TaxTMI 
TaxTMI 
2015 (1) TMI 512
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..../- in which deduction u/s 10B was claimed at Rs. 31,94,659/-, as earlier it had been wrongly claimed at 90% instead of 100%. During the scrutiny assessment proceedings, the Assessing Officer verified the claim of deduction u/s 10B of the IT Act. The appellant is engaged in the business of export of made ups and garments through a 100% Export Oriented Unit in Noida Special Economic Zone. The Assessing Officer observed from the Profit & Loss a/c that net profit of Rs. 32,30,306/- included duty drawback of Rs. 21,62,369/-. The Assessing Officer was of the opinion that deduction u/s 10B could not be allowed on the portion of duty drawback, relying on the judgment of the Supreme Court in the case of Liberty India Vs. CIT 317 ITR 218, wherein duty drawback was held ineligible for computing deduction u/s 80IA and 80IB. 4. The appellant submitted before the Assessing Officer that as per the provisions of section 10B, the deduction was to be computed on the basis of export turnover which was the export consideration brought into the country in foreign exchange, but not including freight, telecommunication charges or insurance attributable to the delivery of goods outside India, and expense....
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....ful perusal of the decision of ITAT 'G' Bench, Delhi in the case of Sanjay Aggarwal vs. DCIT (Supra) we observe that the Coordinate Bench of this Tribunal has declined to accept the contention of the ld. CIT.DR that the decision of Special Bench cannot go beyond the case for disposal of which it was constituted. The relevant para 14 of this judgment reads as under: "14. Since the Special Bench has decided this issue in this manner, it is not possible for us to deviate from the same. There has to be some consistency in the view taken by the Tribunal. Once a Special Bench has decided a particular issue in a particular manner, then, that becomes binding on all the division benches across the country unless there is a contrary judgment of the Hon'ble Supreme Court or that of some High Court. As the ld. DR failed to point out any specific and direct judgment rendered by the Hon'ble High Court on the issue which is obtaining in the present appeal, we are disinclined to deviate from the Special Bench order in the case of All Cargo (supra). We, therefore, hold in principle that no addition can be made for any assessment year u/s 153A, the assessment for which is not pending on the date of....
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....sh a direct nexus with the business of the undertaking and once an income forms part of the business of the undertaking, the same would be included in the profits of the business of the undertaking. Thus, once an income forms part of the business of the eligible undertaking, there is no further mandate in the provisions of section 10B to exclude the same from the eligible profits. The mode of determining the eligible deduction u/s 10B is similar to the provisions of section 80HHC inasmuch as both the sections mandates determination of eligible profits as per the formula contained therein. The only difference is that section 80HHC contains a further mandate in terms of Explanation (baa) for exclusion of certain income from the "profits of the business" which is, however, conspicuous by its absence in section 10B. On the basis of the aforesaid distinction, sub-section (4) of section 10A/10B of the Act is a complete code providing the mechanism for computing the "profits of the business" eligible for deduction u/s 10B of the Act. Once an income forms part of the business of the income of the eligible undertaking of the assessee, the same cannot be excluded from the eligible profits fo....
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.... special provision which enables the assessee to compute the profits derived from the export of articles or things or computer software. We do not see any conflict between Sub- section (1) and Sub-section (4) to Section 10B, as Sub-section (1) states that deduction of such profits and gains as are derived by a hundred percent export-oriented undertaking from the export of articles or things or software would be eligible under the said Section. Sub- section (1) is a general provision and identifies the income which is exempt and has to be read in harmony with Sub-section (4) which is the formula for finding out or computing what is eligible for deduction under Sub-section (1). Neither of the two provisions should be made irrelevant and both have to be applied without negating the other. In other words, the manner of computing profits derived from exports under Sub-section (1), has to be determined as per the formula stipulated in Sub-Section (4), otherwise Sub-section (4) would become otiose and irrelevant. The issue in question in this appeal which pertains to the Assessment Year 2009-10, relates to duty draw back in the form of DEPB benefits. As per Section 28, clause (iii-c), any....
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....tion 80HHB which expressly excludes this type of incomes. Therefore, in view of the aforesaid provisions, it is clear that, what is exempted is not merely the profits and gains from the export of articles but also the income from the business of the undertaking.? In view of the aforesaid position, the appeals have to be dismissed. We order accordingly." 10. In view of above, respectfully note that the decision of Special Bench in the case of Maral Overseas P. Ltd. Vs. ACIT has been upheld by the Jurisdictional High Court of Delhi in the case of Hritnik Export (P) Ltd., (Supra). Therefore, we are inclined to hold that the decision of Special Bench in the case of Maral Overseas P. Ltd. Vs. ACIT (Supra), which has been confirmed and upheld by jurisdictional High Court of Delhi, is binding on all the Division Benches of the ITAT unless there is a contrary judgment of Hon'ble Supreme Court or that of the larger bench of Hon'ble High Court. On specific query from the bench the ld. CIT. DR failed to point out any specific and direct judgment either from Hon'ble Supreme Court or from Hon'ble Jurisdictional High Court or any other High Court on the issue, therefore, we decline to take a d....
