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TMI Blog2016 (7) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessment year 2003-04. The former appeal was an appeal by the assessee and the latter appeal was an appeal by the revenue. By the impugned order, the appeal preferred by the assessee was allowed and the appeal preferred by the revenue was dismissed. The revenue has, as such, come up in appeal. The following questions of law were formulated on 18th November, 2008 when the appeal was admitted : "(a) Whether on the facts and circumstances of the case the Income Tax Appellate Tribunal erred in law in directing the Assessing Officer to treat the interest income of Rs. 28,74,473/- as part of the profits of business of the 100% E.O.U. eligible for deduction under Section 10B of the Income Tax Act, 1961 and compute deduction accordingly w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our purpose, which provide 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 exportoriented undertaking from the export of 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." "10B. (4) For the purposes of sub-section (1), the profits derived from export of articles or things or computer software shall be the amount which bears to the profits of the business of the undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (1) of Section 10B shall be 10% of Rs. 100, i.e. to say Rs. 10/-. This is the formula which has been provided by subsection (4) for the purpose of working out the benefit or deduction under subsection (1). Total turnover shall naturally include receipt on account of interest. The legislature does not appear to have provided for excluding the amount of interest from the total turn over as has been done in the case of 80HHC by explanation (baa) of sub-section (4C) thereof. In that case, 90% of the income arising out of interest has to be excluded from the profits of the business for the purpose of arriving at deduction available under Section 80HHC. But an identical provision is not there. Therefore, that provision cannot be importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the consideration realized by export of articles. In view of the definition of income from Profits and Gains incorporated in Subsection (4), the assessee is entitled to the benefit of exemption of the said amount as contemplated under Section 10B of the Act. Therefore, the Tribunal was justified in extending the benefit to the aforesaid amounts also. We do not find any merit in these appeals. Therefore, the first substantial question of law raised in ITA No. 428/2007 is answered in favour of the revenue and against the assessee and the first substantial question of law in ITA No. 447/2007 is answered in favour of the assessee and against the revenue. In the light of the aforesaid findings, the second question of law in both the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is business income and has in fact been so assessed. It is not in dispute that the surplus funds were of the 100% EOU. As such, the interest earned thereon has to be regarded as part of the "profit of the business of the undertaking". We further find that the Tribunal in the case of Cheviot Co. Ltd. for assessment years 2003-04 and 2004-05, relied upon by the assessee, has dealt with similar issue. In those cases, the difference between the provisions of sections 10B and 80HH was noted and after considering the judgments of the Hon'ble Supreme Court in Sterling Foods (supra) and in P.R.Prabhakar versus CIT (284 ITR 548 (SC) ) approving the Special Bench decision of the Tribunal in International Research Park Laboratories Limited versus Assi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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