TMI Blog2014 (3) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Draw Back difference are covered against the Assessee in view of the decision of Apex Court in the case of Liberty India (2009 (8) TMI 63 - SUPREME COURT ). Thus the Assessee would not be eligible for deduction under section 10B on the aforesaid items With respect to other incomes other than those covered against the Assessee, it is submitted that the same are covered in favour of Assessee by the various decisions cited hereinabove. From the table it is seen that Assessee has bifurcated the income into 2 periods up to the period of granting of EOU status and subsequent to it. We are of the view that these factual aspect needs verification at the end of A.O. We therefore remit the issue to the file of A.O. for fresh examination of the claim of Assessee , the bifurcation of income into 2 periods in the light of the decisions cited by Assessee and thereafter decide the issue as per law and after giving a reasonable opportunity of hearing to the Assessee. The Assessee shall be at liberty to furnish additional evidence before A.O. Thus this ground is allowed for statistical purposes. - I.T. A. Nos. 814 & 1035/AHD/2010 - - - Dated:- 7-3-2014 - D. K. Tyagi (Judicial Member) And A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Assessee are now in appeal before us. The effective grounds raised by Revenue reads as under:- 1. The Ld.CIT(A) has erred in law and on facts in holding that the assessee is entitled to deduction u/s. 10B of the Act. 1.1 The Ld.CIT(A) has erred in law and on facts in not appreciating the fact that the assessee has not fulfilled the conditions eligible for deduction u/s. 10B of the Act. Therefore, the Assessing Officer was right in holding that the assessee is not entitled to deduction u/s. 10B of the Act. 1.2 The Ld. CIT(A) has further erred in law and on facts in not appreciating the fact that the assessee has no positive income for the year under appeal as the receipts shown by the assessee consists of DEPB, Duty Draw Back, DEPB difference, excise duty refund and interest. 4. On the other hand, the effective grounds raised by the Assessee reads as under:- 1. The ld. CIT(A) has erred in law and on the facts of the case in directing the ld. A.O. to reduce other receipts of ₹ 6,08,75,051/- out of eligible income for deduction u/s. 10B of the Act. 2. The ld. CIT(A) has erred in law and on the facts of the case in directing the ld. A.O. to reduce ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions allowed the appeal of the Assessee. The relevant portion from the order of CIT(A) are as under:- 4.19 The aforesaid would show that Hon ble Gujarat High Court and the Hon ble ITAT have upheld that the appellant is eligible to claim deduction u/s 10B of the Act. In these circumstances, the only issue which was left open for the A.O. to be decided afresh was regarding quantification of deduction u/s 10B of the Act. I find that the A.O. has wrongly devoted his energy in deciding the eligibility of the appellant rather than quantifying the claim for deduction u/s 10B of the Act. The AO has pointed out that the appellant did not file the necessary certificate issued by the chartered Accountant in Form No. 56G. However, I find that the relevant certificate from the chartered accountant in Form No. 56G was filed during the proceedings carried out by the A.O in pursuance of the directions of the Hon'ble High court. It is correct that the certificate has been filed in the second round of litigation and the same was admittedly not filed alongwith the return of income. However, I find considerable force in the argument of the Id A. R that auditors certificate is a directory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of Liberty India (supra). The Hon'ble Apex court has held that only profit derived from the eligible business is entitled for such deduction. It has been held that the connotations of the words derived from is narrower as compared to that of the words attributable to . By using the expression derived from Parliament intended to cover sources not beyond the first degree. Hon'ble Apex court in the aforesaid judgment has further observed that 4.24 The appellant has drawn two profit and loss account for the periods 1.04.2002 to 27.10.2002 and 28.10.2002 to 31.03.2003 for claiming deduction u/s 10B of the Act. This account has been filed as per page 70 of the paper book during the course of appellate proceedings. The appellant has bifurcated the other receipts of ₹ 11,34,67,923/- namely DEPB etc. between two periods i.e. up to 27.10.2002 it is at 5,55,31,132/- and from 28.10.2002 to 31.03.2003 it is at ₹ 6,08,75,051/-. Therefore keeping in view the discussion above the amount of ₹ 6,08,75,051/- is required to be excluded from the income eligible for deduction u/s. 10B of the Act. The A.O. is therefore, directed to work out the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible for deduction u/s. 10B and on the other hand Revenue is aggrieved by the order of CIT(A) wherein he has held that Assessee is entitled to deduction u/s. 10B. Before us, the ld. D.R. took us to the finding of A.O. and strongly supported his order. The ld. A.R. on the other hand submitted that Assessee had claimed deduction under 10B in the revised return of income as it was registered as 100% EOU on 1.11.2002 during the year relevant to A.Y. 03-04 and therefore the profits for the entire year was split into two periods i.e. up to 31st October 2002 and from 1st Nov., 2002 to 31st March, 2003 and had claimed the profits for the period between 01.11.2002 to 31st March, 2003 as deduction under section 10B of the Act. He further submitted that CBDT Circular No. 1/05 dated 06.01.2005 has also clarified that in cases where the unit that was set up Domestic Tariff Area and were subsequently approved as 100% EOU, the year of approval of the deduction u/s. 10B shall be restricted to the profit derived from export, from and after the date of approval of the DTA Unit as 100% (EOU). 8. The ld. A.R. then pointed out to the details of other income is as under and were also placed at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Total 55531132 60875051 116406183 9. From the aforesaid table, he fairly conceded that income from DPEB Duty Draw Back, DEPB rate difference and duty draw back difference would not be eligible for deduction under 10B in view of the decision of Hon ble Apex Court in the case of Liberty India vs. CIT 317 ITR 218 (SC). 10. With respect to Excise Duty Refunds and Excise duty income machine, he submitted that the issue is covered in favour of Assessee by the decision of Hon ble Delhi High Court in the case of CIT vs. Dharam Pal Premchand Ltd. (2009) 317 ITR 353 (Del) and the decision of Ahmedabad Tribunal in the case of ITO vs. Electro Ferro Alloys Ltd. (2012) 25 Taxman.com 458 (Ahd.) Tribunal . 11. With respect to bank interest and interest income, he submitted that the Assessee be allowed the netting of income and for which he placed reliance on the decision in the case of CIT vs. Nirma Ltd. Tax Appeal No. 810/A/2013 order dated 27.01.2014. 12. With respect to exchange rate difference, he submitted that since exchange difference was part of the sale price, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to various income on which Assessee has claimed deduction, we find that Assessee has submitted the details of other income which is also reproduced hereinabove. The ld. A.R. has submitted tht the issue with respect to income from DEPB Duty Draw Back, DEPB Duty Draw Back difference are covered against the Assessee in view of the decision of Apex Court in the case of Liberty India (supra). Thus the Assessee would not be eligible for deduction under section 10B on the aforesaid items. 15. With respect to other incomes other than those covered against the Assessee, it is submitted that the same are covered in favour of Assessee by the various decisions cited hereinabove. From the table it is seen that Assessee has bifurcated the income into 2 periods up to the period of granting of EOU status and subsequent to it. We are of the view that these factual aspect needs verification at the end of A.O. We therefore remit the issue to the file of A.O. for fresh examination of the claim of Assessee , the bifurcation of income into 2 periods in the light of the decisions cited by Assessee and thereafter decide the issue as per law and after giving a reasonable opportunity of hearing to the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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