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TMI Blog2020 (12) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... derived from the export of particles or things' to mean amount which bears to the 'profits of the business of the undertaking', the same proportion as the export turnover bears to the total turnover of the business carried on by the undertaking. What is required to be determined is 'profits of the business undertaking'. In short, the profits derived from export have been equated with business profits of the undertaking in view of the statutory formula provided in Section 10A(4) of the Act. In view of the statutory formula available for determination of quantum of deduction, the expression 'derived from' used in Section 10A(1) fades into insignificance and the quantum of deduction is required to be determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant and hence not eligible for deduction under section 10A of the Act. 3. The grievance of the assessee concerns eligibility of deduction of export revenue subsidy, miscellaneous income and sundry balances written off etc. aggregating to ₹ 19.80 Lakhs for the purposes of deduction under Section 10A of the Act. 4. We have heard the rival submissions on the issue. 5. The assessee company is engaged in the business of export of software and support services. In the course of the scrutiny assessment of the return filed for the AY 2005-06 in question, the AO noticed that the assessee has inter alia claimed deduction towards export revenue subsidy ₹ 19,33,024/-, miscellaneous income ₹ 10,108/- and sundry balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 37,630/- and misc. income of ₹ 10,108/- are clearly not in the nature of export The export subsidy of ₹ 19,33,024/- claimed is in fact cash incentive given by Gujarat Government on the export. Therefore, it is not income derived from exports but income received from Government. The deduction u/s. 10A is allowable in respect of profit and gains derived by an undertaking from the export of article or thing or computer software. The income mentioned above, at the best, may be attributable to the business activity of the undertaking but not derived from the export of article or thing or computer software. The appellant relied upon the decision of Hon'ble Gauhati High Court in the case of CIT vs. Meghalaya Steels Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered in favour of the assessee by the decision of the Hon'ble Gujarat High Court in case of Priyanka Gems (2014) 367 ITR 575 (Guj) as well as Hon'ble Bombay High Court in the case of CIT vs. Gem Plus Jewellery India Ltd. (2010) 194 Taxman 192 (Bom.). The issue is also similarly settled in favour of the assessee by long line of judicial precedents where the consistent view has been taken that such income arising as a result of business of export cannot be divested from the export business of the undertaking for the purposes of Section 10A/10B of the Act. Once export is made, the profits/losses may arise due to variety of reasons from such export activity. Noticeably, sub-section (4) to Section 10A of the Act explicitly explains the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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