TMI Blog2012 (5) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... er examination has been done by the authorities below. Therefore, the matter is restored to the Assessing Officer, who shall examine whether the assessee is having three separate units or one single/integrated unit. - ITA No.1389/Bang/2011 - - - Dated:- 24-2-2012 - N Barathvaja Sankar, George George K, JJ. For Appellant: Shri Padam Chand Khincha, CA For Respondent: Shri Farahat Hussain Qureshi, CIT-II ORDER Per: George George K: This appeal instituted by the assessee is directed against the order of the CIT(A)-I, Bangalore dated 17.10.2011. The relevant assessment year is 2004-05. 2. The grounds raised reads as under:- 1) The learned DCIT and Hon ble CIT(A) have erred in passing the orders in the manner passed. The orders being bad in law are liable to be quashed. 2.1) The learned DCIT and Hon ble CIT(A) have erred in holding that:- (a) CST reimbursement in respect of export sales is taxable under the head income from other sources and that (b) CST reimbursed is not eligible for deduction under section 10A. 2.2 On facts of the case and as per applicable law CST reimbursed is part of business profits and is also eligible for deduction under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile calculating deduction under section 10A; b) total turnover of only the eligible units and not of all the 3 units be taken in the denominator in the process of calculation of deduction under section 10A; and further the unit export turnover and gross turnover be taken on same lines; c) the CST refunded be taken as business income from 10A unit eligible for deduction under section 10A, instead of as income from other sources; d) FD interest be taken as income from business eligible for deduction under section 10A; e) The income from business be properly computed; f) The deduction under section 10A of the IT Act 1961 be correctly computed; g) Interest levied be deleted. 3. Ground Nos.1 and 7.2 are general in nature and no specific adjudication is called for. Hence, they are dismissed. 4. Ground No.7.1 is regarding levy of interest under section 234B and 234D of the Act. 4.1 Levy of interest under section 234B and 234D is mandatory and consequential in nature. Hence, this ground is dismissed. 5. Ground No.2.1, 2.2, 6.1 and 6.2 were not pressed during the course of hearing. Hence, they are dismissed as not pressed. 6. The remaining grounds are chronologically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncidental thereto and the profits flowing therefrom . It was submitted that the Hon ble jurisdictional High Court in the case of M/s Green Agro Pack (P) Ltd. in ITA No. 3112/2005 dated 13th April, 2010 had considered an identical issue and decided the matter in favour of the assessee. 6.5 The learned DR on the other hand supported the orders of the Income Tax authorities. 6.6 We have heard the rival submissions and perused the material on record. The Hon ble jurisdictional High Court in the case of M/s Green Agro Pack (P) Ltd. (supra) held that interest earned on deposits kept as margin money for the purpose of carrying of export business is eligible for deduction under section 10B of the Act. The relevant finding of the Hon ble jurisdictional High Court at para 6 and 7 reads as follows:- 6. And during the course of its business it would have to make certain deposits for the purpose of obtaining letter of credit or for bank guarantee when the products which are processed by it have to be exported. In terms of the said letter of credit or bank guarantee, certain deposits are made and such deposits are to be treated as margin amounts and any interest which is earned out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fixed deposits interest to the extent of Rs.5,76,799/- is earned on deposit made for securing bank guarantee/LC credits and deposits were made as a result of business exigencies and compulsions to meet the requirement of bankers/suppliers etc. The Hon ble jurisdictional High Court in the case of Green Agro (supra) has considered an identical issue. The judgement of the Hon ble High Court has not been brought to the notice of the Income Tax authorities. Moreover, there has been no proper examination of the issue as to whether the bank interest to the extent of Rs.5,76,799/- is earned on deposits kept as margin money. Therefore, we are of the view that the matter needs reconsideration by the Assessing Officer. Accordingly, the issue is restored to the file of the Assessing Officer. The Assessing Officer shall take appropriate decision, in consonance with the ratio laid down by the Hon ble jurisdictional High Court in the case of M/s Green Agro Pack (P) Ltd. Needless to say, the assessee shall be afforded due and reasonable opportunity of hearing, before a decision is taken on this matter. It is ordered accordingly. Hence, ground Nos.3.1 to 3.3 is allowed for statistical purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v M/s Axa Business Services Pvt. Ltd. Others . 7.4 The learned DR supported the orders of the Income Tax authorities. 7.5 We have heard the rival submissions and perused the material on record. Elaborate written submission was filed before the CIT(A), which is reproduced from pages 23 to 31 of the impugned order of the CIT(A). The assessee in the written submission had proceeded on the bases that EC- 1, EC-2 and EC-3 are separate undertakings. The focus on the assessee s written submission was that the profit of EC-3 is to be considered separately without set off of losses of the other units, namely EC-1 and EC-2. The assessee, before the CIT(A), had given a general description and how the profits of unit EC-3 is to be considered on stand alone basis. 7.5.1 Before us, it was submitted that the EC-1, EC-2 and EC-3 are separate/independent units set up after obtaining permission from various statutory authorities. It was submitted that the EC-1 was no longer enjoying the benefit of section 10A from the assessment year 2004-05 (Courtesy page 86 of the paper book filed by the assessee). It was stated that these three units are situated in three different locations and the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pective of the nature of business which he is carrying on. The said benefit is available even to undertakings u/s 10B of the Act. The expression deduction of such profits and gains as derived by an undertaking shall be allowed from the total income of the assessee , has to be understood in the context with which the said provision is inserted in Chapter III of the Act. Sub-section (4) of section 10A clarifies this position. It provides that the profits derived from export of articles or things from computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking. Therefore, it is clear that though the assessee may be having more than one undertaking for the purpose of section 10A it is the profit derived from export of articles or things or computer software from the business of the undertaking alone that has to be taken into consideration and such profit is not to be included in the total income of the assessee. It is only after the deduction of the said profits and gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round nos.4.1 to 4.3 is allowed for statistical purposes. Ground Nos.5.1 and 5.2 8. The Assessing Officer while computing deduction under section 10A had considered the total turnover of three units in the denominator as against the export turnover of the EC-3 only in the numerator. Before us, it was submitted that the approach of the Assessing Officer is incorrect and against the law. The learned AR relied on the Board Circular No.794 dated 9/8/2000 (245 ITR (St.) 21. The relevant portion of the Circular relied on by the learned AR reads as follows:- The export turnover and the total turnover for the purposes of sections 10A and 10B shall be of the undertaking located in specified zones or 100 per cent export oriented undertaking as the case may be and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision . 8.1 The learned DR present was duly heard. 8.2 We have heard the rival submissions and perused the materials on record. The issue, namely, whether the Assessing Officer is justified in computing deduction under section 10A by considering the total turnover of the three ..... X X X X Extracts X X X X X X X X Extracts X X X X
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