TMI Blog2007 (10) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... rom M/s. Adani Exports Ltd. This income was claimed to be not includible in the total income under section 10B of the Act. The assessee was required to substantiate the aforesaid claim. It was clarified that this amount was received from M/s. Adani Exports Ltd. on third party export as per Import-Export Policy, as the assessee had made joint exports. The amount was paid by them to meet direct and indirect expenses. Therefore, it was contended that the income could not be treated as income from other sources. However, the Assessing Officer did not accept the contention of the assessee and held the impugned amount as income from other sources, consequently, denying exemption under section 10B to the assessee on this amount. 3. Aggrieved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate issued by the assessee in favour of M/s. Adani Exports and it is stated therein that it shall have no objection to M/s. Adani Exports Ltd. claiming relevant export house benefits and incentives as per para 3.7.2.1( vi ) of the Exim Policy 2003 - 2007, as amended on 31-3-2003. It was further pointed out that the exports were made in the name of the assessee through Adani Exports Ltd., as seen from pages 9 and 10 of the paper book. The assessee was entitled to exemption under section 10B, but other benefits under the Exim Policy were passed on to M/s. Adani Exports Ltd. In lieu thereof, the assessee received the impugned sum of Rs. 15 lakhs. It was his case that this amount represented the income derived from the export activity of new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not qualify for deduction under section 80-I. Such was also the finding in respect of interest received on delayed payment of sale proceeds. It was his case that there was a direct nexus between the receipt and the business of the assessee in respect of receipt of Rs. 15 lakhs, while no such direct nexus was there in respect of interest received by that assessee. Therefore, the reliance placed on this case was also misplaced. He also referred to the order of Hon ble ITAT, Chennai Bench B , in the case of Orchid Chemicals Pharmaceuticals Ltd. v. Jt. CIT [2005] 97 ITD 277 , in which it was held that deduction under section 10B was not admissible in respect of interest income earned by export-oriented unit from margin money placed wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure. The assessee had disclaimed export benefits in respect of certain exports made by it in favour of M/s. Adani Exports Ltd. The benefit received in lieu thereof cannot be claimed exempt again under section 10B by the assessee. He referred to the provision contained in section 10B(4), which provides that the profits derived from export of articles or things etc., shall be the amount which bears to the profits of the undertaking the same proportion as the export turnover in respect of such articles or things etc., bears to the total turnover of the business carried on by the undertaking. This formula was similar to the formula provided under section 80HHC. If the assessee disclaimed benefits in respect of the exports, it was argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the judgment. This will not be permissible in view of the decision in the case of Sun Engineering Works (P.) Ltd. ( supra ). He also referred to the decision of Hon ble Supreme Court in the case of Jain Bros. v. Union of India [1970] 77 ITR 107 and others, in which it was pointed out that section 271(1) and section 297(2)( g ) have to be read together. If that is done, the conclusion would be that in respect of assessments for the year ended on 31-3-1962 or any earlier year, which is completed after 1-4-1962, the imposition of penalty will be governed by section 271(1) of the Act. It was open for the Legislature to say that once a registered firm committed a default, it should be deemed to be an unregistered firm for imposition of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t had yet to be seen whether the income was derived from the newly established export-oriented unit. In the case of Orchid Chemicals Pharmaceuticals Ltd. ( supra ), interest income on margin money deposited with the bank for obtaining letter of credit for import of raw material was held not to be the income derived from the export-oriented unit. It was pointed out that such income was not connected with profits and gains derived from 100 per cent export-oriented undertaking. It was also pointed out that the expression derived from used in section 10B has a distinct but a narrower meaning and it cannot receive a flexible or a wider concept. The assessee can claim deduction in respect of income, which is derived directly from export of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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