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2008 (6) TMI 587 - AT - Income TaxTrading addition - Deduction u/s. 10BA. Trading addition - Assessee contended that the AO had erred in making trading addition on ad hoc basis in the years under consideration sum in AY 2004-05 and in AY 2005-06, and the same was rightly deleted by the learned CIT(A) for both the years - HELD THAT:- We find no reason or basis to interfere with the decision taken by learned CIT(A) more particularly when ld DRe has placed reliance on the order of the AO without pointing out any error in well reasoned decision reached by him - The learned CIT(A) has considered the nature of business activity, market conditions, quality of raw material used, and the fact that the AO laid no material on record to suggest that there has been any suppression of income nor that the assessee carried any activity outside the books - We also find from the remand report given by the assessing authority in appeal before learned GIT(A) that he had deputed the Ward Inspector to verify the records of the assessee and reportedly found no discrepancy or inconsistency in the business transaction of the assessee. Finding no merit in the ground in appeal for both the years, the same stands rejected. For parity of reasons and as the facts and law are same in all other appeals on the ground of Revenue in those appeals also stands rejected. Deduction u/s. 10BA - CIT(A) directed the AO to allow deduction u/s. 10BA on account of DEPB and DDB receipts ignoring the fact that DEPB and DDB are not derived from export of eligible articles or things - HELD THAT:- In the assessee's case before us the AO has accepted the fact that exemption provisions contained u/s. 10BA of the Act are applicable to the assessee. The same were, therefore, to be interpreted liberally for granting deduction in terms of sub-s. (4) unless the amount of profit arising from credit of DEPB and DDB was taken away expressly - The judgment rendered by apex Court in CIT v. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] is a judgment that relates to deduction u/s. 80HHC in relation to total turnover as to whether excise duty, sales-tax, commissions, interest, rent, etc. partake the character of turnover. In the present case in appeal before us, the amount of profit of DEPB/DDB has specifically been included as profits and gains of business and as already found the amount thereof will not enter in the turnover of the business of the undertaking - Ld DR appearing on behalf of Revenue did not point out any such provision u/s. 10BA of the Act which could permit the Revenue to take away the amount of profit of DEPB/DDB from the profits of business of the undertaking. He however, did make a reference to cl. (i) of s. 28 to say that profits and gains of the business are distinct from profits on DDB in cl. (iiic) and profits on DEPB in cl. (iiid) , but by that position, we find it difficult to accept that the exemption that is sought to be granted u/s. 10BA of the Act has been taken away expressly - It is settled law that an exemption is to be granted unless it is expressly taken away and a reference to this principle may be had from the judgment rendered by apex Court in Adityapur Industrial Area Development Authority v. Union of India [2006 (5) TMI 61 - SUPREME COURT] - We hold that the amount of credit on account of DEPB/DDB has to be included as profits of the business of the undertaking for the purpose of s. 10BA(4) of the Act and the said amount of credit of DEPB or DDB will not enter into the total turnover or export turnover of the undertaking for the purpose of calculating profits derived from business of undertaking of the assessee within the meaning of sub-s. (4) and for allowing deduction to the respondent in terms of subs. (1) of s. 10BA of the Act in the two appeals in and for parity of reasons also in the appeals by Revenue and where facts and law are identical - The conclusion reached by learned CIT(A) to allow deduction, therefore, needs no interference. Finding no merit in the grounds in appeals by Revenue, the same stand rejected. In the result all the appeals of the Revenue stand dismissed.
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