Turnover for the purpose of deduction U/S 10-B
This query is : Resolved
12 December 2009
In the case of 100% EOU, the assessee has not collected freight charges/insurance separately in the invoice. The AO wants to deduct the freight charges and insurance charges debited in the P & L A/C from the export turnover. Is he correct.
Kindly clarify
P. Srinivasa
Kindly clarify
P. Srinivasa
12 December 2009
By debiting to profit and loss account such expenses means you have not collected these payments from the customer. Hence this part will not be received in foreign exchange.
Explanation to Section 10B (9A) 2 (iii) -
It reads as under (with modifications and explanations as required by your question) :
"export turnover" means the consideration in respect of export by the undertaking of articles or things received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section 3 (payment to be received within 6 months), but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things outside India ....
It means the expenditure which have been made outside India towards freight, telecommunication or insurance are not considered as export turnover. The logic behind is that we cannot export the expenses.
Simply, whatever you will receive from export turnover in the form of convertible foreign exchange is your export turnover.
ITO is not correct.
You may present the definition in the following form with suitable explanations (with facts of your case):
Convertible Foreign Exchange received is the Export Turnover. Export expenses alrady not included in the turnover hence there is no question of deduction from the invoice value.
CA Rakhecha
Surat
Explanation to Section 10B (9A) 2 (iii) -
It reads as under (with modifications and explanations as required by your question) :
"export turnover" means the consideration in respect of export by the undertaking of articles or things received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section 3 (payment to be received within 6 months), but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things outside India ....
It means the expenditure which have been made outside India towards freight, telecommunication or insurance are not considered as export turnover. The logic behind is that we cannot export the expenses.
Simply, whatever you will receive from export turnover in the form of convertible foreign exchange is your export turnover.
ITO is not correct.
You may present the definition in the following form with suitable explanations (with facts of your case):
Convertible Foreign Exchange received is the Export Turnover. Export expenses alrady not included in the turnover hence there is no question of deduction from the invoice value.
CA Rakhecha
Surat
14 December 2009
The AO wants to reduce the Export turnover to the extent of expenses incurred on account of freight, telecommunication and insurance and is not agreeing for the similar reduction from total turnover.
Is there any case law decided by Karnataka High Court.
Is there any case law decided by Karnataka High Court.
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