TMI Blog2018 (5) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... o dispute that export incentive incomes have been treated by the Assessing Officer as business income. - the undertaking is eligible for deduction on export incentive received by it in terms of provisions of Section 10B(1) read with Section 10B(4) of the Act Sub-section (4) of section 10A/10B of the Act is a complete code providing mechanism for computing the “profit of the business” eligible for deduction u/s. 10B - Decided in favour of assessee. - ITA No.2442/Kol/2016 - - - Dated:- 9-5-2018 - Shri S.S. Godara, JM And Shri M. Balaganesh, AM For The Appellant : Mrs. Arati Debnath, CA For The Respondent : Shri Sallong Yaden,Addl. CIT ORDER PER S.S. GODARA, JM: 1. This assessee s appeal for A.Y.2002-03 arises from the CIT(A)-IV, Kolkata s order dated 06.12.2013, passed in Appeal No.24/CIT(A)-IV/2005-06, confirming Assessing Officer s action inter-alia disallowing its deduction claim u/s 10B of the Act on account of foreign exchange fluctuation, profits derived from sale of import license and interest income to the tune of ₹ 20,95,814, ₹ 7,34,634/- and ₹ 23,13,606/-; respectively, in proceedings u/s 143(3) of the Income Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee s second grievance challenges both the lower authorities action disallowing its 10B deduction of ₹ 7,34,634/- on account of profit on sale of import licence. Both the lower authorities are of the view that such an income cannot be held to have been derived from the export oriented unit in question. We notice herein as well that this tribunal coordinate bench in ITA Nos. 1517 to 1519/Kol/2014 DCIT vs Narendra Tea company (P) Ltd decided on 24.05.2017 has adjudicated the very issue against the Revenue with the following detailed discussion : 8. Ground no. 3 for AY 2011-12 reads as under: 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A), Siliguri was justified in law, in treating the profit from sale of DEPB license as income from regular business and eligible for exemption u/s. 10A/10AA. 9. The facts as noted by the Ld. CIT(A) is as under: 4. Sale of DEPB Licences- In the AY 2011-12, the assessee had sold DEPB licences for ₹ 60,75,499. The AO held that the income from sale of DEPB licences is not the income from the regular business and hence, not eligible for exemption U/S 10A/10AA. The assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the income from the sale of the DEPB licences is also essentially the income from regular business. This has been upheld by the Honourable Supreme Court also in the case cited by the assessee. The AO is directed to treat the income from sale of DEPB licences as income from regular business for calculation of exemption U/S 10A/10AA. Aggrieved by the aforesaid order of the Ld. CIT(A), the revenue is before us. 10. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the issue in respect to the sale of DEPB licence is no longer res integra. We note that the Special Bench in the case of M/s. Maral Overseas Ltd. reported in 136 ITD 177 (Ind) (SB) has dealt with the similar issue. The Ld. AR took our attention to page 63 of the paper book wherein we note that the Special bench has answered the question raised before it in favour of the assessee. We note that in the said case the eligibility of deduction in respect of export incentive received by the assessee in terms of the provision of section 10B(1) r.w.s. 10B(4) of the Act was under challenge. The facts in brief in that case was that during the year the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (4) of section 10B of the Act mandate that deduction under that section shall be computed by apportioning the profits of the business of the undertaking in the ratio of export turnover by the total turnover. Thus, even though subsection (1) of section 10B refers to profits and gains as are derived by a 100% EOU, the manner of determining such eligible profits has been statutorily defined in, sub-section (4) of that section. Both sub-sections (1) and (4) are to be read together while computing the eligible deduction U/S 10B of the Act. We cannot ignore sub-section (4) of section 10B which provides specific formula for computing the profits derived by the undertaking from export. As per the formula so laid down, the entire profits of the business are to be determined which are further multiplied by the ratio of export turnover to the total turnover of the business. In case of Liberty India, the Hon'ble Supreme Court has dealt with the provisions of section 80IA of the Act wherein no formula was laid down for computing the profits derived by the undertaking which has specifically been provided under sub-section (4) of section 10B while computing the profits derived by the undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Once an income forms part of the business of the income of the eligible undertaking of assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction u/s 10B of the Act. As per the computation made by the Assessing Officer himself, there is no dispute that both these incomes have been treated by the Assessing Officer as business income. The CBDT Circular No. 564 dated 5th July, 1990 reported in 184 ITR (St.) 137 explained the scope and ambit of section 80HHC and the mode of determination of profits derived by an assessee from the export of goods. 1 T.A.T., Special Bench in the case of International Research Park Laboratories v. ACIT, 212 ITR (AT) 1, after following the aforesaid Circular, held that straight jacket formula given in sub-section (3) has to be followed to determine 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 Research Park Laboratories v. ACIT (supra). In the assessee's own case the I.T.A.T in the preceding years, after considering the decision in the case of Liberty India held t ..... 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