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TMI Blog2018 (10) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case, the learned CIT(A) erred both on facts and in law in confirming the action of the AO in restricting the exemption under Section 10B of the Income Tax Act to an amount of Rs. 52,34,341/- as against Rs. 70,03,995/- claimed by the assessee and allowable under the Act. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in excluding the amount of Rs. 14,21,719/- on account of interest while computing deduction under Section 10B of the Act despite the fact that such interest income is inextricably linked with the business undertaking and is part of the business profits and hence cannot be excluded while computing the deduction under Section 10B of the Act. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in not excluding a sum of/ Rs. 14,29,186/- being interest paid on loan used towards construction of the property while computing business income. 6. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same being interest, while computing deduction u/s 10B of the Act. AO also made addition of Rs. 14,29,186/- by not excluding the said amount being paid on loan utilized towards construction of property while computing business income. AO further treated the total turnover for computing exemption u/s 10B at Rs. 7,18,75,940/- as against Rs. 7,14,16,743/- claimed by the assessee. AO has also not excluded the scrap sale from the total turnover to compute the deduction u/s 10B of the Act. AO disallowed 10% of expenses claimed by the assessee on account of entertainment expenses, travelling expenses and conveyance expenses to the tune of Rs. 44,144/-, 1,90,428/-and Rs. 2,09,737/- respectively. AO further made adhoc disallowances of Rs. 4,31,910/-, Rs. 19,457/- and Rs. 2,12,100/- on account of miscellaneous expenses on account of short/excess expenses and on garden maintenance respectively, on estimated basis. AO further made adhoc disallowances claimed by the assessee on account of jewellery expenses. 3. Assessee carried the matter before Ld. CIT(A) by way of filing appeal who has upheld the addition made by the AO by dismissing the appeal. Feeling aggrieved, the assessee has come up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view point of the AO would have been correct if there had been no further elaboration of the expression 'such profits and gains as are derived by a hundred per cent export oriented undertaking from the export of articles or things.......'. The position under consideration is not akin to some of the sections employing this expression without any further amplification of the same. Sub-section (4) of section 10B gives meaning to the expression 'profits derived from export of articles or things ........' to mean the amount which bears to the 'profits of the business' of the undertaking the same proportion as the export turnover in respect of such articles or things, etc., bears to the total turnover of the business carried on by the undertaking. A bare perusal of sub-section (4) in juxtaposition to sub-section (1) of section 10B transpires that the expression 'derived by'' used in sub-section (1) cannot be construed in its literal sense to mean encompassing only such items of income which have direct or immediate nexus with the eligible undertaking. The meaning given to this expression in sub-section (4) as referring to 'the profits of the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction for the interest payable by the assessee where property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital. The assessee has admittedly shown some income from let out property under the head 'Income from house property.' Once some term loan has been taken for acquiring or constructing, etc., the property, which fetched income under the head 'Income from house property', then, interest on such loan has to be allowed as deduction u/s 24(b) of the Act. The view point of the assessee to this extent is ergo accepted in principle. However, we are unable to calculate such amount of interest with precision. Under such circumstances, the impugned order is set aside on this score and the matter is sent back to the AO for verifying and ascertaining the amount of loan utilized for the building in respect of which rental income assessable under the head 'Income from house property' was earned and, accordingly, allowing deduction towards such interest u/s 24(b) of the Act. Needless to say, the ITA No.2034/Del/2013 assessee will be allowed a reasonable opportunity of being heard in such determination." 10. So when undispu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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