TMI Blog2012 (4) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... should be assessed under the head Income From Other Sources. The CIT(A) sustained the view taken by the AO. 4. The assessee is now before the ITAT. 5. Before us, the AR of the assessee company pointed out as mentioned in ground No. 1(a) that the interest received was on deposits made in the bank as margin money, placed with the banks to avail credit facilities. Besides this, the assessee had also advanced loans to its employees, from whom the assessee had earned an amount of ₹ 86,876/- as interest. It was submitted by the AR that both types of interests ₹ 6,25,780 + ₹ 86,876/- had been earned during the course of regular business of the assessee. 5. The DR strongly supported the view taken by the revenue authorities and cited the case of Liberty India Vs CIT reported in 317 ITR 218 (SC). 6. The issue before us is whether interest earned on the funds parked in fixed deposits with the banks to avail various credit facilities would have the character of business income or would it be assigned the character of Income from Other Sources. The fact that the interest has been received on fixed deposits for the purposes of availing credit and other facilities h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o allow the ground of appeal and hold that the interest income bears the character of the profits of the business of the assessee and direct the AO to include the interest income in the profits of the assessee from business and compute the quantum of exemption as per law. 8. Ground No. 1(b) has not been pressed by the AR, this ground is therefore dismissed for non prosecution. 9. Ground No. 1(c) is on account of writing back of sundry balances of ₹ 15,99,771/-. The revenue authorities have excluded this amount from the calculation of exemption u/s. 10B, whereby the revenue authorities have taken the view that this amount of ₹ 15,29,771/- (not ₹ 15,99,771/-) does not derive from the business activity of the assessee company. 10. Before us, the AR explained that ₹ 15,29,771/- is an aggregate of amount which represents excess provisions for purchases made in earlier years and which are no longer payable. The assessee, therefore, added this amount as income in its Profit Loss account (u/s 41(1)). The AR submitted and pointed out that the character of the provisions made in the earlier year has not been disputed by the revenue authorities, i.e. the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT Mumbai in the case of Jeweltex International Pvt. Ltd. (supra), as observed in para 5 therein. 13. In the result, we are inclined to allow the ground of appeal and hold that the provisions of purchases/expenses made in the earlier years bears the character of the business of the assessee and direct the AO to include the amount of ₹ 15,29,771 as business income as shown in the P L account and compute the exemption as per law. 14. Ground No. 2 is against the decision of the revenue authorities to exclude ₹ 2,23,46,705/- being the export proceeds, received within the stipulated time. 15. The facts are that there was a delay in the receipt of export proceeds, the AO rejected the assessee s plea, that the proceeds can be received at any time, even after the regular time period has elapsed. The CIT(A) sustained the observation made by the AO in the assessment order, wherein the AO excluded the impugned amount of ₹ 2,23,46,705/- from the total export proceeds for the computation of exemption. 16. Aggrieved by the decision of the CIT(A), the assessee is in appeal before the ITAT. 17. Before us, the AR of the assessee company submitted that there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed export proceeds for computation of the exemption. 18. Against the submissions made by the AR, the DR supported the orders of the revenue authorities and he further submitted that though the competent authority has issued the circular, but that may never be the intention that there would be a blanket permission to the exporters for realization of their export proceeds. 19. We have heard the submissions and perused the material and evidence placed on record, we find that the revenue authorities have never disputed the receipt of the export proceeds, as is evident from the observations of the CIT(A) in his order, wherein he mentions, .till date, the confirmations/clarifications from the respective banks is not on record . Going by this observation, we have to accept that the submissions made by the AR that only the delay in receipt of export proceeds would not bar the eligibility for the claim of exemption under section 10A. If the grievance of the revenue authorities is based only on the clarification/confirmation, then the case of jurisdictional High Court of Bombay, in the case of CIT V/s Stanley Morgan (supra) shall squarely apply on the issue, that the extension has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other units. The AR pointed out to the observation made by the CIT(A) in his order in decision part, wherein, the CIT(A) observes, I do not see how the AO would be justified in holding that such receipts on account job work charges pertaining to the manufacture of diamond and platinum studded jewellery would not be profits of the business of the assessee . The AR submitted that job work is a part and parcel of the business activity of the assessee and should be included in the total turnover for the purposes of the computation of exemption. The AR submitted a copy of the decision of coordinate Bench of ITAT at Mumbai, in the case of Tropicate Textiles Pvt. Ltd. V/s DCIT, ITA No. 1827/Mum/2006 and ITA No. 2544/Mum/2006, the Hon ble Bench had dismissed the appeal of the department (para 29 of the order), relying on the decision of Jeweltex International Pvt. Ltd. (supra). 31. We have perused the facts of the case and we totally agree with the observations of the CIT(A) that job work activity is a part and parcel of the business of the assessee. In the business conducted by the assessee, once a receipt gets identified and takes the character of a business activity, the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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