9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 1184 - AT - Income TaxDeduction u/s 10A - export revenue subsidy, Miscellaneous income and sundry balances written off as not derived from the business carried on by the Appellant and hence not eligible for deduction - HELD THAT - As relying on M/S. PRIYANKA GEMS 2014 (3) TMI 938 - GUJARAT HIGH COURT and M/S. GEM PLUS JEWELLERY INDIA LTD. 2010 (6) TMI 65 - BOMBAY HIGH COURT once export is made, the profits/losses may arise due to variety of reasons from such export activity. Noticeably, sub-section (4) to Section 10A of the Act explicitly explains the term 'profits derived from the export of particles or things' to mean amount which bears to the 'profits of the business of the undertaking', the same proportion as the export turnover bears to the total turnover of the business carried on by the undertaking. What is required to be determined is 'profits of the business undertaking'. In short, the profits derived from export have been equated with business profits of the undertaking in view of the statutory formula provided in Section 10A(4) of the Act. In view of the statutory formula available for determination of quantum of deduction, the expression 'derived from' used in Section 10A(1) fades into insignificance and the quantum of deduction is required to be determined as per the aforesaid formula provided in Section 10A(4) - considerable weight in the plea advanced on behalf of the assessee for eligibility of deduction of the incidental profits alongwith the export profits for the purposes of Section 10A of the Act. We thus set aside the order of the CIT(A) on the point. The AO is directed to compute the quantum of deduction under s. 10A of the Act in the light of formula provided in Section 10A(4) of the Act - Appeal of the assessee is allowed.
Issues:
Eligibility of deduction under Section 10A of the Income Tax Act for export revenue subsidy, miscellaneous income, and sundry balances written off. Analysis: The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) concerning the assessment order passed by the Assessing Officer under Section 143(3) of the Income Tax Act for the assessment year 2005-06. The main issue raised in the appeal was the denial of deduction under Section 10A of the Act for export revenue subsidy, miscellaneous income, and sundry balances written off totaling ?19.80 lakhs. The Assessing Officer contended that these incomes were not 'derived from' the export business but were only 'attributable to' it, hence not eligible for deduction. The CIT(A) upheld this view, stating that the subsidy received was a cash incentive from the government and not income derived from exports. The CIT(A) relied on precedents to support the disallowance of the deduction. The Tribunal, however, found in favor of the assessee based on judicial precedents and statutory provisions. Referring to decisions by the Gujarat High Court and the Bombay High Court, the Tribunal emphasized that income arising from the export business cannot be separated from the export activity for the purposes of Section 10A of the Act. The Tribunal highlighted Section 10A(4) of the Act, which equates 'profits derived from the export of articles or things' to the 'profits of the business of the undertaking.' Therefore, the Tribunal directed the Assessing Officer to compute the deduction under Section 10A in accordance with the formula provided in Section 10A(4) of the Act. The Tribunal concluded by allowing the appeal of the assessee, setting aside the order of the CIT(A), and directing the computation of the deduction as per the statutory formula. In conclusion, the Tribunal's decision clarified that incidental profits along with export profits are eligible for deduction under Section 10A of the Act, emphasizing the importance of considering the overall business profits of the undertaking in determining the deduction. The Tribunal's ruling was based on statutory provisions, judicial precedents, and the interpretation of the term 'profits derived from export' under Section 10A(4) of the Act.
|
