The Tax PublishersITA No. 1645/Ahd/2014
2021 TaxPub(DT) 0131 (Ahd-Trib)INCOME TAX ACT, 1961
Section 10A
Where assessee inter alia claimed deduction towards export revenue subsidy, miscellaneous income and sundry balances under section 10A, same was to be allowed because 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).
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Deduction under section 10A - Allowability - Deduction towards export revenue subsidy, miscellaneous income and sundry balances under section 10A -
Assessee company was engaged in the business of export of software and support services. AO alleged that assessee inter alia claimed deduction towards export revenue subsidy, miscellaneous income and sundry balances under section 10A. AO denied the deduction for aforesaid streams of income on allegation that same were not 'derived from' the export business per se carried out by the eligible undertaking but only arose as an incidental income and thus was, at best, only 'attributable to' the export business. Held: 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 explicitly explains the term 'profits 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). 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 as per the aforesaid formula provided in section 10A(4). Thus, AO was directed to compute the quantum of deduction under section 10A in light of formula provided in section 10A(4).
Followed:CIT v. Priyanka Gems (2014) 367 ITR 575 (Guj-HC) : 2014 TaxPub(DT) 1612 (Guj-HC).
REFERRED : Liberty India v. CIT (2009) 317 ITR 218 (SC) : 2009 TaxPub(DT) 2027 (SC), CIT v. Meghalaya Steels Ltd. (2013) 356 ITR 256 (Guj-HC) : 2013 TaxPub(DT) 2125 (Gau-HC), CIT v. Gem Plus Jewellery India Ltd. (2010) 194 Taxman 192 (Bom.) : 2011 TaxPub(DT) 314 (Bom-HC).
FAVOUR : In assessee's favour.
A.Y. : 2005-06
IN THE ITAT, AHMEDABAD BENCH
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