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TMI Blog2021 (2) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court vide order dated 01.12.2014 on the following substantialquestions of law: "1. The Tribunal was right in holding that the appellant was not entitled to deduction under Section 35(2AB) of the Act to the extent the expenses eligible for deduction under the said provisions pertained to unit entitled for deduction under Section 10B of the Act? 2. The Tribunal was right in holding that Section 14A of the Act was applicable to the appellant although it had no exempt income?" 2. Facts leading to filing of this appeal briefly stated are that the assessee is a company engaged in the manufacture and sale of biotechnological products in Pharmaceutical and enzyme sectors through fermentation based technology. The assessee filed its return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AXMANN.COM 41 (SC) and it was held that Section 10A and Section 10B of the Act are the provisions with regard to deduction. In this connection, our attention was invited to paragraph 18 of the judgment. It is also submitted that deduction under Section 10B of the Act is qua the undertaking and is given in respect of the profits of business of the undertaking whereas deduction under Section 35(2AB) of the Act is given effect to a later stage while computing the total income of the assessee at the entity level. Therefore, the deductions granted under Section 10B as well as Section 35(2AB) of the Act are independent and the deduction under Section 35(2AB) of the Act is an expenditure based deduction whereas deduction under Section 10B of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2AB), amounts to tinkering with the formula. It is also urged that the Tribunal grossly erred in relying on Section 14A of the Act to uphold the disallowance. It is further submitted that Section 14A applies only to exempt incomes and since Section 10B of the Act is not an exemption provision as has been held by the Supreme Court in CIT Vs. YOKOGAWA LIMITED, supra, the aforesaid provision does not apply to the fact situation of the case. In support of aforesaid submission, reliance has been placed on the decisions in 'KARLE INTERNATIONAL PRIVATE LTD. Vs. ACIT' dated 07.09.2020 in ITA No.377/2012, 'VIJAY INDUSTRIES Vs. CIT' (2019) 103 TAXMANN.COM 454, 'REDINGTON (INDIA) LTD. Vs. ACIT' [(2017) 77 TAXMANN.COM 257 (MAD)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttention has been invited to paragraph 16 of the decision of the Supreme Court in YOKOGAWA INDIA LTD., supra. 6. We have considered the submissions made on both sides and have perused the record. Before proceeding further, it is apposite to take note of the relevant extract of Section 10B and Section 35(2AB) of the Act, which reads as under: "10B. Special provisions in respect of newly established hundred per cent export-oriented undertakings (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court in YOKOGAWA INDIA LTD., supra insofar as it pertains to nature of provision of Section 10B of the Act is concerned, was reversed by the Supreme Court in CIT VS. YOKOGAWA, supra and it was held that Section 10B of the Act is in the nature of deduction provision. It is also pertinent to mention here that Section 10B is a provision which deals with deduction of income whereas Section 35(2AB) deals with deduction on expenditure. 8. It is also relevant here to mention that the restriction contained in sub-Section (6) of Section 10B of the Act operate only upto 1st day of April 2001. Therefore, the restrictions contained in sub-Section (6) of Section 10B of the Act have no application to the obtaining factual matrix of the case as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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