPUTING DEDUCTION UNDER SEC TION 10A OF THE ACT. 13.1 HOWEVER, DURING THE COURSE OF THE APPEAL, THE LEARNED AR SUBMITTED THAT HE IS NOT PRESSING THIS GROUND IF TH E ASSESSEES ALTERNATIVE GROUND IS ALLOWED. SINCE THE ASSESSEES ALTERNATIV E GROUND IS ALLOWED FOR OUR REASONING MENTIONED IN PARAS 11 AND 12 (SUPRA), THE GROUNDS RAISED IN THE CROSS OBJECTIONS ARE DISMISSED. 14. IN THE RESULT, THE APPEALS AND THE CROSS OBJEC TIONS ARE DISMISSED. THE ORDER PRONOUNCED ON THE 29 TH DAY OF JUNE, 2012 AT BANGALORE. SD/- SD/- (N BARATHVAJA SANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNE D. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BA NGALORE.