TaxTMI 
TaxTMI 
2016 (11) TMI 1483
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....-08 which is directed against an order passed by CIT(A)-26, Mumbai dated 11/12/2012, which in turn, arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short 'the Act') dated 17/11/2009. The Grounds of appeal raised by the assessee read as under:- Disallowance of claim of deduction u/s. 10B for Central Sales-tax (CST) refund of Rs. 2,59,903/- received during the year. 1. The learned CIT(A) erred in confirming disallowance made by the AO of deduction u/s.1OB claimed by the appellant for CST Refund of Rs. 2,59,903/- received during the year without appreciating that it has direct nexus with the profit derived from exports and appellant is entitled to deduction on CST re....
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....sessee company had claimed deduction under section 10B of Rs. 9,36,31,606/- with respect to its 100% export oriented undertaking (EOU). The Assessing Officer noted that the claim of deduction under section 10B of the Act included income by way of reimbursement of Central Sales Tax(CST) - Rs. 2,59,903/-, interest earned on term deposits - Rs. 68,677/-; and, interest earned on deposits with Gujarat Electricity Board - Rs. 47,441/-. 4. The Assessing Officer disallowed the claim of deduction under section 10B of the Act with respect to the aforesaid three elements of income on the ground that such incomes do not constitute a first degree profit of the 100% EOU. Further, as per Assessing Officer such incomes were not received in convertible f....
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....ish Valves (P) Ltd. (2012) 204 Taxmann 133(Karn)(HC), (ii) CIT vs. Motrola India Electronics (P) Ltd.(2014) 265 CTR 94 (Kar)(HC) (iii) Riviera Home furnishing v. ADIT (2016) 237 Taxman 520 (Del) (iv) Bright engineering works v. JCIT, ITA No.7699/Mum/2012 dtd 19/9/2014 (Mum.Trib) (v) CIT vs. Hrithnik Exports Pvt. Ltd. IT Appeal Nos. 219& 239 of 2014, dated 13/11/2014 (Del) (HC). 6. On the other hand, the Ld. Departmental Representative has reiterated the stand of the lower authorities by pointing out that the CST refund cannot be said to be on account of profits and gains derived by the undertaking from export of articles or things and, therefore, the claim of deduction has been rightly denied by the lo....
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....eduction. Quite clearly, the schematic mechanism of section 10B of the Act, especially a joint reading of sub-section (1) and sub-section (4) would show that there is no requirement for the assessee to establish a direct nexus with the business of the undertaking so long as the relevant income forms part of the business of the undertaking. In the present case, the assessment order itself reveals that the refund of Rs. 2,59,903/- on account of CST has been assessed as a part of the business income of the 100% EOU. Similar is the situation with regard to the interest income of Rs. 68,677/- earned on term deposit with the bank and interest of Rs. 47,441/- earned on deposit with Gujarat Electricity Board. Under these circumstances and consideri....