AI Drafter 
TaxTMI 
TaxTMI 
2016 (2) TMI 300
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....nd export of diamond studded jewellery, filed its return for A.Y. 2010-11 on 26.09.2010 disclosing total income of Rs. 4,20,000/-. The case was subsequently taken up for scrutiny. The assessment was completed under section 143(3) of the Income Tax Act, 1961 (in short 'the Act') vide order dated 22.01.2013, wherein the income of the assessee under the normal provisions was determined at Rs. 4,20,000/-, which, inter alia, included additions/disallowances of Rs. 57,563/- on account of internet on FD's and Rs. 13,39,825/- on account of EEFC income being excluded from computation of deduction under section 10A of the Act. While computing the book profits under section 115JAB of the Act, at Rs. 2,26,92,585/-, the Assessing Officer (AO) disallowed....
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....e said sum of Rs. 57,563/- being the interest received on Fixed Deposits as profits of the business while calculating deduction u/s. 10A. 2. Without prejudice to Ground of Appeal No. 1, the learned CIT(A) had erred in upholding that only net interest should be excluded for deduction u/s. 10A. 3. On facts and in law, the learned CIT(A) had failed to appreciate that Rs. 13,39,825/- is not interest received on EEFC, but the exchange difference on EEFC and the same should be considered as such while calculating deduction u/s. 10A. Under the facts and circumstances of the matter, he ought to have considered the said sum of Rs. 13,39,825/- as exchange difference on EEFC and directed the Assessing Officer to allow deduction u/s. ....
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.... the fixed deposit account is shown as secured against bank guarantee which shows that the fixed deposits have a direct nexus with the business of the assessee. In our considered view, the interest earned from such deposits of the money kept apart for the purpose of business is to be taxed under the head 'Income from business' and cannot be taxed under 'Income from other sources'. We draw support from the decision of the Hon'ble Bombay High Court in the case of Indo Swiss 284 ITR 389. We, accordingly direct the AO to treat the interest income under the head 'Profits and gains of the business' and for the reasons given in ground No. 1 of this appeal, we direct the AO to allow deduction u/s. 10A of the Act. Ground No. 2 is accordingly all....
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....e matter. We find, as submitted by the learned A.R. for the assessee that similar issue was considered and held in favour of the assessee by the Coordinate Bench of this Tribunal in its order in ITA No. 7371/Mum/2012 dated 15.07.2015 in assessee's own case for A.Y. 2008- 09, holding as under at para 19 thereof: - "19. We have carefully perused the relevant part of the orders of the Revenue authorities. It is not in dispute that Rs. 35,86,248/- is not interest earned but gain on the fluctuation of foreign exchange. From the chart exhibited at page-24, we find that the assessee has suffered losses on foreign exchange fluctuation which have been accepted by the Revenue authorities. We, therefore, do not find any reason for giving diff....
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....e circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the statute has omitted the deduction available in respect of amount of income to which the provisions of section 10A or 10B apply in order to arrive at the Book Profit u/s. 115JB?" 10.1 The learned D.R. for the Revenue was heard in support of the ground raised (supra) and placed reliance on the orders of the AO on this issue. 10.2 Per contra, the learned A.R. for the assessee supported the finding of the learned CIT(A) in the impugned order on this issue. The learned A.R. for the assessee submitted that this issue of allowing deduction under section 10A of the Act from 'Book Profit' under section 115JB of the Act has been considered and held in favou....
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....ed to have been notified and established in accordance with provisions of SEZ Act and the provisions of Special Economic Zones Act shall apply to such existing SEZ units. It is also observed that by the SEZ Act, sub-section (6) to section 115JB was also inserted providing that provisions of section 115JB shall not apply to the income accrued or arisen on or after 1.4.2005 from any business carried on, or services rendered, by an entrepreneur or a Developer, in a Unit or Special Economic Zone, as the case may be. Hence, income of units located SEZ will not be included while computing book profit for the purpose of MAT as per section 115JB(6) of the Act. In view of above, we are of the considered view that there is merit in the contention of ....