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2013 (1) TMI 400 - AT - Income TaxDeduction u/s.10B - eligibility of Interest on monies held in FD with bank for availing credit facilities by way of LC and bank guarantee - Held that:- It is not clear if monies held in deposit account/s form part of the regular arrangement adopted or followed by the bank for extending non-fund based credit facilities to its constituents. If so, the same can only be regarded as integral to the assessee's business, forming part of the profits of the business of the assessee's eligible undertaking, even as held by the tribunal on more than one occasion. The receipt though arising in India directly impacts the input cost of goods or services required for carrying on the export business, if not the availability of those goods and services themselves. However, if these (deposits) serve only or principally as a collateral for availing the facilities, in which case these could well be substituted with any other security as mutually acceptable to the lender-bank and the borrower, the position would be different. Subject to verification on this count by the AO, and returning a positive finding of the deposits not serving merely as a collateral, but extended as a part of a normative business arrangement by the bank with its clients for allowing such non-fund facilities for their business, the assessee's claim is allowed. Interest on FD and bank on surplus funds - Held that:- Even as admitted by the assessee during hearing, the same is only on surplus funds for the time being and, therefore, cannot be said to be derived from the assessee's business. The same stands rightly excluded. Sales tax refund and excise duty draw back - Held that:- The same represents refund of sales-tax on purchases for an earlier period, being not payable by an export unit. The said benefit is only a part of the receipt of the business. No doubt, it arises from a government policy toward non-levy of tax on the purchases meant for export, is yet only to provide an incentive to the export business by making it more competitive in the international market, by reducing the input cost. The same would, thus, have to be regarded as an eligible receipt of the eligible business. Likewise for the duty draw back. It is not the business of the undertaking per se but the relevant policy of the government that leads to a different treatment of the assessees engaged in exports vis-a-vis those in domestic business and, thus, responsible for the said profit. See Liberty India (2009 (8) TMI 63 - SUPREME COURT ). Scrap sale - Held that:- It is not necessary that every credit or receipt of the export business must arise directly from the export itself, for it to qualify for inclusion, and it would be suffice that the same arises in the course of the assessee's business. Further, the very fact that section 10B(4) provides for an apportionment in the ratio of ET to TT implies that receipts other than that comprised in ET are contemplated for inclusion in TT. The same is, thus, eligible and, further, would go to form part of the TT. As this aspect does not arise directly but constrained to observe so, as the same only follows; rather, forms the basis of finding of the scrap sales forming part of the receipt of the assessee's export business, i.e., accepting the assessee's case, so that the said profit stands derived from such business. Miscellaneous Income - Held that:- As assessee informed that the credit does not constitute an income per se, but only represents recovery (to that extent) out of canteen expenses, which stand already debited and reduced in arriving at the eligible profits. If so, there is no question of it being an item of income, and would only go to reduce a cost, which stands incurred and, secondly, already considered as part of the cost and reduced from the profits of the eligible business, to that extent. The A.O. shall verify the same, and allow relief only to the extent the said amount goes to reduce the relevant expenditure, where already claimed and allowed - No case qua fine from workers is, however, made out - The details of the discount would be required to be similarly considered, which have not been by the Revenue. The assessee's claim, where found to be so, is a part of the profits derived from the eligible business - in favour of assessee for statistical purposes.
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