TMI Blog2020 (2) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Whether tribunal has erred in holding that report turnover of the unit whose profits are allowed a deduction under Section 10B of the Income Tax Act is not to be included in the export turn over for the purpose of calculating the deduction under Section 80HHC ? - The issue is covered in favour of the assessee by a decision of the Division Bench of this Court in M/s Mahavir Spinning Mills Ltd. v. Commissioner of Income Tax, Ludhiana and another, [ 2016 (9) TMI 156 - PUNJAB AND HARYANA HIGH COURT ] Non-allowance of exemption under Section 10B - HELD THAT:- Sub-section (4) to Section 10B of the Act gives a formula for working out the profits from export of articles. Once it is held that interest on delayed payment relating to export is eligible under Section 10B of the Act, thereafter the calculation is to be done as per sub-section (4) to Section 10B of the Act. The decision of the Tribunal allowing only interest relating to export sales under Section 10B of the Act is upheld, however, the directions for verification are modified to the extent that the Assessing Officer shall assess the interest received on delayed payments as per provisions of Section 10B(4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded in the export turn over for the purpose of calculating the deduction under Section 80HHC of the Income Tax Act, 1961? iii) Whether on true and correct interpretation of Section 80HHC read with Section 80-IA/80-IB of Income Tax Act, the Income Tax Appellate Tribunal erred in holding that amounts of profits of Auro Unit V, eligible for deduction under Section 80-IB of Income Tax Act are to be excluded while calculating eligible profits for deduction under Section 80HHC of Income Tax Act? iv) Whether the Income Tax Appellate Tribunal is correct in law in holding that gross interest received from suppliers without adjusting interest paid on working capital borrowings should be excluded from eligible profits for deduction under Section 10B of Income Tax Act? v) Whether the Income Tax Appellate Tribunal is correct in law in apportioning the Head Office expenses amongst various units claiming deduction U/s 10-B/80-IA/80-IB of the Act, when units are maintaining their separate books of accounts? For question (iv), following question has been substituted: vi) Whether in facts and circumstances the ITAT is correct in law in directing the A.O. to grant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such profits; and (2) the profits of any branch office, warehouse or any other establishment of the assessee situate outside India: The explanation provides for reduction from the profits and gains of business or profession , receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature. Depreciation is not receipt of a similar nature as mentioned in the explanation. Supreme Court in Acg Associated Capsules P. Ltd.'s case (supra) held that the explanation is to be construed as per the plain natural meaning of the words in it. Relevant portion is reproduced below: 9. Explanation (baa) extracted above states that profits of the business means the profits of the business as computed under the head Profits and Gains of Business or Profession as reduced by the receipts of the nature mentioned in clauses (1) and (2) of the Explanation (baa). Thus, profits of the business of an assessee will have to be first computed under the head Profits and Gains of Business or Profession in accordance with provisions of Section 28 to 44D of the Act. In the computation of such profits of business, all receipts of income whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted under the head Profits and Gains of Business or Profession referred to in the first part of the Explanation (baa). Accordingly, if any quantum of any receipt of the nature mentioned in clause (1) of Explanation (baa) has not been included in the profits of business of an assessee as computed under the head Profits and Gains of Business or Profession , ninety per cent of such quantum of the receipt cannot be deducted under Explanation (baa) to Section 80HHC. The receipts mentioned in the explanation are the actual payments received like brokerage etc. The phrase receipt of similar nature will not increase its scope to include depreciation which is not on same footing as brokerage, commission etc. The finding recorded by the Tribunal on the said issue is upheld. The question is answered against the assessee. As regards question (ii), learned counsel for the parties are ad idem that the issue is covered in favour of the assessee by a decision of the Division Bench of this Court in M/s Mahavir Spinning Mills Ltd. v. Commissioner of Income Tax, Ludhiana and another, 2017 (391) ITR 290. Question (iii) claimed does not arise from the order of the Tribunal and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Sub-section (4) to Section 10B of the Act gives a formula for working out the profits from export of articles. Once it is held that interest on delayed payment relating to export is eligible under Section 10B of the Act, thereafter the calculation is to be done as per sub-section (4) to Section 10B of the Act. The decision of the Tribunal allowing only interest relating to export sales under Section 10B of the Act is upheld, however, the directions for verification are modified to the extent that the Assessing Officer shall assess the interest received on delayed payments as per provisions of Section 10B(4) of the Act. The question is answered in favour of the assessee. The answer to question (v) is against the assessee. The appellant is having various units some of them being eligible to deduction under Section 10B of the Act being 100% export-oriented undertaking and others not eligible under Section 10B of the Act. There were expenses incurred for the head office which was working for eligible and noneligible units. With ..... X X X X Extracts X X X X X X X X Extracts X X X X
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