TMI Blog2016 (7) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 16,05,675/-. 3. Brief facts of the case are that the assessee has filed its return of income electronically on 29.9.2008 declaring total income at NIL. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Act was issued and served upon the assessee. The assessee at the relevant time was engaged in the business of manufacture and export of aluminum blinds. It has claimed deduction under section 10B of the Income Tax Act. As far as the issue disputed in the present appeal is concerned, the assessee has included a sum of ₹ 19,26,669/- in the turnover for the purpose of claiming exemption under section 10B. According to the AO, this amount represents to services and maintenance provided by the assessee. The ld.AO after allowing the expenditure incurred on this front, excluded the amount of ₹ 15,04,869/-. The ld.AO assessed this amount under head Income from other sources . On appeal, the ld.CIT(A) has agreed with view of the AO, but re-worked out the quantum. The finding of the ld.CIT(A) reads as under: 4. I have considered the appellant's submissions and the AO's observations. The present issue involves t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of section 80-IB while computing taxable income in respect of profits derived from an industrial undertaking and not from any other activity which has no immediate or direct nexus to the essential activity of the industrial undertaking. Section 80-IB uses the opening word that where the gross total income of assessee includes any profits and gains derived from any business and the deduction under this provision be allowed in computing the total income of the assessee from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. The Apex Court has also drawn a distinction between the expression 'derived from' and 'attributable to' in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 , wherein it is held that the expression 'attributable to' was wider in import than the expression 'derived from'. The expression of wider import, namely, 'attributable to', was used when the Legislature intended to cover receipts from sources other than the actual conduct of the business. But in the instant case, the assessee's source of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .counsel for the assessee. In the case of Hritnik Exports P.Ltd. (supra), Hon ble Delhi High Court, while considering this issue took into consideration para-79 of the Special Bench decision in the case of Maral Overseas Ltd. (supra), wherein the Tribunal has propounded its interpretation as to how section 10(B)(1)(4) are to be construed. Hon ble Delhi High Court, thereafter, took note of its earlier decision rendered in ITA No.438 of 2014 and recorded a finding that section 10B is not on similar footing of 80HHC and/or 80HHB. The decision of the Hon ble Delhi High Court containing order of the ITAT, Special Bench read as under: 78. Section 10B sub-section (1) allows deduction in respect of profits and gains as are derived by a 100% EOU. Section 10B(4) lays down special formula for computing the profits derived by the undertaking from export. The formula is as under :- Profit of the business of the Undertaking Export turnover X Total turnover of business carried out by the undertaking 79. Thus, sub-section (4) of section 10B stipulated that deduction under that section shall be computed by apportioning the profits of the business of the undertaking in the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine the eligible deduction. The Hon ble Supreme Court in the case of P.R. Prabhakar; 284 ITR 584 had approved the principle laid down in the Special Bench decision in International Reserarch Park Laboratories v. ACIT (supra). In the asses see s own case the I.T.A.T. in the preceding years, after considering the decision in the case of Liberty India held that provisions of section 10B are different from the provisions of section 80IA wherein no formula has been laid down for computing the eligible business profit. 80. In view of the above discussion, question no. 2 is answered in affirmative and in favour of the assessee. Accordingly, the assessee is eligible for claim of deduction on export incentive received by it in terms of provisions of section 10B( 1) read with section 10B(4) of the Act. The aforesaid view is in consonance with the decision of this Court dated 1st September, 2014 passed in ITA 438/2014, Commissioner of Income Tax-VII versus XLNC Fashions in which this court has held as under :- Deduction under Section 10B of the Income Tax Act, 1961 (Act, in short) is to be made as per the formula prescribed by Sub- Section (4), which reads as under: 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The amount quantified as per the formula would be eligible and qualify for deduction/exemption. The position is somewhat akin or close to Section 80HHC of the Act, which also prescribes a formula for computation of deduction in respect of exports. In view of the aforesaid, we do not find any merit in the present appeal and the same is dismissed. Karnataka High Court in Commissioner of Income Tax, Central Circle versus Motorola India Electronics (P) Ltd., ITA No. 428/2007, decided on 11.12.2013, reported as [2014] 46 taxmann.com 167 (Karnataka) has also taken a similar view, wherein it has been held:- By Finance, Act, 2001, with effect from 01.04.2001, the present Sub- section (4) is substituted in the place of old Sub-section (4). No doubt Sub-section 10(B) speaks about deduction of such profits and gains as derived from 100% EOU from the export of articles or things or computer software. Therefore, it excludes profit and gains from export of articles. But Sub-section (4) explains what is says that profits derived from export of articles or things or computer software shall be the account which bares to the profits of the business of the undertaking and not the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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