TMI Blog2012 (10) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... S HIGH COURT), that assessee entitled for deduction u/s 10B. In favour of assessee Deduction u/s 10B – Sale of scrap - Whether sale proceeds of scrap could be reduced from the eligible profits u/s 10B – AO reduced the receipt from scrap sales from the business profits and treated it as income from other sources - Held that:- As the sale of scrap is part and parcel of the business receipt of the assessee. That being so, it has to be included in the total turnover of the assessee and cannot be reduced from the business profits of the assessee while computing the deduction u/s 10B. Issue in favour of assessee - I.T.A.Nos.1776 and 1896/Mds/2007 - - - Dated:- 31-7-2012 - SHRI N.S. SAINI AND SHRI SATBEER SINGH GODARA, JJ. Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention of the assessee on the ground that the proceeds of scrap sales are not realized in convertible foreign exchange by the assessee and in view of the provisions of section 10(3) deduction u/s 10B cannot be allowed in respect of sales of scrap. 4. The order of the Assessing Officer was confirmed in appeal by the CIT(A). 5. The DR supported the order of the lower authorities. 6. The A.R of the assessee filed before us a copy of the decision of the Hon'ble Madras High Court in the case of CIT vs Savvy Systems (India) Ltd, [2007] 291 ITR 105(Mad) and submitted that the Hon'ble Madras High Court has held that where the domestic turnover of the sales did not exceed 25 percent of the total sales and it was not in dispute that the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT vs Savvy Systems (India) Ltd (supra), we hold that the assessee was entitled to deduction of the entire income of Rs. 8,60,20,343/- as deduction u/s 10B of the Act. Thus, the grounds of appeal of the assessee are allowed in assessment year 2001-02. 8. In assessment year 2002-03, it is observed that the scrap sale of the assessee was Rs. 21,91,984/-. The assessee has claimed deduction u/s 10B of the Act on Rs. 21,91,984/- also. The Assessing Officer has disallowed the deduction u/s 10B of the Act on the ground that the sale of scrap was made in India and the sale proceeds of scrap were not realized in convertible foreign exchange by the assessee. The Assessing Officer, therefore, held that it was income from other sources while compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business profits of the assessee and treated it as income from other sources of the assessee while computing the income of the assessee. The same was confirmed in appeal by the CIT(A). 13. We find that it is not the case of the Revenue that the scrap was not generated during the manufacturing of textile machinery by the assessee. Thus, the sale of scrap is part and parcel of the business receipt of the assessee. That being so, it has to be included in the total turnover of the assessee and cannot be reduced from the business profits of the assessee while computing the deduction u/s 10B of the Act. We, therefore, set aside the orders of the lower authorities and direct the Assessing Officer to recompute the deduction u/s 10B of the Act af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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