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2015 (10) TMI 1892 - AT - Income TaxEligibility for deduction U/s.10B - interest received from EEFC deposits and Bank deposits - Held that - This issue has been decided by the Hon ble Delhi High Court in favour of the assessee in the case of CIT vs. Indian Toners and Developers Ltd. 2008 (12) TMI 375 - DELHI HIGH COURT and by a series of Tribunal orders. Accordingly, we direct the Assessing Officer to include the gain from EEFC account as part of the profits eligible for deduction under section 1OA of the Act. This issue is decided in favour of the assessee. Also following the decision of the Tribunal in the case M/s.Cognizant Technology Solutions India Pvt. Ltd. Vs. ACIT 2013 (1) TMI 767 - ITAT CHENNAI hereby direct the Ld. Assessing Officer to include the interest from EEFC deposit and the other deposit in the bank account as part of the profits eligible for deduction u/s.10B of the Act because the nature of income earned on both the deposits are similar and the nature of deductions in Section 10A & 10B of the Act is also similar though available to assessee s engaged in different field. Decided in favour of the assessee.
Issues:
1. Eligibility of interest received from EEFC deposits and Bank deposits for deduction under Sec.10B of the Act. Analysis: The appeal was filed by the Assessee against the order of the Commissioner of Income Tax(A)-II, Chennai, challenging the denial of deduction under Sec.10B of the Act for interest received from EEFC deposits and Bank deposits. The Assessee, engaged in software development and exports, claimed a deduction of &8377; 6.28,83,715/- U/s.10B of the Act. However, the Assessing Officer assessed interest income of &8377; 9,73,193 from deposits, denying the deduction as it was not directly related to the export business. The Commissioner upheld this decision, leading to the appeal. The Assessee argued citing a Tribunal decision in favor of a similar case, while the Revenue relied on a different case. The Tribunal found the Tribunal decision cited by the Assessee applicable to the case, emphasizing the nexus between interest income and export turnover. The Tribunal directed the Assessing Officer to include the interest income from EEFC and bank deposits for deduction under Sec.10B, stating the similarity in nature of income and deductions under Sec.10A & 10B, despite different fields of engagement. The Tribunal discussed the nature of interest income from EEFC and bank deposits, emphasizing its nexus with export turnover and the precedent set by various Tribunal orders and a High Court decision. The Tribunal highlighted the relevance of including the interest income in export profits eligible for deduction under Sec.10B. The Tribunal differentiated the case cited by the Revenue, stating it was not identical to the Assessee's case. Relying on the precedent set by the Tribunal decision in a similar case, the Tribunal directed the Assessing Officer to allow the deduction for interest income from EEFC and bank deposits under Sec.10B, as the nature of income and deductions aligned despite different fields of operation for the Assessee. In conclusion, the Tribunal allowed the appeal of the Assessee, pronouncing the order on 26.8.2015. The decision highlighted the importance of the nexus between interest income and export turnover in determining eligibility for deduction under Sec.10B of the Act. The Tribunal's ruling emphasized the consistency in interpreting similar cases and the relevance of aligning income nature with deduction provisions under the Act, irrespective of the field of operation of the Assessee.
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