Tribunal ruling: Assessee's appeal partly allowed, Revenue's appeal dismissed. Recomputation ordered.

The Tribunal partly allowed the assessee's appeal and dismissed the Revenue's appeal. The Assessing Officer was directed to recompute deductions and set-offs in accordance with the Tribunal's directions and judicial precedents. The decision was pronounced on June 12, 2012.

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Issues Involved:
1. Deduction under section 80HHE.
2. Computation of interest under section 234B.
3. Allowability of deduction under section 10A for three units.
4. Set-off of losses of section 10A units against normal business income.
5. Adjustment under section 92CA for non-charging of interest on extended credit to associated enterprises.

Issue-wise Detailed Analysis:

1. Deduction under section 80HHE:
- Ground 1a: The assessee did not press this ground; hence, it was dismissed.
- Ground 1b: The issue was about the computation of deduction under section 80HHE, specifically whether the turnover of overseas branches should be excluded from both the export turnover and the total turnover. The Tribunal referred to its previous decision in the assessee's own case and other judicial precedents, concluding that the turnover of overseas branches should be excluded from both the export turnover and the total turnover for computing the deduction under section 80HHE. The Tribunal directed the Assessing Officer to recompute the deduction accordingly.

2. Computation of interest under section 234B:
- The issue was whether the tax credit for taxes paid in the USA under the Double Taxation Avoidance Agreement (DTAA) should be considered while computing interest under section 234B. The Tribunal followed the judgment of the Bombay High Court in the assessee's own case, which held that the tax credit must be considered for computing interest under section 234B. The amendment to the law was deemed clarificatory and retrospective. The Tribunal allowed the assessee's ground.

3. Allowability of deduction under section 10A for three units:
- The issue was whether the units at Chinchwad, Akruti, and Millennium Business Park were new units eligible for deduction under section 10A or merely expansions of existing units. The Tribunal referred to its earlier decision and the Supreme Court's judgment in the case of Textile Machinery Corporation Ltd., concluding that the units were independent and not mere expansions. The Tribunal upheld the Commissioner of Income-tax (Appeals)'s decision allowing the deduction under section 10A for these units.

4. Set-off of losses of section 10A units against normal business income:
- The issue was whether the losses of section 10A eligible units could be set off against the normal business income. The Tribunal followed its earlier decision and the Bombay High Court's judgment in the assessee's own case, which allowed the set-off of such losses. The Tribunal directed the Assessing Officer to allow the set-off of losses of section 10A units against the normal business income.

5. Adjustment under section 92CA for non-charging of interest on extended credit to associated enterprises:
- The issue was whether the extended credit period allowed to associated enterprises constituted an international transaction requiring an arm's length price adjustment. The Tribunal referred to its earlier decision and the Mumbai Bench's decision in the case of Nimbus Communications Ltd., concluding that the extended credit period did not constitute an international transaction under section 92B. The Tribunal held that the adjustment made by the Assessing Officer was untenable and directed the deletion of the entire addition.

Conclusion:
- The assessee's appeal was partly allowed, and the Revenue's appeal was dismissed. The Tribunal directed the Assessing Officer to recompute deductions and set-offs as per the Tribunal's directions and judicial precedents. The decision was pronounced on June 12, 2012.

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