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2014 (3) TMI 1022 - AT - Income TaxDeduction u/s 10B denied - Held that - CBDT vide Circular No. 1/2005 had clarified that an undertaking set up in Domestic Tariff and which derives profit from export of articles or things or computer software manufactured or produced by it shall be eligible for deduction u/s. 10B of the Act on getting approval as 100% EOU and in the year of approval the deduction shall be restricted to the profits derived from exports from and after the date of approval of the DTA unit as 100% EOU. CIT(A) has also given a finding that Assessee was granted 100% EOU status with effect from 1/11/2002 and its claim for deduction u/s. 10B would be eligible for the period 1/11/2002 to 31/03/2003. The aforesaid finding of CIT(A) has not been controverted by Revenue by bringing any contrary material on record. With respect 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 (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.
Issues Involved:
1. Eligibility for deduction under section 10B of the Income Tax Act. 2. Inclusion of various income sources (DEPB, Duty Draw Back, Excise Duty Refund, Interest, etc.) in the eligible income for deduction under section 10B. 3. Deduction under section 80IB for Unit 1. 4. Deduction under section 80HHC for the period prior to 1.11.2002. Issue-wise Detailed Analysis: 1. Eligibility for Deduction under Section 10B: The Assessee, a company engaged in manufacturing Dyes & Dyes Intermediates, initially claimed deductions under sections 80HHC and 80IB but later revised the return to claim deduction under section 10B. The A.O. denied the claim, citing non-fulfillment of conditions and improper certification. The CIT(A) upheld the Assessee's eligibility for deduction under section 10B, noting that the Assessee was granted 100% Export Oriented Unit (EOU) status from 1.11.2002. The Tribunal and Hon'ble Gujarat High Court also upheld this eligibility, directing the A.O. to quantify the deduction from 1.11.2002 to 31.03.2003. 2. Inclusion of Various Income Sources in Eligible Income for Deduction under Section 10B: During assessment, the A.O. excluded export incentives (DEPB, Duty Draw Back, Excise Duty Refund, Interest) from eligible income, referencing Supreme Court decisions in Sterling Food and Pandian Chemicals. The CIT(A) concurred, citing the Supreme Court's Liberty India judgment, which clarified that such incomes are not derived from the export of articles or things. The Assessee's bifurcation of income into two periods was noted, and the CIT(A) directed the A.O. to exclude Rs. 6,08,75,051 from eligible income under section 10B for the period 1.11.2002 to 31.03.2003. 3. Deduction under Section 80IB for Unit 1: The CIT(A) directed the A.O. to consider the Assessee's claim for deduction under section 80IB for Unit 1 for the period 1.04.2002 to 31.10.2002, as initially claimed in the original return. The A.O. was instructed to allow this deduction per the law, keeping in mind the Supreme Court's Liberty India decision regarding the admissibility of other incomes. 4. Deduction under Section 80HHC for the Period Prior to 1.11.2002: The CIT(A) noted that the Assessee did not fulfill the conditions laid out in the fourth proviso below sub-section(3) of section 80HHC due to an export turnover exceeding Rs. 10 crore. The A.O. was directed to work out the deduction under section 80HHC for the eligible profits for the period before 1.11.2002, as per the law. Conclusion: The Tribunal remitted the matter back to the A.O. for fresh examination of the Assessee's claims, particularly the bifurcation of income and the eligibility of various income sources for deduction under section 10B. The A.O. was directed to verify these claims in light of relevant judicial decisions and provide the Assessee an opportunity to present additional evidence. The appeals by both the Assessee and Revenue were allowed for statistical purposes. Order Pronounced in Open Court on 07-03-2014.
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