M/S. INTERNATIONAL GOLD CO. LTD, MUMBAI V. THE ITO RG 8(2)(1), MUMBAI

ITA 1209/MUM/2008

• Counselvise Citation: 120919914 RSA 2008
• Duration Of Justice: 4 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 22-03-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 18-02-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARTHASARTHI NAIK
• Assessee Lawyers: NITESH JOSHI
• Keywords: Business income; Depreciation; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI P.M. JAGTAP (ACCOUNTANT MEMBER) AND SHRI VIVEK VARMA (JUDICIAL MEMBER) ITA NO.1615/MUM/2008 ASSESSMENT YEAR-2003-04 THE ITO, RANGE 8(2)(1), AAYAKAR BHAVAN, MUMBAI-400 020 M/S. INTERNATIONAL GOLD CO. LTD., G-48, GEMS & JEWELLERY COMPLEX, SEEPZ, ANDHERI (E), MUMBAI-400 096 (APPELLANT) VS. (RESPONDENT) ITA NO.1209/MUM/2008 ASSESSMENT YEAR-2003-04 M/S. INTERNATIONAL GOLD CO. LTD., G-48, GEMS & JEWELLERY COMPLEX, SEEPZ, ANDHERI (E), MUMBAI-400 096 PAN-AAACI 2830H THE ITO, RANGE 8(2)(1), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) VS. (RESPONDENT) ASSESSEE BY: SHRI NITESH JOSHI DEPARTMENT BY: SHRI PARTHASARTHI NAIK DATE OF HEARING : 22.3.2012 DATE OF PRONOUNCEMENT: 27-04-2012. O R D E R PER VIVEK VARMA, JM : THE APPEALS HAVE BEEN FILED BY THE ASSESSEE AND TH E DEPARTMENT AGAINST ORDERS OF CIT(A)-VIII, DATED 5.12.2007. ITA NO. 1209/MUM/2008 2. THE ASSESSEE COMPANY IS IN THE BUSINESS OF MANUF ACTURING AND EXPORTS OF DIAMOND STUDDED GOLD AND PLATINUM JEWELLERY. ITA NO.1615 & 1209 /M/08 2 3. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E RECEIVED INTEREST ON FIXED DEPOSITS KEPT IN THE BANK AS MARGIN MONEY FOR AVAILING THE FACILITIES FROM THE BANK (RS. 6,25,780) AND INTEREST RECEIVED ON ADVANCES PAID TO THE EMPLOYEES (RS. 86,876). THE AGGREGATE OF BOTH THESE TYPES OF INTERESTS, COME TO RS. 7,12,656/-. ACCORDING TO THE AO, SINCE THESE INTERESTS HAVE NOT BEEN DERIVED FROM THE BUSINESS ACTIVITY OF THE ASSESSE E COMPANY, THESE WOULD HAVE TO BE EXCLUDED FOR THE PURPOSES OF EXEMPTION U NDER SECTION 10A AS THESE INTERESTS SHOULD BE ASSESSED UNDER THE HEAD I NCOME FROM OTHER SOURCES. THE CIT(A) SUSTAINED THE VIEW TAKEN BY TH E AO. 4. THE ASSESSEE IS NOW BEFORE THE ITAT. 5. BEFORE US, THE AR OF THE ASSESSEE COMPANY POINTE D OUT AS MENTIONED IN GROUND NO. 1(A) THAT THE INTEREST RECEIVED WAS O N DEPOSITS MADE IN THE BANK AS MARGIN MONEY, PLACED WITH THE BANKS TO AVAI L CREDIT FACILITIES. BESIDES THIS, THE ASSESSEE HAD ALSO ADVANCED LOANS TO ITS EMPLOYEES, FROM WHOM THE ASSESSEE HAD EARNED AN AMOUNT OF RS. 86,87 6/- AS INTEREST. IT WAS SUBMITTED BY THE AR THAT BOTH TYPES OF INTERESTS RS . 6,25,780 + RS. 86,876/- HAD BEEN EARNED DURING THE COURSE OF REGULAR BUSINE SS OF THE ASSESSEE. 5. THE DR STRONGLY SUPPORTED THE VIEW TAKEN BY THE REVENUE AUTHORITIES AND CITED THE CASE OF LIBERTY INDIA VS CIT REPORTED IN 317 ITR 218 (SC). 