Software Development Services to be included in Export Turnover for Computing Deduction under sec 10B

Software Development Services to be included in Export Turnover for Computing Deduction under sec 10B

IN THE HIGH COURT OF KARNATAKA

The Relevant Text of the Order as follows :

10. It is pertinent to mention here that in the cae 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.

In view of preceding analysis, substantial questions of law No.3 and 5 are answered in favour of the assessee and against the revenue. In the result, the impugned order dated 11.01.2013 to the extent it is prejudicial to the assessee is hereby quashed. As a result, the appeal is allowed.

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Tags: Judgement, High Court

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