Dismissing the appeal of the revenue the High Court held that foreign currency expenditure incurred for providing software development services outside India cannot be excluded from export turnover for purpose of computing deduction. High Court also held that when expenditure incurred in foreign currency on account of telecommunication expenses is excluded from export turnover, said expenditure has to be excluded from total turnover also for purpose of computation of deduction. Followed CIT v. Tata Elxsi Ltd (2012) 349 ITR 98 (Karn.) (HC), affirmed in CIT v. HCL Technologies Ltd. (2018) 404 ITR 719 (SC) ( AY. 2003-04, 2004-05)
CIT v. Mphasis Ltd. (2016) 74 taxmann.com 274 (Karn.)(HC) Editorial : SLP of revenue is dismissed; CIT v. Mphasis Ltd. (2020) 269 Taxman 3 (SC)
S. 10B : Export oriented undertakings-Total turnover-Foreign currency expenditure incurred for providing software development services outside India cannot be excluded from export turnover for purpose of computing deduction-When expenditure incurred in foreign currency on account of telecommunication expenses is excluded from export turnover, said expenditure has to be excluded from total turnover also for purpose of computation of deduction. [S. 80HHC, 80HHE ]