6. THE ISSUE BEFORE US IS WHETHER INTEREST EARNED O N THE FUNDS PARKED IN FIXED DEPOSITS WITH THE BANKS TO AVAIL VARIOUS CRED IT FACILITIES WOULD HAVE THE CHARACTER OF BUSINESS INCOME OR WOULD IT BE ASSIGNE D THE CHARACTER OF INCOME FROM OTHER SOURCES. THE FACT THAT THE INTEREST HAS BEEN RECEIVED ON FIXED DEPOSITS FOR THE PURPOSES OF AVAILING CREDIT AND OT HER FACILITIES HAS NOT BEEN DISPUTED BY THE REVENUE AUTHORITIES. AT THIS POINT, THE AR POINTED OUT THE CASE APPENDED IN THE PAPER BOOK, DECIDED BY THE CO-ORDIN ATE BENCH OF MUMBAI ITAT IN ITO VS JEWELTEX INTERNATIONAL PVT. LTD. IN ITA NO. 3 302/M/09 ITA NO.1615 & 1209 /M/08 3 ACCEPTED THE ASSESSEES SUBMISSION AND HELD THAT IF THE INTEREST INCOME FORMS PART OF THE PROFITS OF THE BUSINESS OF THE UNDERTAK ING, THEN IN THE LIGHT OF THE STATUTORY FORMULA THE RESULTANT FIGURE AFTER APPLYI NG THE FORMULA HAS TO BE STATUTORILY CONSIDERED AS PROFITS DERIVED FROM EXPO RT OF ARTICLES. THEREFORE, ONCE THE CONCLUSION IS REACHED AS TO WHAT ELEMENTS FORM THE BUSINESS INCOME, THE STATUTORY FORMULA HAS TO BE APPLIED AND SUB SE CTION (4) LEAVES NO CHOICE, AND IT TAKES OVER, AS PRESCRIBED IN SECTION 10B(4). THE AR ALSO CITED THE CASE OF ANOTHER DECISION BY THE COORDINATE BENC H AT MUMBAI, IN THE CASE OF ITO V/S GREYTRIX (INDIA) PVT. LTD., ITA NO. 5787 /MUM/2009, WHEREIN, THE BENCH HAD CITED THE CASE OF HONBLE BOMBAY HIGH COU RT, IN CIT V/S INDO SWISS JEWELS LTD., REPORTED IN 284 ITR 389 (BOM), W HEREIN THE HONBLE BOMBAY HIGH COURT HELD, THE INTEREST EARNED ON THE SHORT TERM DEPOSITS OF THE MONEY KEPT APART FOR THE PURPOSES OF BUSINESS H AD TO BE TREATED AS INCOME EARNED FROM BUSINESS AND COULD NOT BE TREATE D AS INCOME FROM OTHER SOURCES . THE HONBLE COORDINATE BENCH ALSO CITED THE CASE OF MYSODET (P) LTD. V/S CIT, REPORTED IN 305 ITR 276 (SC), WHEREIN THE HONBLE APEX COURT ALLOWED THE CIVIL APPEAL FILED BY THE ASSESSEE. THI S WAS A CASE WHERE THE ASSESSEE DURING THE YEAR PURCHASED SOME COMPUTERS A ND EXPORTED THEM AT ITS COST PRICE, AND THERE WAS NO EXPORT INCOME AS S UCH, THE HONBLE APEX COURT, HELD THAT EVEN THE EXPORT INCENTIVES WOULD B E DEDUCTIBLE UNDER SECTION 80HHC. THE AR SUBMITTED THAT IN THE CASE OF THE ASS ESSEE, THE ASSESSEE HAD EARNED INTEREST INCOME FROM THE MONEY KEPT IN THE B ANK FOR AVAILING BANK/CREDIT FACILITIES, WHICH HAVE DIRECT NEXUS WIT H THE BUSINESS OF THE ASSESSEE, AND ON FACTS THE CASE IS DISTINGUISHABLE FROM THE RATIO OF THE DECISION IN LIBERTY INDIA. 7. WE SEE NO DISTINGUISHING FEATURE IN THE CASE AT HAND AND THE CASE CITED BY THE AR. THERE HAS BEEN NO DISPUTE BY THE AO THAT THE INTEREST EARNED BY THE ASSESSEE BEARS A DIFFERENT CHARACTER AND AT NO POINT IT HAS BEEN DISPUTED THAT THE FUNDS PARKED WITH THE BANK TO AVAIL CREDIT FACILITIES ARE FOR THE PURPOSES OF BUSINESS. WE ARE, THEREFORE, INCLINED TO ALLOW THE GROUND OF APPEAL AND HOLD THAT THE INTEREST INCOME BEARS THE CHARACTER OF THE PROFITS OF ITA NO.1615 & 1209 /M/08 4 THE BUSINESS OF THE ASSESSEE AND DIRECT THE AO TO I NCLUDE THE INTEREST INCOME IN THE PROFITS OF THE ASSESSEE FROM BUSINESS AND CO MPUTE THE QUANTUM OF EXEMPTION AS PER LAW. 8. GROUND NO. 1(B) HAS NOT BEEN PRESSED BY THE AR, THIS GROUND IS THEREFORE DISMISSED FOR NON PROSECUTION. 9. GROUND NO. 1(C) IS ON ACCOUNT OF WRITING BACK OF SUNDRY BALANCES OF RS. 15,99,771/-. THE REVENUE AUTHORITIES HAVE EXCLUDED THIS AMOUNT FROM THE CALCULATION OF EXEMPTION U/S. 10B, WHEREBY THE REVE NUE AUTHORITIES HAVE TAKEN THE VIEW THAT THIS AMOUNT OF RS. 15,29,771/- (NOT RS. 15,99,771/-) DOES NOT DERIVE FROM THE BUSINESS ACTIVITY OF THE ASSESS EE COMPANY. 