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.... the entity from export turnover. 13. The ld. counsel further contended that the department has not disputed that the provisions of section 10B(4) of the Act mandate that the deduction shall be computed by apportion the profits of the business of the undertaking in the ratio of export turnover by the total turnover and sub section(1) and sub section(4) of section 10B of the Act are to be read together while computing the eligible deduction u/s 10B of the Act. The ld. counsel submitted that in the case of Liberty India (Supra), Hon'ble Supreme Court has dealt with the provisions of section 80I of the Act wherein no formula was laid down for computing the profits derived by the undertaking which has specifically been provided under sub section (4) of section 10B of the Act. The ld. counsel especially pointed out that the decision of Hon'ble Supreme Court in the case of Liberty India (Supra) is not applicable to the present case therefore, contention of the Revenue are not sustainable and order of the ld. CIT(A) and impugned order of the CIT(A) should be upheld. 14. The ld. counsel for the assessee also pointed out and drawn our attention towards decision of Hon'ble Supreme Court in....
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.... so laid down, the entire profits of the business are to be determined which are further multiplied by the ratio of export turnover to the total turnover of the business. In case of Liberty India, the Hon'ble Supreme Court has dealt with the provisions of section 80IA of the Act wherein no formula was laid down for computing the profits derived by the undertaking which has specifically been provided under sub-section (4) of section 10B while computing the profits derived by the undertaking from the export. Thus, the decision of the Hon'ble Supreme Court is of no help to the revenue in determining the claim of deduction u/s 10B in respect of export incentives. 78. Section 10B sub-section (1) allows deduction in respect of profits and gains as are derived by a 100% EOU. Section 10B(4) lays down special formula for computing the profits derived by the undertaking from export. The formula is as under :- Profit of the business of the X Total turnover of business Undertaking carried out by the undertaking 79. Thus, sub-section (4) of section 10B stipulated that deduction under that section shall be computed by apportioning the profits of the business of the undertaking in the ....
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....to determine the eligible deduction. The Hon'ble Supreme Court in the case of P.R. Prabhakar; 284 ITR 584 had approved the principle laid down in the Special Bench decision in International Research Park Laboratories vs. ACIT (supra). In the assessee's own case the I.T.A.T. in the preceding years, after considering the decision in the case of Liberty India held that provisions of section 10B are different from the provisions of section 80IA wherein no formula has been laid down for computing the eligible business profit. 80. In view of the above discussion, question no. 2 is answered in affirmative and in favour of the assessee. Accordingly, the assessee is eligible for claim of deduction on export incentive received by it in terms of provisions of section 10B(1) read with section 10B(4) of the Act. 3.1. Since the Special Bench after considering the ratio of decisions in the case of Liberty India (supra); International Research Park Laboratories v. ACIT 212 ITR (AT) 1; and CBDT Circular has held that while working out the deduction u/s 10B(1) the calculation of eligible profits is to be made by including the claim of export incentives, thus the claim ultimately allowed by the....
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....no help to the revenue in determining the claim of deduction under section 10B in respect of export incentives". 4.1 The Hon'ble Special Bench has further held that sub-section 10B(4) does not require an assessee to establish a direct nexus with the business of the undertaking and once an income forms part of the business of the eligible undertaking, there is no further mandate in the provisions of section 10B to exclude the same from the eligible profits. The Court has held that the mode of determining the eligible deduction under section 10B is similar to the provisions of section 80HHC, with the significant difference that section 80HHC contains a further mandate in terms of Explanation (baa) for exclusion of certain income from the profits of the business, which is conspicuously absent in section 10B. Subsection (4) of section 10B of the Act is a complete code providing the mechanism for computing the profits of the business eligible for deduction under section 10B. Thus, after considering the decision of the Supreme Court in the case of Liberty India Ltd., the Special Bench has held that the provisions of section 10B are different from the provisions of section 80IA, wherein ....
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....tions provide for incentives in the form of deductions which are linked to profit derived from industrial undertaking. We may also note that in the case of Maral Overseas Ltd.,(Supra) the Special Bench of the ITAT has held that in the case of Liberty India the Hon'ble Apex Court has dealt with the provisions of section 80IA of the Act for which no formula was laid down for computing the profits derived by the undertaking which has specifically been provided under sub section (4) of section 10B of the Act, for computation of the profits derived by the undertaking from the export business. Under these facts and circumstances, we respectfully held that the ld. CIT(A) was right in holding that the benefit of the ratio of decision of Hon'ble Apex Court in the case of Liberty India (Supra) is not allowable for the Revenue in determining the claim of the assessee u/s 10B of the Act. The ld. CIT(A) was right in holding that section 10B(4) of the Act is a complete code which provides a formula/mechanism for computing the profits of the business eligible for deduction u/s 10B of the Act and in view of the decision of Special Bench in the case of Maral Overseas Ltd.,(Supra) the present assess....