Case Law Details
Mindtree Ltd Vs. ACIT (Karnataka High Court)
Thus, the Commissioner of Income Tax (Appeals) has recorded a categorical finding that assessee is engaged in the development of computer software, which is exported outside India. The aforesaid finding has not been set aside by the Tribunal. Therefore, in view of Explanation 2(iii) to Section 10B of the Act, the expression ‘export turnover’ does not include any expenses incurred in foreign exchange in providing technical services outside India. The assessee has incurred expenditure of Rs.198,17,58,814/- in foreign currency from export turnover for software development. Similarly, the telecommunication charges attributable to delivery of computer software outside India could not have been excluded from the export turnover in view of Explanation 1(i) to Section 10AA of the Act. It is also noteworthy that Explanation 2 to Section 10AA provides that profits and gains derived from; on site development of computer software (including services for development of software) outside India shall be deemed to be the profits and gains derived from the export of computer software outside India.
It is pertinent to mention here that in the case of assessee itself, for the Assessment year 2009-10, the expenditure incurred in foreign currency was not reduced from export turnover and total turnover, which is evident from the order dated 31.01.2017 passed by the Assistant Commissioner of Income Tax. A bench of this court in Tata Elxsi Limited supra has also taken a view that technical services rendered by the assessee’s engineers in connection with export of computer software, cannot be excluded in computing the export turnover as it forms part of export turnover. The aforesaid order was upheld by the Supreme Court vide order dated 22.02.2019 passed in SLP (C) No.19150/2015. A division bench of this court in Mphasis Ltd., supra has held that foreign currency expenditure incurred for providing software development services outside India cannot be excluded from export turnover for the purpose of computing deduction under Section 10B of the Act and the aforesaid decision has been upheld by the Supreme Court vide order dated 13.11.2019 passed in SLP (C) No.766/2015.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee. The subject matter of the appeal pertains to the Assessment year 2008-09. The appeal was admitted by a bench of this Court vide order dated 09.04.2013 on the following substantial questions of law:
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