TaxTMI 
TaxTMI 
2019 (1) TMI 260
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....er referred to as "the Act") dated 15.01.2014 relevant to Assessment Year (AY) 2011-12. 2. The grounds of appeal raised by the assessee are as under:- "1. (a) The CIT(A) has erred both in Law and in fact in computing deduction u/s. 10B(4) of the Act and restricting the same by not treating Income of Rs. 9,19,094/- as Income from Business as claimed b> the Appellant related Business of E.O.U. for calculating deduction u/s 10B. (b) It is submitted that in the claim of the Appellant was as per provisions of Law and backed by Certificate of Chartered Accountant and that since Rs. 9,19,094/- is income attributable to Business of E.O.U. the same ought to have been allowed as claimed by the Appellant. 2. Alternatively it is submitted that C....
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....ess provision of expense written Back Rs. 291/- Discount and Kasar Rs. 56,542/- Central Sales Tax Refund as it is EOU unit Rs. 2,77,565/- Service Tax Refund as it is EOU Unit. Rs. 5,84,329/- Scrap Sales - Generated by manufacture in EOU Unit. 4.1 The assessee in support of the above income claimed the deduction u/s 10B of the Act on the ground that these are arising in the course of the business carried on under its 100% Export Oriented Unit. However, the AO disagreed with the submission of the assessee and held that the aforesaid incomes are not eligible for deduction u/s 10B of the Act. Accordingly, the AO reduced the amount of other income as discussed above from the income eligible for deduction u/s 10B of the Act. As per the ....
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....ubmission of the appellant is that this scrap sale is part of manufacturing and therefore while computing the profit of EOU, this local sale of scrap of Rs. 5,84,329/- has been included in total turnover only and not in export turnover. In my opinion, local sale of scrap of Rs. 5,84,329/- cannot be treated as part of total turnover because it has got nothing to do with export activities. However, this local sale of scrap of Rs. 5,84,329/- has to be treated as part of total turnover for the purpose of calculating the profit u/s 10B of the Act. In view of this the action of the AO regarding inclusion of this amount of Rs. 5,84,329/- in the total turnover for the purpose of calculating profit u/s 10B is hereby confirmed. 5.5 Likewise, excess....
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....r cent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee : Provided that where in computing the total income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as it stood immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to the deduction referred to in this sub-section only for the unexpir....
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.... the profit of the undertaking is eligible for deduction u/s 10B of the Act provided it should arise in the course of business activities of 100% export unit. In the identical facts and circumstances the Hon'ble ITAT in the case of Lubrizol Advanced Materials India Pvt. Ltd.(Supra) has decided the issue in favor of the assessee by observing as under: "19. We have heard the rival submissions and perused the material on record. Before us the nature of income as submitted by the Assessee has not been controverted by Revenue. The contention of the Revenue is that the income cannot be said to be derived from the eligible undertaking and hence is not allowable. We find that before Special Bench in the case of Maral Overseas Ltd. (supra) one of ....
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....a was laid down for computing the profits derived by the undertaking which has specifically been provided under sub-section (4) of section 10B while computing the profits derived by the undertaking from the export. Thus the decision of the Hon. Supreme Court is of no help to the revenue in determining the claim of deduction u/s 10B in respect of export incentives." 20. Thus it is seen that the respected Special Bench of the Tribunal has held that once an income forms part of the business of the undertaking, the same would be included in the profits of the business of the undertaking and will be eligible for deduction. Respectfully following the aforesaid Special Bench decision, we are of the view that the Assessee is eligible for deductio....