TMI Blog2015 (1) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... uite justified in granting relief for the assessee - Decided against revenue. - I.T.A. No. 3746/Del/2013 - - - Dated:- 30-12-2014 - Shri S. V. Mehrotra And Shri C. M. Garg,JJ. For the Petitioner : Sh. Ramesh Chand, CIT. DR For the Respondent : Sh. Satish Khosla, Adv. ORDER Per C. M. Garg, JM. This appeal of the Revenue has been preferred against the order of CIT (Appeals) -XXIII, New Delhi, vide dated 25.03.2013 in Appeal No.272/11-12 for the Assessment Year 2009-10. 2. The sole ground raised by the assessee in this appeal reads as under: 1. On the facts and in the circumstances of the case; the Ld. CIT(A) has erred in allowing the duty drawback of ₹ 21,62,369/- to be included as part of eligible profit derived from export oriented unit u/s 10B of the Income Tax Act. 3. Briefly stated the facts giving rise to Revenue s appeal as noted by the CIT(A) are that the return of income for the A.Y. 2009-10 on 30.09.2009 disclosing a total income of ₹ 2,92,453/- was filed and the appellant claimed deduction u/s 10B of ₹ 28,75,193/-. The return of income was revised on 16.08.2010, disclosing income of ₹ 35,650/- in which deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income Tax Act 1961, (for short the Act) itself explicit that the Special Bench decision cannot go beyond the case for disposal of which it was constituted. The ld. counsel appearing for the assessee contended that the same argument of the ld. CIT DR was considered and dismissed in the case of Sanjay Aggarwal vs. DCIT in ITA No.3184/Del/2013 for A.Y. 2003-04 by the ITAT, Delhi G Bench. He further submitted that since the ld. DR could not substantiate and fail to point out any specific and direct judgment rendered by either Hon ble Supreme Court or Hon ble High Court on the issue that decision of Special Bench is not binding on the Coordinate Bench of the Tribunal then the same deserve to be followed by the other division benches of the Tribunal as there has to be same consistency in the view taken by the Tribunal on a particular issue. 7. We have gone through the written submissions of ld. CIT(A) DR, decision of Hon ble Supreme Court in the case of Union of India Vs. Paras Laminates Pvt. Ltd. 186 ITR 726 and decision of ITAT Delhi G Bench in the case of Sanjay Aggarwal vs. DCIT (Supra). 8. On careful consideration of rival submissions of both the parties on the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f their Special Bench in the case of Maral Overseas Ltd. versus Additional Commissioner of Income Tax decided on 20th March, 2012, in which it has been held:- 78. Section 10B sub-section (1) allows deduction in respect of profits and gains as are derived by a 100% EOU. Section 10B(4) lays down special formula for computing the profits derived by the undertaking from export. The formula is as under :- Profit of the business of the Export turnover X Total turnover of business carried out by the undertaking . 79. Thus, sub-section (4) of section 10B stipulated that deduction under that section shall be computed by apportioning the profits of the business of the undertaking in the ratio of turnover to the total turnover. Thus, not-with-standing the fact that sub-section (1) of section 10B refers the profits and gains as are derived by a 100% EOU, yet the manner of determining such eligible profits has been statutorily defined in sub-section (4) of section 10B of the Act. As per the formula stated above, the entire profits of the business are to be taken which are multiplied by the ratio of the export turnover to the total turnover of the business. Sub-section (4) does not require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business profit. 80. In view of the above discussion, question no. 2 is answered in affirmative and in favour of the assessee. Accordingly, the assessee is eligible for claim of deduction on export incentive received by it in terms of provisions of section 108(1) read with section 108(4) of the Act.? The aforesaid view is in consonance with the decision of this Court dated 1st September, 2014 passed in ITA 438/2014, Commissioner of Income Tax-VII versus XLNC Fashions in which this court has held as under :- Deduction under Section 108 of the Income Tax Act, 1961 (Act, in short) is to be made as per the formula prescribed by Sub- Section (4), which reads as under: 10B. Special provision in respect of newly established hundred per cent export- oriented undertakings- .............. .............. (4) For the purposes of sub-section (1), the profits derived from export of articles or things or 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 undertakin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as [2014] 46 taxmann.com 167 (Karnataka) has also taken a similar view, wherein it has been held:- By Finance, Act, 2001, with effect from 01.04.2001, the present Sub- section (4) is substituted in the place of old Sub-section (4). No doubt Sub-section 10(B) speaks about deduction of such profits and gains as derived from 100% EOU from the export of articles or things or computer software. Therefore, it excludes profit and gains from export of articles. But Sub-section (4) explains what is (4) says that profits derived from export of articles or things or computer software shall be the account which bares to the profits of the business of the undertaking and not the profits and gains from export of articles. Therefore, profits and gains derived from export of articles is different from the income derived from the profits of the business of the undertaking. The profits of the business of the undertaking includes the profits and gains from export of the articles as well as all other incidental incomes derived from the business of the undertaking. It is interesting to note that similar provisions are not there while dealing with computation of income under Section 80HHC. On the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) cannot be pressed into services for granting relief for the present assessee. 