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TMI Blog2015 (1) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of goods exported (outside India) are on CIF (i.e., cost plus freight and insurance) basis. The assessee exporter pays the freight and insurance, which for the year amounts to Rs. 81.30 lacs, and which is then recovered from the customers. There is thus no question of it being regarded as a source of income and, in fact, there is a negative impact on the profit of the assessee on this account. Reliance toward same was also placed on the decisions in the case of Gala International (in ITA No. 6519/Mum/1998) and C. A. Galikotwala & Co. Ltd. (in ITA No. 1512/Mum/1996), wherein it had been held that the freight collected is to be reduced from both the export and total turnover, i.e., in computing the income derived from export. The Assessing Officer (A.O.), however, assessing the same as income from other source, the ld. CIT(A) in appeal found that there was a clear nexus between the income and the freight expenses. Even assuming freight to be in an independent source of income, the expenditure incurred by the assessee would have to be allowed u/s.57(iii), resulting in a loss under the head 'income from other source'. The A.O.'s view therefore could not be sustained. Aggrieved, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y qua the profits of the eligible undertaking, i.e., as derived by it. The computational formula of section 10B(4) only takes care of the latter part, i.e., the income of the undertaking that can be said to be derived from export, on which export of eligible articles and things, enabling securing convertible foreign exchange for the country, the deduction is granted. The words 'profits of the business of the undertaking' in section 10B(4), are to be read as 'profits derived from eligible undertaking'. The receipts by way of DEPB, which are step removed from the undertaking, in-as-much as they own their origin to the scheme/policy framed by the Government under the provisions of the relevant statutes (viz. Central Excise Act, 1944; Customs Act, 1942), would therefore stand excluded in reckoning the profits of the eligible undertaking. That is, the decisions by the apex court, as in the case of Liberty India (supra), or even prior thereto, viz. Pandian Chemicals Ltd. vs. CIT [2003] 262 ITR 278 (SC); CIT vs. Sterling Foods [1999] 237 ITR 579 (SC); India Leather Corpn. (P.) Ltd. vs. CIT [1997] 227 ITR 552 (SC), etc. shall apply. The second set of decisions, i.e., as relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rger bench of the tribunal, was specifically also put to the parties during hearing, only to be declined by them. 6.3 We therefore proceed to discuss the matter, beginning by reproducing the provision in its relevant part: 'SECTION 10B Special provisions in respect of newly established hundred per cent export-oriented undertakings. (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by a hundred per cent export-oriented undertaking from the export for articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee: Provided that where in computing the total income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as it stood immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to the deduction referred to in this sub-section only for the unexp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a part of the business of the 100% EOU, and which may further be a part of its total business, include as it may domestic turnover/business as well. This explains our observation that implicit in the words 'derived from the export', defining the primary condition, is that the profit under consideration is derived from the business of the eligible undertaking. The limiting ratio of section 10B(4) only seeks to restrict the base or the qualifying profits, derived from total business of the eligible undertaking, to that from the export of the eligible goods only, i.e., are statutorily estimated. It cannot but by otherwise if the words 'derived from', employed by the Legislature in section 10B(1), which controls the scope of the deduction, as well as in s.10B(4), is to be given its proper meaning, as explained by the apex court in several decisions, some of which are cited supra. We are, thus, in agreement with the interpretation as accorded by the tribunal in Tessitura Monti India (P.) Ltd. (supra) that the words 'profits of the business of the undertaking' would signify the profits as derived from the business of the undertaking. That is, connote a relationship of first degree be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its business, are to be considered, as held in the said decisions, was to define the same as the 'profits of the eligible undertaking as computed under Chapter IV-D' or 'under the head of income profits and gains of business or profession', as in fact done at several places in the statute. As explained by the apex court in, among others, CIT vs. Tara Agencies [2007] 292 ITR 444 (SC), the intention of the Legislature has to be gathered from the language used in the statute, and which means that attention should be paid to what has been said as also to what has not been said. Further, that it is the bounden duty and obligation of the court to interpret the statute as it is. It is contrary to all rules of construction to read words into a statute which the Legislature in its wisdom has deliberately not incorporated. Continuing further, the decision in the case of Motorola India Electronics (P.) Ltd. (supra) is based on the finding of a direct nexus between the income under reference and the business of the eligible undertaking. The same, thus, does not contradict what stands stated by us in this order, and a different decision in the said case, i.e., vis-à-vis that in the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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