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TMI Blog2012 (9) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct was generated - against assessee. Disallowance of deduction u/s 10B on DEPB income - Held that:- As decided in Maral Overseas Ltd. vs. Addl.CIT [2012 (4) TMI 345 - ITAT INDORE] once an income forms part of the business of the income of the eligible undertaking of the 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 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 - Decided in favor of assessee. - I.T.A. No. 2890/Ahd/2011 - - - Dated:- 31-7-2012 - Mukul Kr . S hrawat And T. R. Meena , JJ. Appellant by : Tushar P.Hemani Respondent by : Roopchand, Sr.D.R. ORDER Per Mukul Kr. Shrawat, Judicial Member This is an appeal at the behest of the Assessee which has emanated from the order of the ld.CIT(Appeals)-VIII,Ahmedabad dated 15/09/2011 and the substantive Grounds raised are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court decision in the case of Rajesh Jhaveri Stock Brokers Pvt.Ltd. .291 ITR 500 (SC) has opined that an intimation u/s.143(1) could not be treated to be an order of assessment. It was held that there being no assessment u/s.143(3), the question of change of opinion did not arise. The AO had jurisdiction to issue notice u/s.148 for bring to tax income escaping assessment in an intimation u/s.143(1) and did not render the AO powerless to initiate re-assessment proceedings. Respectfully following this decision of Hon ble Apex Court, this ground of the assessee is hereby dismissed. 3. Apropos to Ground No.2, the issue was in respect of sale of the wastage viz. Gola out of manufacturing process. The entire sales represented domestic turnover of the undertaking. Admittedly, it was not the export turnover as far as the re-computation on that ground of the deduction u/s.10B was concerned, the same was not disputed, however, an alternate plea was that only the income element on sale of Gola should have been excluded and not the entire sale-proceeds. However, on further questioning that what was the related expenditure which was having a direct nexus for production of this by- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- It is clear from the plain reading of section 10B(1) of the Act that the said section allows deduction in respect of profits and gains as are derived by a 100% EOU. Further, section 10B(4) of the Act stipulates specific formula for computing the profit derived by the undertaking from export. Thus, the provisions of subsection (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 turn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is a complete code providing the mechanism for computing the profits of the business eligible for deduction u/s 10B of the Act. Once an income forms part of the business of the income of the eligible undertaking of the 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. I.T.A.T., Special Bench in the case of International Research Park Laboratories Ltd. (supra), after following the aforesaid Circular, held that straight jacket formula given in subsection (3) has to be followed to determine the eligible deduction. The Hon'ble Supreme Court in the case of P.R. Prabhakar v. CIT [2006] 284 ITR 584/154 Taxman 503 had approved the principle laid down in the Special Bench decision in International Reserarch Park Laboratories L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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