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Explanation - For the purposes of this section, -

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(c)    "export    turnover"    means        the

consideration in respect of computer software received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section (2), but does not include freight, telecommunication charges or insurance attributable to the delivery of the computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India; xxxx

Profits from export of Profits of the Computer software = business of the Computer software x export turnover Total turnover of the business Sub-Section (5) makes it clear that where the deduction under this Section is claimed and allowed, no deduction shall be allowed in relation to such profits under any other provisions of this Act for the same or any other assessment year. In other words, if the assessee chooses to claim benefit of Section 80HHE, even though there are several provisions granting deductions in respect of profits derived from export, the assessee would not be entitled to the benefit of the aforesaid provisions. Once deduction is claimed under this provision, he is disentitled from claiming under any other provisions of this Act. In other words, once this provision is attracted to such profits, all other provisions are excluded. The explanation to the Section gives a definition of various words and phrases used in the Section. As the opening words of the explanation makes it clear, these definitions have to be construed only for the purpose of this Section, that is Section 80HHE of the Act. Therefore, in order to decide the profits derived from the business of computer software, one of the component is export turnover. As per the aforesaid definition, it means the consideration in respect of computer software received in or brought into India by the assessee in convertible foreign exchange, but it does not include freight, telecommunication charges or insurance attributable to the delivery of the computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India. Therefore, all these expenses have to be excluded from the component of export turnover. Similarly, in view of the definition of total turnover, the income under Clause (iiia), (iiib), (iiic) of Section 28 have to be excluded.

The difference between Section 80HHC and Section 80HHE of the Act is to be noted. Prior to 1st April 1986, the head note of Section 80HHC defined 'deductions in respect of profits retained for export business'. The said head note was amended and the present head note, 'deduction in respect of profits retained for export business' was substituted, by the Finance Act of 1985 and came into effect by 1st April 1986. Therefore, the very basis shifted from export turnover to export business. The Heading of Section 80HHE is 'deductions in respect of profits from export of computer software, etc.' That is the first distinction which is to be borne in mind which distinguishes Section 80HHE from Section 80HHC is the head note of deduction. Section 80HHE allows deductions in respect of profits from export of computer software etc. Secondly, Section 80HHC is applied to an Indian company or a person resident of India who is engaged in the business of export outside India of any goods or merchandise to which the Section applies. The said Section was made applicable to goods or merchandise other than those specified in Clause(b) of Sub-Section (2) and only the goods or merchandise namely mineral oil, minerals and ores other than processed minerals and ores specified in the 12th Schedule were excluded. In other words, this Section is applied to all goods and merchandise other than those which are exempted. Therefore, it included computer software also on the day the aforesaid Section was enacted. The said Section also provides for how profits derived from such export shall be determined under Sub-Section(3) of Section 80HHC. Further the explanation to the Sub- Section also states that for the purpose of the said Section, the meaning attributable to 'export turnover', 'total turnover', 'profits of the business'. In interpreting Section 80HHC and 'total turnover', in the aforesaid judgment, the Apex Court has categorically held that the total turnover includes the turnover of the assessee from all businesses.

"(3) For the purposes of sub-

section(1), profits derived from the business referred to in that sub-section shall be the amount which bears to the profits of the business, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee."

The word "export turnover" has been defined for the purpose of this Section which means the consideration in respect of computer software received or brought into in India by the assessee in convertible foreign exchange. Similarly the total turnover for the purposes of this Section has been defined as it shall not include the amounts mentioned therein which is also not included in the export turnover. The word "profits of the business" is also defined for the purpose of this Section and means the profits of the business as computed under the head profits and gains of business or profession and reduced by the factors mentioned therein. Sub- Section(5) of Section 80HHE makes it clear that where a deduction under the Section is claimed and allowed in respect of the profits of the business referred to in sub-Section (1) for any assessment year no deduction shall be allowed in respect of such profits under any other provision of this Act for the same or any other assessment year. Therefore these provisions have to be understood with reference to such business referred to in sub-Section(1). Therefore in computing the profits from export of computer software what has to be taken into consideration is only the profits from the business of computer software and export turnover which is to be divided by the total turnover of the business of computer software. The business of computer software may include export as well as domestic sales. Both have to be taken into consideration in arriving at the total turnover. There is no difficulty in so far as the export turnover is concerned. The only limitation is that the factors mentioned therein has to be excluded in arriving at export turnover. Then we have to look into the profits of the computer software business which may include profits from export as well as domestic sales. As sub-Section(1) is very clear that what is to be taken is the profits derived by the assessee from "such business". The said business does not include the other business which the assessee may be carrying on. "Such business" specifically referred to the business dealt with under sub-Section(1) that is the business of computer software as well as business of technical services outside India. Even if the assessee is carrying on the business in other goods, for the purpose of computing the profits from export business determining the profits from computer software business the profits derived from other business have to be excluded. Therefore the formula prescribed in sub-Section(3) may be understood as under:-