Document Fragment View

Matching Fragments

"9(i). 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 and excluding the following amounts while computing deduction under Section 10B of the Act
(i) Export Incentive Rs.13,22,959/- 
           (ii) Scrap Sales                           Rs.22,920/-
           (iii)    lnterest on       Fixed
                                                      Rs.23,04,152/-
                    Deposits
           (iv) Amount written back                   Rs. 44,376/-

           (v) Miscellaneous Income                   Rs. 3,907/-

           (vi) Insurance Claim                       Rs. 1,31,980/-

           (vii) Job Work received                    Rs. 2,08,803/-

           (viiii) Claim & Damages                    Rs. 2,75,245/-
Thus, the expression 'profits derived from such export' occurring in sub-section (3) read with Explanation (baa) restrict the profits available for deduction in terms of sub-section (1) to only those items of income directly relatable to the business of export."

6.7 In view of the above, the income from Export incentives (Rs. 1,322,959/-), Scrap sale (Rs. 22,920/-), Interest on fixed deposits (Rs. 2,304,152/'-), Amount written back (Rs. 44,376/-), Miscellaneous income (Rs. 3,907/r), Insurance claim (Rs. 131,980/-), Job work received (Rs. 208,803/-) and Claims & damages (Rs. 275,245/-) cannot be treated as income derived from the eligible unit, and as such would not be eligible for deduction u/s 10B. The AO is justified in his view that the assessee would not be eligible for exemption u/s 10B in respect to these incomes. In the case of CIT vs. Sadhu Forging Ltd. (2011) 242 CTR (Del) 158 it has been held that there cannot be any two opinions that manufacturing activity of the type of material being undertaken by the assessee would also generate scrap in the process of manufacturing. The receipts of sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from industrial undertaking for the purpose of computing deducting u/s 80IB. However in the instant case of the appellant, in the absence of any material or explanation on whether the scrap scale shown by the appellant is generated in the manufacturing process, the said receipts from sale of scrap cannot be treated as derived from the eligible activities of export. Similarly the amount written back of provisions/ expenses of Rs. 4-1.736/- or earlier years does not relate to the AY 2009-10. Therefore, the AO is justified in his view that the appellant would not be eligible for exemption u/s 10B in respect of these incomes. The appeal fails in this ground."

12.1 Before us, the Ld. counsel filed the written submission, which is reproduced as under:

"1.Export Incentives- Rs. 13.22.959/-
i. This income forms part of the business if the undertaking and therefore cannot be excluded from the computation of calculating exemption.
ii. This issue is covered by the judgment of • Hon'ble Delhi High Court in the case of CIT-VIII Vs XLNC Fashions 2015(10) TMI1086 -3-3 • CIT Vs Hritnik Exports P Ltd- 2015(1)TMI 1009- Delhi High Court.
2. Scrap Sales Rs. 22.920 Scrap sale is the income derived from the business and is eligible for the deduction. This issue is covered by the following:

12.7 Similarly on the issue of scrap sales the assessee has cited the decision of the Hon'ble Supreme Court in the case of Punjab Stainless Industries (supra).

12.8 Since the issue of computing deduction under section 10B of the Act has already been restored to the file of the Assessing Officer, we feel it appropriate to restore this issue for deciding the quantum of the deduction on export incentives, and scrap sales to the file of the Assessing Officer for deciding in the light of above decisions of the Hon'ble Courts.