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of <h1>Tribunal Decision Upheld on Depreciation & Export Profit Calculation</h1> <h3>Commissioner of Income-tax, Cochin Versus Sun Fibre Optics (P.) Ltd.</h3> Commissioner of Income-tax, Cochin Versus Sun Fibre Optics (P.) Ltd. - TMI Issues:1. Depreciation calculation based on subsidies received by the industrial unit.2. Determination of export profit eligible for deduction under Section 10B of the Income Tax Act.Issue 1: Depreciation calculation based on subsidies received:The appeal filed by the Revenue challenges the Tribunal's order favoring the respondent assessee regarding the depreciation calculation on assets subsidized by the State Government. The Assessing Officer reduced the actual cost of assets by the subsidy amount as per Explanation 10 to Section 43(1) of the Act. The Tribunal allowed the assessee's appeal, citing that the provision for subsidy reduction was introduced post the investment date, thus not applicable. The High Court upheld the Tribunal's decision, stating that the amendment was prospective, applying to investments made after 01/04/1999. The Court referenced the Supreme Court's decision in CIT v. P.J. Chemicals Ltd., emphasizing no retrospective application without legislative intent.Issue 2: Determination of export profit eligible for deduction:The dispute arose over the calculation of export profit deduction under Section 10B of the Act, specifically regarding the treatment of components supplied by the foreign buyer in export turnover determination. The Assessing Officer, in reassessment, adopted a different approach for export and total turnover calculations, including the value of components withheld by the foreign buyer in total turnover. The Tribunal, following the Chennai Tribunal's Special Bench decision and the Supreme Court's ruling in CIT v. Lakshmi Machine Works, rejected the Department's stance. The High Court concurred, emphasizing that export turnover, as both numerator and denominator, should reflect the actual amount received in convertible foreign exchange, excluding the value of components supplied. The Court upheld the Tribunal's decision, dismissing the Departmental Appeal on this issue as well.In conclusion, the High Court dismissed the Revenue's appeal, upholding the Tribunal's decisions on both issues related to depreciation calculation based on subsidies received and the determination of export profit eligible for deduction under Section 10B of the Income Tax Act.
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