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2016 (11) TMI 1483 - AT - Income TaxDenial of deduction under section 10B - Claim of deduction on the amount of refund of CST - Held that:- Special Bench of the Tribunal in the case of Maral Overseas Ltd. (2012 (4) TMI 345 - ITAT INDORE) held that once an income forms part of the business of the eligible undertaking, there is no further mandate in section 10B of the Act to exclude it from the profits eligible for deduction. 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 ₹ 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 ₹ 68,677/- earned on term deposit with the bank and interest of ₹ 47,441/- earned on deposit with Gujarat Electricity Board. Thus we find that the claim of the assessee for deduction u/s. 10B of the Act is quite justified. In fact, the judgment of the Hon'ble Karnataka High Court in the case of Motrola India Electronics (P) Ltd (2014 (1) TMI 1235 - KARNATAKA HIGH COURT) is directly on the point of allowability of deduction under section 10B of the Act in relation to interest income earned from inter-corporate loans. The Hon’ble High Court has considered the definition of ‘profits derived from export’ contained in sub-section (4) of section 10B of the Act and held that the said income was eligible for deduction contemplated under section 10B(1) of the Act
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