2014 (2) TMI 1225

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....r u/s 143(3) dated 31-12-2010. While making the assessment the assessing officer did not record any observations or findings about the allowability of the claim of deduction u/s 10B as worked out by the assessee. 2.1. The CIT issued notice u/s 263, finding that the order of assessment was erroneous insofar as it was prejudicial to the interests of revenue as the allowability of amount of claim qua DEPB profits was not in consonance with the ratio of decision of Hon'ble Supreme Court in the case of Liberty India 317 ITR 218 and as the assessing officer had not examined the case in the light of Hon'ble Supreme Court judgment. The order thus, was held to be erroneous and prejudicial to the interests of revenue and ld. CIT in exercise of power....

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....tion was sec. 80IB. The Special Bench after duly considering the facts & issues held as under: "It is clear from the plain reading of section 10B(1) of the Act that the said section allows deduction in respect of profits and gains as are derived by a 100% EOU. Further, section 10B(4) of the Act stipulates specific formula for computing the profit derived by the undertaking from export. Thus, the provisions of subsection (4) of section 10B of the Act mandate that deduction under that section shall be computed by apportioning the profits of the business of the undertaking in the ratio of export turnover by the total turnover. Thus, even though sub-section (1) of section 10B refers to profits and gains as are derived by a 100% EOU, the manne....

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....hall be computed by apportioning the profits of the business of the undertaking in the ratio of turnover to the total turnover. Thus, not-with-standing the fact 75 that sub-section (1) of section 10B refers the profits and gains as are derived by a 100% EOU, yet the manner of determining such eligible profits has been statutorily defined in sub-section (4) of section 10B of the Act. As per the formula stated above, the entire profits of the business are to be taken which are multiplied by the ratio of the export turnover to the total turnover of the business. Sub-section (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 undertaking, the same....

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....ort of goods. I.T.A.T., Special Bench in the case of International Research Park Laboratories vs. ACIT, 212 ITR (AT) 1, after following the aforesaid Circular, held that straight jacket formula given in sub-section (3) has to be followed 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 eligibl....