TaxTMI 
TaxTMI 
2019 (7) TMI 1491
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.... 3,58,749/- on account of interest on the investment of Rs. 29,89,571/- for non-business expenditure. 3. Ld. CIT (A) has erred on fact and in law in deleting the disallowance Rs. 73,29,225/- out of interest under Proviso to section 36(1)(iii) being interest @12% on capital work in progress amounting to Rs. 6,09,93,541/- J as assets were not put to use during this previous year. 4. Ld. CIT (A) has erred on fact and in law in deleting the disallowance of Rs. 18,62,886/- made under section 14A of the Income Tax Act, 1961." 2. In the Assessment Year 2011-12, the Revenue has taken the following grounds:- "1. Ld. CIT(A) has erred on facts and in law in deleting the disallowance to the extent of Rs. 32,42,244/- on account of interest on the investment of Rs. 2,70,18,699/- for non-business expenditure. 2. The Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 31,59,173/- made by Assessing Officer by disallowing deduction u/s 10B to this extent claimed on duty drawback received by the assessee as per Scheme framed by the Government under Customs Act. 3. Ld. CIT(A) has erred on fact and in law in deleting the disallowance of Rs. 18,04,390/- made under section....
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.... 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 assessee to compute the profits derived from the export of articles or things or computer software. We do not see any conflict between Subsection (1) and Sub-section (4) to Section 10B, as Sub-section (1) states that deduction of such profits and gains as are derived by a hundred percent export-oriented undertaking from the export of articles or things or software would be eligible under the said Section. Sub- section (1) is a general provision and identifies the income which is exempt and has to be read in harmony with Subsection (4) which is the formula for finding out or co....
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....uld read thus: Profits derived from export = profits of the business of the undertaking x export turnover total turnover 9A. In terms of the above formula, the question that would arise is whether the interest on the FDRs could form part of the 'profits of the business of the undertaking'. The attention of the Court has been drawn to the decision of the Karnataka High Court in CIT v. Motorola India Electronics Pvt. Ltd. (2014) 46 Taxmann.com 167 (Kar.) which held that there was a direct nexus between the interest received from the FDRs created by a similarly placed Assessee from the amounts borrowed by it. The High Court approved the order of the ITAT in that case which held that the entire profits of the business of the undertaking should be taken into consideration while computing the eligible deduction under Section 10B of the Act by ITA 392/2015 Page 5 of 5 applying the mandatory formula." 6. Thus, the Hon'ble High Court has categorically held that the export benefits of DEPB interest should be considered for the purposes of deduction under Section 10B of the Act. Respectfully following the ratio laid down in the above cases, we direct the Assessing Officer to consid....
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....t @12% on capital-work-in-process amounting to Rs. 6,09,93,541/-. The facts in brief are that the assessee had shown capital-work-in-process at Rs. 6,09,93,541/-, which AO noted that, this was in the nature of asset yet not in use. After invoking proviso to Section 36(1)(iii), Assessing Officer disallowed interest @12%. The case of assessee before the authorities below was that interest of Rs. 5,04,552/- incurred in respect of acquisition of assets for extension of business has already been offered for disallowance by the assessee in computation of taxable income and the complete details of interest computation for the period up to assets put to use. This has been duly checked and certified by the auditors and thereafter auditors have considered the interest for the period between the date of disbursement of loan and date of putting the asset in use as per proviso to Section 36(1)(iii) and AO has not found any fault with the computation. 12. The ld. CIT (A) following the earlier years order for the Assessment Years 2007-08 and 2008-09 has deleted the addition. 13. We find that in Assessment Year 2007-08, the Tribunal has deleted the similar addition not only in the Assessment Ye....