2012 (9) TMI 407 - BOMBAY HIGH COURT

Abnormally high profit - extraordinary arrangement between the assessee and the German company - Held that:- The profits earned by Kandla division of the respondent-assessee is not abnormally high due to any arrangement between the respondent-assessee and its German Principal. The Tribunal correctly held that extraordinary profits cannot lead to the conclusion that this is an arrangement between the parties. This would penalize efficient functioning. Further the industrial sewing machine needles imported and traded by the Mumbai division are different from those manufactured & exported by the Kandla division, this also negatives any arrangement between the parties to show extraordinary profits in respect of its Kandla division so as to claim deduction under Section 10A - The appellant- revenue have not been able to show that the findings are perverse or arbitrary - against revenue.

Computation of deduction u/s 10A without setting off of the loss from the trading unit - Held that:- As decided in CIT v. Black & Veatch Consulting Pvt. Ltd [2012 (4) TMI 450 - BOMBAY HIGH COURT] Section 10A is a provision which is in the nature of a deduction and not an exemption - the deduction under Section 10A has to be given effect to at the stage of computing the profits and gains of business - Section 80B(5) defines for the purposes of Chapter VI-A “gross total income” to mean the total income computed in accordance with the provisions of the Act, before making any deduction under the Chapter – against revenue.