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2015 (10) TMI 951 - DELHI HIGH COURT

2015 (10) TMI 951 - DELHI HIGH COURT - TMI - Computation of Deduction under Section 10B (1) - CIT (A) and AO treating the scrap amount as part of the domestic turnover - Assessee is engaged in the manufacture and export of Fasteners, a 100 per cent export oriented unit - ITAT allowed assessee claim - Held that:- ITAT correctly held that in terms of the judgment of the Supreme Court in CIT v. Punjab Stainless Steel Industries (2014 (5) TMI 238 - SUPREME COURT) sale of scrap is not includable in t .....

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orms 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 on the FDRs - whether the interest on the FDRs could form part .....

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t of the “profits of the business of the undertaking” for the purposes of computation of the profits derived from export by applying formula under Section 10B(4) of the Act. - Decided against revenue. - ITA 392/2015 - Dated:- 6-10-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Mr Sanjay Kumar and Mr Dileep Shivpuri, Advocates For the Respondent : Mr Ved Jain and Mr Pranjal Srivastava, Advocates ORDER Dr. S. Muralidhar, J 1. This appeal by the Revenue is directed against the order .....

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ction 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 .....

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of the Act. 5. In allowing the Assessee s appeal by the impugned order, the ITAT held that in terms of the judgment of the Supreme Court in CIT v. Punjab Stainless Steel Industries (2014) 364 ITR 144 (SC) sale of scrap is not includable in the total turnover since the Assessee was not engaged in the business of scrap. Consequently, the impugned orders of the CIT (A) and the AO treating the scrap amount as part of the domestic turnover was set aside. 6. On the above aspect, the Court finds no err .....

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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. 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 Ass .....

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states that for the purposes of Section 10B (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 undertaking. As noted by this Court in CIT v. Hritnik Exports Pvt. Ltd. (decision dated 13th November, 2014 in ITA No.219 & .....

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