TMI Blog2015 (10) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the domestic turnover was set aside.- Decided against revenue. Exchange rate fluctuation, the ITAT referred to the decision of the Bombay High Court in CIT v. Gem Plus Jewellery India Ltd. (2010 (6) TMI 65 - BOMBAY HIGH COURT ) which held that foreign exchange fluctuations realized within the stipulated period forms part of the sale proceeds and is directly related to the export activates. It was, accordingly, held that this should be treated as income derived from export activities. Since the provisions of Section 10A and 10B are more or less similar, the ITAT rightly held that for the purposes of Section 10B, the foreign exchange fluctuation has to be considered as part of the export turnover.- Decided against revenue. Interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d return revising its total income to ₹ 1,59,35,040/-. The Assessee claimed deduction under Section 10B (1) of the Act. 3. In the assessment order dated 19th December, 2011, the AO noted that the Assessee had included as part of its income scrap sales of ₹ 31,84,869/-, exchange rate difference amounting to ₹ 32,35,700/- and interest received on Fixed Deposit Receipts (FDRs) amounting to ₹ 1,60,11,996/-. The AO was of the view that only those profits and gains would be exempted under Section 10B which had direct and proximate relationship with activities relatable to an EOU. It was held that interest from FDRs was not income derived from the undertaking. The AO included the exchange rate difference in the domestic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from export activities. The above decision of the Bombay High Court was in the context of Section 10A of the Act. The learned counsel for the Assessee has also referred to the decision of the Madras High Court in CIT v. M/s Pentasoft Technologies Ltd. (2012) 342 ITR 578 (Mad.) where again that High Court has answered the question likewise and in favour of the Assessee. Since the provisions of Section 10A and 10B are more or less similar, the ITAT rightly held that for the purposes of Section 10B, the foreign exchange fluctuation has to be considered as part of the export turnover. 8. Again, on the above aspect, the Court finds no error committed by the ITAT since its decision on this issue is based on the correct legal position as explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire profits of the business of the undertaking should be taken into consideration while computing the eligible deduction under Section 10B of the Act by applying the mandatory formula. 10. In the present case, the Assessee has stated that the interest on FDRs was received on margin kept in the bank for utilization of letter of credit and bank guarantee limits . In those circumstances, the decision of the ITAT that such interest bears the requisite characteristic of business income and has nexus to the business activities of the Assessee cannot be faulted. In other words, interest earned on the FDRs would form part of the profits of the business of the undertaking for the purposes of computation of the profits derived from expor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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