TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 908
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....in the present appeal is concerned, the assessee has included a sum of Rs. 19,26,669/- in the turnover for the purpose of claiming exemption under section 10B. According to the AO, this amount represents to services and maintenance provided by the assessee. The ld.AO after allowing the expenditure incurred on this front, excluded the amount of Rs. 15,04,869/-. The ld.AO assessed this amount under head "Income from other sources". On appeal, the ld.CIT(A) has agreed with view of the AO, but re-worked out the quantum. The finding of the ld.CIT(A) reads as under: "4. I have considered the appellant's submissions and the AO's observations. The present issue involves two different types of income. So far as development charges of Rs. 3,20,694/- is concerned, the same has been received by the appellant for developing the tools for manufacture of blinds as per the product requirements of the customer. Thus, the appellant's submission that the product development charges are inextricably linked with the manufacturing of the products is acceptable. Hence this income has been derived from the activity of manufacture of the industrial undertaking and accordingly deduction u/s.1O....
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....qual to such percentage and for such number of assessment years as specified in this section. The Apex Court has also drawn a distinction between the expression 'derived from' and 'attributable to' in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 , wherein it is held that the expression 'attributable to' was wider in import than the expression 'derived from'. The expression of wider import, namely, 'attributable to', was used when the Legislature intended to cover receipts from sources other than the actual conduct of the business. But in the instant case, the assessee's source of income was from repairs and maintenance, i.e., after sale-services and it might have commercial connection between the profits earned and the industrial undertaking but industrial undertaking itself was not the source of this profit. This profit from repair and maintenance earned by assessee was not a direct yield from industrial undertaking as the word used in section 80-IB of profits and gains derived from." (ii) [2012] 17 taxmann.com 259 (Mad.), Indian Additives Ltd. In this decision, the High Court has held that the assess....
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....elhi High Court containing order of the ITAT, Special Bench read as under: "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 Undertaking Export turnover X Total turnover of business 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 ratio of turnover to the total turnover. Thus, not-with-standing the fact 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 under....
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.... 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." The aforesaid view is in consonance with the decision of this Court dated 1st September, 2014 passed in ITA 438/2014, Commissioner of Income Tax-VII versus XLNC Fashions in which this court has held as under :- "Deduction under Section 10B of the Income Tax Act, 1961 (Act, in short) is to be made as per the formula prescribed by Sub- Section (4), which reads as under: "10B. Special provision in respect of newly established hundred per cent export- oriented undertakings- ......... ........... (4) For the purposes of sub-section (1), the profits derived from export of articles or things or computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking". Sub-section (4), therefore, is the special provision which enables the ....
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....wherein it has been held:- "By Finance, Act, 2001, with effect from 01.04.2001, the present Sub- section (4) is substituted in the place of old Sub-section (4). No doubt Sub-section 10(B) speaks about deduction of such profits and gains as derived from 100% EOU from the export of articles or things or computer software. Therefore, it excludes profit and gains from export of articles. But Sub-section (4) explains what is says that profits derived from export of articles or things or computer software shall be the account which bares to the profits of the business of the undertaking and not the profits and gains from export of articles. Therefore, profits and gains derived from export of articles is different from the income derived from the profits of the business of the undertaking. The profits of the business of the undertaking includes the profits and gains from export of the articles as well as all other incidental incomes derived from the business of the undertaking. It is interesting to note that similar provisions are not there while dealing with computation of income under Section 80HHC. On the contrary there is specific provisions like Section 80HHB which expressly exclud....