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2019 (3) TMI 73 - HC - Income TaxDeduction u/s 10B - basis of computation of the deductions - assessee is a 100% export-oriented unit - income on sale of export quota and interest on margin money deposits for opening letter of credit - HELD THAT:- Basis of computation of the deductions enumerated under Chapter VI A is different from that set out for special deductions like section 10A and 10B. Relief under section 10A is granted in respect of profits derived from the eligible activity of export, computed as a proportion of the profits of the business of the undertaking. Export reliefs such as Duty Drawback, REP Licences and DEPB have been brought within the ambit of business income in terms of sub-sections (iiia) to (iiie) of section 28 of the Act, vide Finance Act, 1990 with retrospective effect from 01.04.1962. Income from sale of export quota thus falls under the head 'business income' to be included in the computation of 'Profit and Gains of business or profession' entitled to relief under section 10B. As regards interest income, the assessee states that the assessee imports raw materials under a letter of credit. The sanctioning bank mandates that a percentage of the amount be maintained as margin money and retained as a Time deposit. The deposit is created out of the working capital limits sanctioned by the bank. Interest is paid on the working capital assistance and processing charges and earned on the lien marked deposits. Both the componants of interest have a direct nexus to the business activity carried on by the assessee. There the sole activity engaged in by the assessee is export, all incomes generated by the conduct of the business of the unit would be eligible to the benefits under section 10A/10B. The orders of the authorities below are reversed and the issue answered in favour of the assessee
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