12. Replying to the above, the ld. counsel appearing for the assessee placed a copy of the decision of ITAT Delhi A Bench in ITA No.3606/Del/2013 for A.Y. 2008-09 dated 10.02.2014 (Supra) and submitted that on similar set of facts and circumstances the appeal of the Smt. Ambika Sadh was allowed by the Tribunal and therefore, present appeal of the Revenue on the similar issue does not have legs to stand on the legal platform. The ld. counsel further contended that the issue in question stand squarely decided in favour of the assessee by the decision of Hon ble Jurisdictional High Court of Delhi in the case of CIT vs. Hritnik Export (P) Ltd, (Supra), decision of ITAT, Indore Special Bench in the case of Maral Overseas Ltd. vs. ACIT (Supra) and decision of ITAT Delhi A Bench in the case of Smt. Ambika Sadh vs. CIT (Supra). Supporting the order of the CIT(A) the ld. counsel strongly contended that the AO and the department have not disputed that u/s 10B (1) of the Act, deduction in the ratio of profits and gains as are derived by the 100% Export Oriented Unit (EOU) are allowable and u/s 10B(4) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y India (supra) the Hon ble Supreme Court has dealt with the provisions of Sec. 80IA of the I.T. Act where the issue under consideration was sec. 80IB. The Special Bench after duly considering the facts issues held as under: It is clear from the plain reading of section 10B(1) of the Act that the said section allows deduction in respect of profits and gains as are derived by a 100% EOU. Further, section 10B(4) of the Act stipulates specific formula for computing the profit derived by the undertaking from export. Thus, the provisions of subsection (4) of section 10B of the Act mandate that deduction under that section shall be computed by apportioning the profits of the business of the undertaking in the ratio of export turnover by the total turnover. Thus, even though sub-section (1) of section 10B refers to profits and gains as are derived by a 100% EOU, the manner of determining such eligible profits has been statutorily defined in sub-section (4) of that section. Both sub-sections (1) and (4) are to be read together while computing the eligible deduction u/s 10B of the Act. We cannot ignore sub-section (4) of section 10B which provides specific formula for computing the 74 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The only difference is that section 80HHC contains a further mandate in terms of Explanation (baa) for exclusion of certain income from the profits of the business which is, however, conspicuous by its absence in section 10B. On the basis of the aforesaid distinction, sub-section (4) of section 10A/10B of the Act is a complete code providing the 76 mechanism for computing the profits of the business eligible for deduction u/s 10B of the Act. Once an income forms part of the business of the income of the eligible undertaking of the assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction u/s 10B of the Act. As per the computation made by the Assessing Officer himself, there is no dispute that both these incomes have been treated by the Assessing Officer as business income. The CBDT Circular No. 564 dated 5th July, 1990 reported in 184 ITR (St.) 137 explained the scope and ambit of section 80HHC and the mode of determination of profits derived by an assessee from the export of goods. I.T.A.T., Special Bench in the case of International Research Park Laboratories vs. ACIT, 212 ITR (AT) 1, after following the aforesaid Circular, held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case from operative part of the impugned order we observe that the ld. CIT(A) has granted relief for the assessee with following conclusion: 4. I have carefully considered the submissions made by the appellant. I have also perused the judgments relied upon by the Assessing Officer and by the appellant. As argued by the appellant, the judgment of the Supreme Court in the case of M/s. Liberty India (Supra) relates to the claim of deduction under section 80I, 80IA and 80IB, which have a common scheme and the said sections provide for incentives in the form of deductions which are linked to profits derived from industrial undertaking . The appellant has relied on the recent Special Bench Judgment in the case of Maral Overseas Ltd. Vs. Addl. CIT reported at 2012-TIOL-197- ITAT-Indore-SB. In the judgment dated 28.03.2012, the Special Bench of the ITAT has held that, ...In case of Liberty India, the Hon ble Supreme Court has dealt with the provisions of section 80IA of the Act wherein no formula was laid down for computing the profits derived by the undertaking which has specifically been provided under sub-section (4) of section 10B while computing the profits derived by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of the duty drawback stand squarely covered in favour of the assessee by the order of the jurisdictional High Court of Delhi in the case of CIT vs. Hritnik Export (P) Ltd, (Supra), wherein their lordships speaking for the Jurisdictional High Court of Delhi after considering and approving the ratio of the decision of Special Bench in the case of Maral Overseas Ltd.,(Supra) have held that as per section 28, clause (iiic) of the Act any duty of Custom and Excise repayable as drawback to a person against export under Custom and Central Excise Duty drawback Rules 1971 is deemed to be the profits and gains of business or profession. Their lordship further held that the said provision has to be given full effect to and this means that the duty drawback or duty benefits would be deemed to be a part of business income and this will be treated as profit derived from business of the undertaking and the same cannot be excluded. 19. In the present case, from operative part of the impugned order as reproduced hereinabove, we observe that before granting relief for the assessee the ld. CIT(A) has held that the dedcision of Hon ble Apex Court in the case of Liberty India relates to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
