2021 (1) TMI 295

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.... and should be deleted. 2. Without prejudice, the Id. CIT(A) has erred in confirming the AO's order and reducing the claim u/s 10B with respect to Misc. income and interest income. Both the incomes are profits of the business of the undertaking and eligible for 10B deduction. 3. The above grounds are independent of and without prejudice to one another. 4. The appellant prays that he may be allowed to add, alter, amend or delete any of the grounds at the time of hearing. 3. Briefly stated facts of the case are that the assessee was engaged in the business of manufacturing of automobile parts. For the year under consideration, the assessee filed return of income in terms of section 139 (1) of the Income-tax Act, 1961 (in short 'the Act') on 13/10/2010 declaring loss of Rs. 8,57,15,202/-, which was further revised under section 139(5) of the Act on 22/03/2011 at loss of Rs. 9,11,16,007/-. The return of income filed by the assessee was selected for scrutiny assessment and notice under section 143(2) of the Act was issued. 3.1 Subsequently, a search and seizure operation under section 132 of the Act was carried out on 10/12/2012 at the premises of the....

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....e is entitled for deduction under section 10B of the Act. 7. On the other hand, the Learned DR submitted that interest income and miscellaneous income are never part of the business of the undertaking. She submitted that there is no detail of the miscellaneous income available on record, on the basis of which it could be establish that it is part of the profit of business of undertaking. Similarly, the source of interest income is also not known from the assessment record. Accordingly, she submitted that issue in dispute may be restored to the Assessing Officer for deciding in accordance with law. 8. We have heard rival submission of the parties on the issue in dispute. We find that ground No. 1 has not been pressed by the Learned Counsel of the assessee. Even otherwise, the assessment u/s 143(3) of the Act was pending and same was abetted due to search action under section 132 of the Act and, therefore, the Assessing Officer is justified in considering the disallowance other than based on incriminating materials found and seized during the course of the search. The ground of the appeal is accordingly dismissed. 9. As far as ground No. 2 is concerned, we find that, the Ld.....

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....the subsidy in respect of the business carried on and the said subsidy was part of the profit of the business of the undertaking. If the ITAT was prepared to consider the deemed export draw back as eligible for deduction then there was no justification for excluding the freight subsidy. Even as regards the interest on FDR, the Court has been shown a note of the balance sheet of the Assessee [which was placed before the AO] which clearly states that "fixed deposit receipts (including accrued interest) valuing Rs. 15,05,875 are under lien with Bank of India for facilitating the letter of credit and bank guarantee facilities." In terms of the ratio of the decisions of this Court both in Hritnik Exports (supra) and Universal Precision Screws (supra), the interest earned on such FDR ought to qualify for deduction under Section 10B of the Act." 9.3 The Learned Counsel of the assessee has contested that both issues are covered in favour by the order of the Tribunal in assessment year 2008-09 (ITA No. 4207/Del/2013) and 2006-07 (ITA No. 4208/Del/2013). The relevant finding of the Tribunal in AY 2008-09 on the issue of the miscellaneous income is reproduced as under: "5. The fir....

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....uestion is earned .from sale of scrap. The income from these item has been assessed under the head "'Income from business profession". Under these circumstances there can be no disallowance by applying the proposition laid down by the special bench of the Tribunal in the case, of Maral Overseas Ltd. vs. ACIT ITA Nos. 777 & 999 (Ind) of 2004 & 295 & 356 (Ind) of 2006 dated 28.3.2012 (SB). For the reasons given while dismissing revenue's appeal ground No. 3 & 4 for the asstt. Year 2008-09 ground of the revenue is dismissed." 9.5 On perusal of the decisions cited by the assessee, we are of the opinion that in terms of section 10B(4) of the Act any profit which is part of the business of the undertaking shall be eligible for deduction in the ratio of export turnover of the articles to the total turnover of the business carried by the undertaking. In the case of Dishman Pharmaceuticals and Chemicals Ltd. (supra), the Hon'ble Court has held that dividend income or profit on sale of the assets, profit on sale of the investments, excess provision written back, duty drawback and interest income though might not have direct nexus to the business of the undertaking, but they could ....