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TMI Blog2019 (1) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... hd/2014 - - - Dated:- 3-12-2018 - Shri Waseem Ahmed, Accountant Member And Smt Madhumita Roy, Judicial Member For the Appellant : Shri Anil R. Shah Kinjal Shah, A.R. For the Respondent : Shri Lalit P. Jain, Sr.D.R. ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals) I, Baroda [CIT(A) in short] vide appeal no.CAB-I/260/2013-14 dated 20.10.2014 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961(here-in-after referred to as the Act ) dated 15.01.2014 relevant to Assessment Year (AY) 2011-12. 2. The grounds of appeal raised by the assessee are as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) erred in not allowing the deduction u/s 10B of the Act for certain income of ₹ 9,19,094/- only. 4. Briefly stated facts are that the assessee in the present case is a private limited company and engaged in the business of manufacturing of precision machine parts and assemblies. The assessee has two separate manufacturing unit which is identified as Engineering unit and 100% Export Oriented Unit. The assessee was maintaining separate books of account for both the units. The assessee in the year under consideration has shown certain income under the head other sources which inter alia include the following; ₹ 367/- Excess provision of expense written Back ₹ 291/- Discount and Kasar ₹ 56,542/- Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same can also not be treated as part of business profit. These are the taxes which are collected by the appellant from the customer and are paid to the Central Sales Tax Department and Service Tax Department. In view of this these two amounts of ₹ 56,542/- and ₹ 2,77,565/- cannot be treated as business profit and therefore the same are required to be reduced from the business profit for calculating the deduction u/s 10B of the IT Act. Thus, in my opinion, the AO has correctly reduced these two items from the business profit for the purpose of calculating deduction u/s 10B and therefore this action of the AO is confirmed. 5.4 As regards scrap sales of ₹ 5,84,329/-, the submission of the appellant is that this scrap s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izol Advanced Materials India Pvt. Ltd. vs. DCIT reported in 42 taxman.com 263. 7. On the other hand, ld. DR vehemently supported the order of authorities below. 8. We have heard the rival contentions and perused the materials available on record. The limited issue arises before us for our adjudication whether the income earned by the assessee from the business activities of the 100% units. In this regard, we find important to refer to the provision of Section 10B of the Act which reads as under: [ Special provisions in respect of newly established hundred per cent export-oriented undertakings 35 . 10B. (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by a hundred per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) This section applies to any undertaking which fulfils all the following conditions, namely :- (i) it manufactures or produces any articles or things or computer software; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of any undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section ; (iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. 8.1 From the plai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the total turnover. Thus, even though sub-section(1) of section 10B refers to profits and gains as are derived by a 100% EOU, the manner of determining such eligible profits has been statutorily defined in subsection( 4) of that section. Both sub-sections(1) and (4) are to be read together while computing the eligible deduction u/s10Bof the Act. We cannot ignore sub-section (4) of section 10B which provides specific formula for computing the profits derived by the undertaking from export. As per the formula so laid down, the entire profits of the business are to be determined which are further multiplied by the ratio of export turnover to the total turnover of the business. In case of Liberty India, the Hon. Supreme Court has dealt w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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