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2011 (5) TMI 575 - AT - Income TaxDeduction u/s 10A - taxability of gain or deduction of loss arising on account of fluctuation in rate of foreign exchange - ECB's raised form its parent company for meeting its working capital requirements - Held that:- section 10A(1) provides for connotation of such profit or gain as are derived from the export of articles or things or computer software. As reiterated in Liberty India (2009 (8) TMI 63 - SUPREME COURT) the contention of the words "derived from" is narrower as compared to that of words "attributable". By using the expression "derived from" in S. 10A(1), the Parliament intended to cover sources not beyond the first degree. In the present case, gain is not on account of fluctuation in foreign exchange relating to assessee's export activities. The same is with respect to the external commercial borrowings. This cannot be termed as derived from the export activity of the assessee. The assessee's reliance in this regard on section 10A(4) does not come to its rescue, as the said sub-section only provides the formula for computing profits derived from the export activity. First, the income or gain has to be derived from export activity, only then the computation formula can be applied - against assessee.
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