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TMI Blog2018 (6) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... lance written back represented the sundry creditors related to the export business of the assessee and that the said expenses were considered as part of export business. There is nothing on record to prove that the order of the FAA is factually incorrect. Similarly, it is found that the disputed interest income was earned on fixed deposits pledged with bank or the authorised brokers, that it was a pre-requisite to carry the hedging transaction, that the revenue generated by it from overseas, that hedging transaction were entered into by the assessee as a safeguard against exchange rate fluctuation, that hedging is directly related to export business of the assessee. Applicability of provisions of section 115JB - income relating to SEZ u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer (AO)completed the assessment on 13/03/2014, u/s. 143(3)of the Act, determining its income at ₹ 6.33 crores under normal provisions and book profit at ₹ 4.77 crores u/s.115 JB. 2.First effective ground of appeal is about allowing the claim made by the assessee u/s.10B of the Act. During the assessment proceedings, the AO found that the assessee had claimed deduction u/s.10B of ₹ 6.07 crores in respect of profits from exports from its unit at SEEPZ. He observed that the claim made by the assessee u/s.10 B had been rejected in the earlier AY.s, that the matter was sub judice before the honorable Bombay High Court for the AY.s 2003-04 to 2006-07 and 2008-09.Following the earlier years order ,he rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the assessee s claim of deduction u/s.10B on interest income(Rs.3.19 lakhs)and exchange loss (Rs.10.32 lakhs), and hedging gain(Rs.19.70 lakhs).During the assessment proceedings, the AO observed that during the year under consideration the assessee has claimed deduction u/s.10B of the Act on the profits from SEEPZ unit which included interest income, miscellaneous income and hedging gains of ₹ 19,57,438/-. The AO was of the view that interest income, miscellaneous income and hedging gains were not derived from the services/export activity and that it was not entitled to claim deduction. After considering the submission assessee in that regard, he reduced the business income of the assessee by ₹ 29.13 lakhs and added it to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedging its export proceeds to vulnerable exposure of currency risk and to hedge the exchange rate, that the transaction were done with the object of protecting the export vision of the assessee from the exchange fluctuation risk, that it had a direct nexus to the export, that hedging income was not derived from any scheme framed by the Government, it had a direct proximate nexus with the export business of the assessee. Accordingly, he held that hedging income was derived from export business and had assessed under the head income from business. Finally, he held that income aggregating to ₹ 29.13 lakhs was eligible for deduction u/s.10B of the Act. 3.2.Before us, the DR supported the order of AO and the AR relied upon the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provisions of 115JB of the Act. After considering the submission of the assessee, the AO held that book profit was to be computed after making specified adjustment to the net profit, that the Finance 2007 widened the scope of MAT by including total income exempt u/s.10A 10B in the book profit. He held that as per the memorandum explaining the provision of Finance Act,2007 MAT provisions were applicable to company on the income which was from any business or services derived from unit of SEZ, that provisions of section 115JB(6)was applicable to assessee claiming deduction provision of section 10AA of the Act and not an assessee claiming deduction u/s.10b of the Act. Accordingly, he held that assessee was liable to tax u/s.115JB ..... X X X X Extracts X X X X X X X X Extracts X X X X
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