TMI Blog2015 (6) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer passed under S.143(3) on this issue, as alleged by the learned Commissioner, calling for any revision under S.263. We, therefore, set aside the impugned order of the learned Commissioner of Income-tax passed under S.263 and restore that of the Assessing Officer. - Decided in favour of assessee. - ITA No.672/Hyd/2013 - - - Dated:- 23-1-2015 - D. Manmohan, VP And P. M. Jagtap, AM,JJ. For the Appellant : Shri A V Raghuram For the Respondent : Shri Parneet S Sachdev CIT-DR ORDER Per: P M Jagtap: This appeal filed by the assessee is directed against the order dated 4.3.20123 passed by the learned Commissioner of Income-tax IV, Hyderabad under S.263 of the Income Tax Act,1961, revising the assessment made by the Assessing Officer under S.143(3) with direction to him to recompute the deduction allowable to the assessee under S.10B, after excluding other income of ₹ 24,27,261 from the profit of the business. 2. The assessee in the present case is a company, which is engaged in the business of manufacture, trading and export of bulk drugs and intermediaries. The return of income for the year under consideration was filed by it on 22.9.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of suppliers or customers transactions take place in terms of US $ at the prevailing exchange rate at that time. The difference in books of account either in suppliers account or customers account treated as exchange fluctuations. It is evident that income from exchange fluctuations is emanated from business transactions. Accordingly treated as business income for the purpose of claiming exemption u/s.1 OB. iii) Loss on forex options ₹ 268724/- Most of the overseas suppliers supply goods on credit basis against Le and the invoices are raised in terms of foreign currency i.e., US $. To minimize the risk from exchange fluctuations bankers may insist/suggest to take forward/option contracts against the outstanding liabilities and receivables as the case may be. The resultant loss/gain at the time of settlement of contract is te5ated loss on forex options. Hence, the same should be adjusted under other incomes which are nothing but income derived from business. iv) Suppliers' Discount ₹ 1540633/-. In the normal course of business purchases are procured on credit basis for a certain period. Sometimes the suppliers may request for early payment for which they ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a direction to the Assessing Officer to recompute the deduction allowable to the assessee under S.10B, after excluding other income of ₹ 24,27,261 from the profits of the business of the assessee undertaking. Aggrieved by the order of the learned Commissioner, assessee has preferred this appeal before the Tribunal. 6. The learned counsel for the assessee submitted that while considering the claim of the assessee for deduction under S.10B in respect of other income, the vital aspect that is required to be considered is that there is a formula given in sub-section (4) of S.10B to work out the profits derived from the export of article or thing or computer software for the purpose of allowing deduction under S.10B. He invited out attention to the provisions of sub-section (4) of S.10B, wherein the formula is given to compute the profits derived from the export of articles or things or computer software, as 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 by the undertaking. He contended that what is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rue that the deduction under S.10B is allowable in respect of profits and gains derived by the eligible undertaking from the export of articles or things or computer software. It is also true that the expression 'derived from' is given a narrow meaning inter alia by the Hon'ble Supreme Court in the case of Sterling Foods (supra) by holding that any income for being said to be derived from any business of the undertaking should have a direct nexus or first degree connection with that business of the undertaking. It is, however, relevant to note that this narrow meaning has been given especially in the context of S.80HH and S.80IA etc. where the term 'Profits and gains derived' is neither defined nor any formula is given to compute the profits and gains derived from. In S.10B of the Act, which is relevant in the present context as well as in S.80HHC, a formula, however, has been given to compute the profits derived from the export of articles or things or computer software. In Sub-section (3)(a) of S.80HHC, it is provided that the profits derived from exports shall be the amount which bears to the profits of the business the same proportion as the export turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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