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TMI Blog2008 (12) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of ₹ 10,93,586/- earned by the appellant from the fixed deposits kept as margin money with the bank, is chargeable under the head 'Income from other sources' and is not entitled for deduction u/s. 10A of the IT Act, without appreciating the facts of the case. (ii) On the facts and circumstances of the case, and in law the CIT(A) erred in holding that the interest receipt of ₹ 9,76,155/- is related to the borrowings and would go to reduce the interest liability that has been claimed as deduction. 4. The ld. Counsel for the assessee contended that this issue was covered in favour of assessee by the order of the Tribunal in assessee's own case for A.Y 2003-04 in ITA No. 5284/M/2006, order dated 23rd Octobe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest has got a nexus with the business of the undertaking and, therefore, it should be assessed as business income. The ld. DR has placed reliance on the decisions whcih are in the context of deduction u/s.80HHC, hence, not applicable in the present case. Now, the next question arises for our consideration is whether the assessee right in claiming exemption u/s. 10A thereon or not. In this regard, we find that there are three components in Section 10A i.e. profit of business of undertaking, export turnover and the total turnover and any income/receipt which does not have an element of export turnover or total turnover, then, such receipt cannot be taken into consideration for computing quantum of exemption u/s. 10A of the Act. Hence, we h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 10A, without appreciating the facts of the case. 8. The ld. Counsel for the assessee contended that this issue was also covered in favour of assessee by the order of the Tribunal in assessee's own case for A Y 2003-04 and referred to para 32 and 33 of the impugned order of the Tribunal in ITA No. 5290/Mum/06. We find that this issue arose before the Tribunal and the Tribunal after examining the issue held as under:- 33. The issue raised in this ground is covered by the decision of the Special Bench of the Tribunal in the case of Prakash Shah in ITA No. 6349/M/04, order dated 22.08.2008 wherein it has been held that foreign exchange earned on realization of export receipt in an year other than the year of export of goods was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al turnover of business carried on by the undertaking. Hence, in our opinion, both numerator and denominator, being export turnover and total turnover should be comparable. We further state that it is nobody's case that assessee earned any profit on account of freight/telecommunication charges or insurance which are included in the profits of the business of the undertaking, hence, for this reason also the freight/insurance and such telecommunication charges cannot be included in the total turnover of the business carried on by the industrial undertaking. Accordingly, we hold that the exemption u/s. 10 of the Act should be computed after excluding freight and insurance from the total turnover. Thus, we accept this ground of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that these expenses have been debited in the P and L, account, which, in turn has the effect of reducing the profit of such undertaking, hence, these amounts have got direct nexus with the export activities of the undertaking. Further, it is also a settled position that exemption/deductions under the Income Tax Act should be given on the basis of assessee income, to be justified. Accordingly, we direct the AO to grant the exemption u/s. 10A of the Act on the assessed income, being enhanced due to both employees's as well as employer's contribution so disallowed. Thus, ground No. 4 of assessee's appeal stands allowed and this also takes care of ground No. 4 of Revenue's appeal which also stands allowed, however, as a conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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