TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 73
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....t appeal and second appeal to the effect that it is not entitled to relief under section 10A of the Income Tax Act, 1961 (in short 'Act') in regard to income earned from sale of export quota and interest on Margin Money Deposits for opening Letters of Credit. 4. Mr.Vikram Vijayaraghavan, learned counsel appearing for the assessee submits that the assessee is a 100% export-oriented unit. An entity engaged in export has to mandatorily avail of sufficient quota alloted by the Apparel Export Promotion Council (in short 'APEC') as against only, it may undertake export. The export quota is allotted based on past performance and an export commitment during the year in question backed by sufficient bank guarantee. The quota available with APEC is limited and if an exporter does not obtain the required quota from APEC itself, it would have to be purchased from the open market. The appellant, as an exporter, had sufficient quota in respect of its own exports and was holding excess quota, over and above its own requirements. The quota is transferable and an exporter holding excess quota is entitled to transfer the same to other exporters in need of it. Since the holding of th....
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..... (354 ITR 227 (SC)) 3. Liberty India V. CIT (317 ITR 218 (SC)) 4. CIT V. Menon Impex P. Ltd. (259 ITR 403 (Mad)) 5. Sakthi Footwear V. ACIT (317 ITR 194 (Mad)) 6. Rajkumar Impex (P) Ltd. V. DCIT (15 DTR 118 (Mad)) 7. Cyber Peral Information Tech. Ltd. V. ITO (399 ITR 310 (Mad)) 8. Dollar Apparels V. ITO (294 ITR 484 Madras HC)) 9. India Comnet International (304 ITR 322 (Mad)) 10.CIT V. K.K.Doshi & Co. (245 ITR 849 (Bom)) 11.CIT V. Nagesh Knitwears P. Ltd. (345 ITR 135 (Del)) 9. We have heard the submissions of learned counsel and persued the papers in detail. 10. The assessee/appellant is a 100% export-oriented unit. The provisions of section 10B of the Income tax Act ('Act'), in terms of which relief is sought, provides for a deduction of such profits and gains as are derived by a 100% export-oriented unit from the export of articles, things or computer software for a period of ten (10) consequtive assessment years commencing with the assessment year relevant to the previous year in which the eligible activity commences. The methodology for computation as envisaged in sub-section (1) of section 10B is by way of a mathematical formula set out in sub-se....
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....; entitled to relief under section 10B. It is relevant to note that there is no restriction whatsoever placed on what constitutes profits of the business of the eligible undertaking. 13. One may contrast in this context, the provisions of clause (baa) under the Explanation to Section 80 HHC of the Act that provides for a deduction in respect of income derived from the business of export of goods or merchandise. Section 80 HHC also provides for the computation of the deduction by way of a formula, similar to Section 10 B of the Act. However, in computing the componant of 'profits of the business', Clause (baa) stipulates that 90% of all receipts from ennumerated categories including export entitlements such as Duty Drawback and similar reliefs, that are part of business income be excluded from the computation of 'profits of the business' in the computation of relief under 80HHC. Such restriction is conspicuous by its absence in Section 10B. This issue is held in favour of the assessee and against the revenue. 14. As regards interest income, the assessee states that the assessee imports raw materials under a letter of credit. The sanctioning bank mandates that a pe....
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....A (4) read "Notwithstanding anything to the contrary contained in section 10A or section 10AA or section 10B or section 10BA or in any provisions of this Chapter.....". What is sought to be underscored, therefore, is that Section 80A, and the other provisions in Chapter VIA, are independent of Sections 10A and 10B of the Act. It appears that the object of Section 80A (4) was to ensure that a unit which has availed of the benefit under Section 10B will not be allowed to further claim relief under Section 80IA or 80IB read with Section 80A (4). The intention does not appear to be to deny relief under Section 10B (1) read with Section 10B (4) or to whittle down the ambit of those provisions as is sought to be suggested by Mr. Manchanda. Also, he is not right in contending that the decisions of the High Courts referred to above have not noticed the decision of the Supreme Court in Liberty India. The Karnataka High Court in CIT v. Motorola India Electronics Pvt. Ltd. (supra) makes a reference to the said decision. That decision of the Karnataka High Court has been cited with approval by this Court in Hritnik Exports (supra) and Universal Precision Screws (supra). In Hritnik Exports (sup....