2016 (12) TMI 1191

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....ile computing the deduction u/s.10A of the Act. The assessee earned interest of Rs. 10,90,028/- on fixed deposits and claimed as business income of the assessee while claiming deduction u/s.10A of the Act. However, the lower authorities treated the same as 'income from other sources' and not considered for granting deduction u/s.10A of the Act. Against this, the assessee is in appeal before the Tribunal. 3. The ld. AR, submitted that the assessee is a 100% export oriented unit and is eligible to avail the exemption u/s. 10A the Act as all the conditions prescribed therein are complied with. The assessee earned interest of Rs. 10,90,028.00 from the deposits placed with the Bank for various purposes, like, to meet the margin requirements w....

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....it is the income which is derived from the consideration realized by export of articles. Therefore, it is eligible for benefit u/s.10B of the Act and to support his view, he further relied on the judgment of the Tribunal, Mumbai Bench in the case of J.P.Morgan Services Pvt. Ltd. (2013). Further, the ld. AR submitted that 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 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 subject undertaking which is directly attributable to and part6akes the character of being b....

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....that the interest income earned from fixed deposit cannot be considered as part of the export business income of the assessee. According to him, only the income from export is entitled for deduction u/s.10A of the Act. He also relied on the decision of the co-ordinate Bench in the case of Changepond Technologies (P) Ltd.CIT reported in 22 SOT 220 (Chennai) and in the case of Orchid Chemicals & Pharmaceuticals Ltd. vs. JCIT (97 ITD 277)(Chennai), wherein it was observed as under : "In the context of expression 'derived from' or 'attributable to', the nature of the income is important and the nature of income has to be decided on the facts of each case. In the instant case, the assessee had earned the interest on margin money deposit made ....

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.... the securities are held as trading assets or capital assets. The fact that income falling under a specific head may indirectly be covered by any other head will not make it taxable under the latter head. The interest income earned from deposits with the bank was not connected with profits and gains which were derived from hundred per cent export-oriented undertaking or from manufacturing any article or thing. The expression 'any profits and gains' derived by the assessee from a hundred per cent export oriented undertaking to which this section applies as used in section 10B has a distinct but narrow meaning and it cannot receive a flexible or wider concept. The assessee is entitled to claim deduction of the amount which it derives as direc....