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20. We have heard both the parties and are of the opinion that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee's own case for AY 2006-07 & 2007-08. Further the Department filed appeal before the Hon'ble High Court against the Tribunal's order, however, no ground was raised against this issue. Hence, this ground of the assessee is allowed.

21. The next ground is with respect to extra depreciation claimed on computer software of Rs.4,13,14,674. The fact is that aassessee bought some new computers and also some software and calculated depreciation @60% on both the assets. The AO granted depreciation @ 60% on the opening WDV of the computers and value of additions to computers, but restricted it to @25% on the additions to the software. The AO held that, in terms of Item 2(b) under Machinery and Plant (Item III of Part A of the Depreciation schedule) relevant for the assessment years 1988-89 to 2002-03, the depreciation is allowable @60% only on ITA Nos.1450 to 1456 1780 395 InfoTech computers and not on software. It is only from A.Y 2003-04 to 2005-06, the depreciation is allowable "on computers including computer software" @60% in terms of Item 4 under Machinery and Plant (Item III of Part A of the Depreciation schedule). Apparently, based on this distinction between the two schedules, the Assessing officer restricted the grant of depreciation @60% to computers and allowed depreciation on software at only 25% which is the general rate applicable to Plant & Machinery. He added the difference of Rs. 4,13,14,874/- as excess depreciation claimed.

(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".

29. It was further submitted that the above definition doesn't rope in expenditure on travel and subscriptions. So, the reduction from export turnover of Rs. 9,98,35,209/- (Rs.9,93,64,053 + Rs.71,156/- is not at all warranted. The balance of Rs.2,09,84,489/- includes Rs.2,01,40,454/- paid to ISSI for the services rendered in the context of the assessee contractual obligations to Pratt & Whitney. The amount of Rs.2,09,84,489/- represents expenditure in foreign currency incurred in providing software development services which is the main activity of the assessee Company. This expenditure was not incurred in providing technical services by the assessee outside India. It is not at all the case of either the AO or the CIT(A) that the Appellant was in the business of providing technical services. What the CIT(A) held was only that the amount paid by the assessee to USA subsidiary i.e. ISSI, i.e., Rs.2,01,40,454/- is for technical services received from that entity. It is not the case ITA Nos.1450 to 1456 1780 395 InfoTech of even the CIT(A) that the assessee company provided technical services to ISSI. The definition of export turnover covers only "expenditure incurred in foreign exchange in providing the technical services outside India" and not expenditure incurred while receiving technical services or providing software services. So there is no basis for reducing this amount of even Rs.2,09,84,489/- from export turnover while granting a deduction under section 80HHE.

33. The next ground is that the ld CIT (A) erred in holding that the communication expenses of Rs.92,60,349 are excludible from "export turnover" for granting deduction u/s 80HHE. Export turnover is defined under clause (iv) of Explanation 2 to sec.1 OA of the IT Act and it reads as under:

"export turnover" means the consideration in respect of export [by the undertaking] of articles or things or computer software received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section (3), but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things or ITA Nos.1450 to 1456 1780 395 InfoTech computer software outside India or expenses ,if any, incurred in foreign exchange in providing the technical services outside India;"