2015 (10) TMI 1618

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..... The scrutiny assessment was completed. While deducting the deduction u/s 10(B), the AO followed the following principle: Profits of the export unit x Turnover of the export unit Turnover of EOU Unit + Trading Unit turnover 3. Aggrieved the assessee filed appeal before the CIT (A) and submitted that while computing deduction u/s 10(B) where the consolidated profits and total turnover of both the Units i.e. EOU and Trading Divisions are to be considered, only the profits and turnover of the EOU are to be considered. The ld Counsel for the assessee submitted the figures pertaining to both the Units as per the annual reports as under: Description EOU Unit Trading Unit Total Turnover 7,95,41,956 6,83,84,266 14,79,26,222 Profits 52, .....

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..... 39;total income' has been defined in section 2 (45) of the IT Act and it means the total amount of income referred to in section 5, computed in the manner laid down in the Income-tax Act. 5.1 All income for the purposes of computation of total income is to be classified under the following heads of income and computed in accordance with the provisions of Chapter IV of the Act- * Salaries * Income from house property * Profits and gains of business and profession * Capital gains * Income from other sources 5.2 The income computed under various heads of income in accordance with the provisions of Chapter IV of the IT Act shall be aggregated in accordance with the provisions of Chapter VI of the IT Act, 1961. This means that first t .....

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..... 10B. The correct way to calculate the deduction u/s 10B is by considering the division-wise profits and the profits attributable to exports. This is also supported by various judicial decisions. 7. Assessee also relied on the decisions of the Madras High Court in the case of M/s Ventura Metal Products (P) Ltd Chennai vs. DCIT Circle III(4) Chennai (Tax Case Appeal No.749 of 2013) and in the case of M/s Sandoz (P) Ltd Mumbai vs. DCIT Circle 7(1) Mumbai (ITAT Mumbai 'K' Bench) in ITA No.6922/Mum/2012 dated 05.04.2013. 8. We heard both the parties. Section 10B states as follows: "10B (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 .....

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