TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 1062
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....ived on Fixed Deposits as profits of the business while calculating deduction u/s.10A. Under the facts and circumstances of the matter, he ought to have directed the Assessing Officer to include the said sum of Rs. 1,10,314/being the interest received on Fixed Deposits as profits of the business while calculating deduction u/s.10A 3. On facts and in law, the learned CIT(A) had failed to appreciate that RS.3S,86,248/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.35,86,248/as exchange difference on EEFC and directed the Assessing Officer to allow deduction u/s.1OA on the said amount. 4. On facts and in law, the learned CIT(A) had erred in not directing the Assessing Officer to exclude the exemption allowable u/s.10A from the Book Profit taxable u/s.115JB of the I.T. Act. Under the facts and circumstances of the matter, he ought to have directed the Assessing Officer to exclude the exemption allowable u/s.10A from the Book Profit taxable u/s.115JB of the Act. 5. On facts and in law, the ....
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....ers of the Revenue authorities. 8. We have given a thoughtful consideration to the relevant provisions of the Act and have considered the orders of the authorities carefully and also the decision relied upon by the assessee. There is no dispute that the labour charges earned by the assessee have a direct nexus with the business of the assessee. All that has to be considered is whether such profit is eligible profit for the purpose of the claim of deduction u/s. 10A of the Act. The Special Bench of the Tribunal in the case of Maral Overseas (supra) has considered this issue and has 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....
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....ed. 9. Ground No. 2 relates to the exclusion of interest received on fixed assets as profit of the business while calculating deduction u/s. 10A of the Act. 10. The issue finds place at para-5 on page-3 of the assessment order. The assessee was asked to explain why interest on fixed deposit should not be excluded from the profit of business and taxed as income from other sources. In its reply dated 20.12.2011, the assessee stated that the fixed deposit receipts are in respect of bank guarantee provided by the bank to Seepz authority, Federation of India, Chambers of Commerce and Industry, New Delhi. It was explained that the FDR is directly related to the business of the assessee and therefore interest earned on such fixed deposits have to be taxed under the head "Income from business". 10.1. The submissions of the assessee was dismissed by the AO relying upon the decisions of the Hon'ble Supreme Court in the case of Pandian Chemicals Ltd. Vs CIT 262 ITR 278 and Liberty India Vs CIT 317 ITR 218 (SC). The AO treated the interest income under the head Income from other sources thereby denying the claim of deduction u/s. 10A of the Act. 11. Aggrieved by this, the assessee carried ....
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....ansaction so as to fall within the expression "derived" by the taxpayer. The AO accordingly taxed the gain on EEFC account under the head Income from other sources. 16. The assessee could not succeed before the Ld. CIT(A) and is therefore before us. 17. The Ld. Counsel for the assessee drew our attention to page-24 of the paper Book and pointed out that the gain on exchange difference on EEFC account of Rs. 35,86,248/- is not an interest but a gain on the fluctuation of foreign exchange which has been wrongly considered by the Revenue authorities as interest. It is the say of the Ld. Counsel that such exchange fluctuation has a direct nexus with the business of the assessee and therefore the same should be taxed under the head business income. 18. The Ld. DR relied upon the assessment order and the order of the First appellate authority. 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....
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....dered view that there is merit in the contention of ld A.R. that irrespective of the fact that amendment has been made in clause (f) of Explanation (1) to section 115JB(2) of the Act to apply the provisions of MAT in respect of units which are entitled to deduction u/s.10A or 10B but the units which are in SEZ will continue to get benefits from the applicability of provisions of MAT in view of sub-section(6) of the Act. We also observe that benefit given to SEZ unit from the applicability of provisions of section 115JB has been withdrawn by the Finance Act, 2011 by inserting a proviso to section 115JB(6) of the Act." Respectfully following the decision of the Co ordinate Bench, we direct the AO to exclude the exemption allowable u/s/.10A from the Book Profit taxable u/s. 115JB of the Act. Ground No. 4 is accordingly allowed. 23. Ground No. 5 relates to the non-exclusion of the Fringe Benefit Tax of Rs. 84,585/- from the book profit taxable u/s. 115JB of the Act. 23.1. At the very outset, the Ld. Counsel for the assessee pointed out that the Ld. CIT(A) at para-5.5 of his order has considered this issue as general in nature. The Ld. Counsel drew our attention to the Circular of the....