10. BEFORE US, THE AR EXPLAINED THAT RS. 15,29,771/ - IS AN AGGREGATE OF AMOUNT WHICH REPRESENTS EXCESS PROVISIONS FOR PURCH ASES MADE IN EARLIER YEARS AND WHICH ARE NO LONGER PAYABLE. THE ASSESSE E, THEREFORE, ADDED THIS AMOUNT AS INCOME IN ITS PROFIT & LOSS ACCOUNT (U/S 41(1)). THE AR SUBMITTED AND POINTED OUT THAT THE CHARACTER OF THE PROVISION S MADE IN THE EARLIER YEAR HAS NOT BEEN DISPUTED BY THE REVENUE AUTHORITIES, I .E. THE PROVISIONS WERE IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE. THE A R FURTHER SUBMITTED THAT SINCE THE BUSINESS OF THE ASSESSEE COMPANY HAS NOT SEEN ANY CHANGE FROM THE EARLIER YEARS, WHEN THE PROVISIONS WERE MADE, T HEN THE CHARACTER OF THOSE PROVISIONS SHALL REMAIN THE SAME AS BEING MADE OUT AGAINST THE BUSINESS INCOME OF THE ASSESSEE COMPANY. THE AR SUBMITS THAT IF THE CHARACTER OF THE PROVISION IN THE EARLIER YEAR HAS BEEN ACCEPTED TO BE PERTAINING TO THE BUSINESS, THEN OBSERVING, THAT THOSE PROVISIONS IN THE CURRENT YEAR HAS CHANGED ITS CHARACTER WOULD NOT BE IN LINE WITH BU SINESS SYMMETRY. THE AR CITED THE CASE OF RAJPUTANA TRADING CO. LTD. VS CIT REPORTED IN 72 ITR 286, WHEREIN THE HONBLE SUPREME COURT OF INDIA HELD THAT IT WOULD BE MOST ILLOGICAL AND IRRATIONAL TO TREAT THE SO CALLED PRO FIT AS HAVING A NEUTRAL SOURCE AND NOT SPRINGING OUT OF THE SAME CATEGORY OF SPECU LATIVE BUSINESS WHICH LED TO THE ASSESSEE INCURRING THAT LOSS AS LIABILITY WHICH MEANS, THAT THE ITA NO.1615 & 1209 /M/08 5 CHARACTER WILL REMAIN THE SAME IN THE CASE OF WRITI NG BACK OF EXCESS PROVISIONS DURING THE YEAR. 11. THE DR RELIED ON THE OBSERVATIONS OF THE RE VENUE AUTHORITIES. 12. WE HAVE HEARD THE ARGUMENTS OF THE TWO SIDES AN D WE ARE INCLINED TO AGREE WITH THE ARGUMENTS MADE BY THE AR OF THE ASSE SSEE BECAUSE THE REVENUE AUTHORITIES TILL NOW HAVE NOT DISPUTED THE CHARACTER OF THE PROVISIONS MADE IN THE PRECEDING YEARS AND WHICH HAVE BEEN AL LOWED IN THOSE YEARS. IF THE PROVISIONS MADE IN THE EARLIER YEARS HAVE BEEN ACCEPTED TO HAVE THE CHARACTER OF BUSINESS, THEN HOW CAN ONE DISPUTE THE CHARACTER OF THOSE VERY PROVISIONS AS NOT BEARING THE SAME CHARACTER IN THE CURRENT YEAR, SIMPLY BECAUSE THESE AMOUNTS HAVE BEEN ADDED AS NON PAYABL E BUSINESS AMOUNTS IN THE COMPUTATION FOR THE YEAR, THE AO CANNOT BE JUST IFIED TO OBSERVE THAT THE AMOUNTS ARE NOT DERIVED FROM THE BUSINESS. IF THE PR OVISIONS IN THE EARLIER YEARS HAVE BEEN MADE AGAINST INCOME DERIVED FROM BU SINESS THEN IMPORTING THE DECISION CITED BY THE AR, BY THE HONBLE SUPREM E COURT OF INDIA IN THE CASE OF RAJPUTANA TRADING CO. LTD. VS COMMISSIONER OF INCOME-TAX (SC) (SUPRA), IS WELL FOUNDED THAT THE AMOUNTS WRITTEN B ACK BEARS THE CHARACTER OF BUSINESS. ONCE THE AMOUNT GETS THE CHARACTER OF BUS INESS, IT IS IMPERATIVE THAT IT HAS TO ENTER INTO THE STATUTORY FORMULA PRE SCRIBED IN SECTION 10B(4) AND AS HELD IN THE DECISION OF THE CO-ORDINATE BENCH OF ITAT MUMBAI IN THE CASE OF JEWELTEX INTERNATIONAL PVT. LTD. (SUPRA), AS OBS ERVED IN PARA 5 THEREIN. 13. IN THE RESULT, WE ARE INCLINED TO ALLOW THE GROU ND OF APPEAL AND HOLD THAT THE PROVISIONS OF PURCHASES/EXPENSES MADE IN T HE EARLIER YEARS BEARS THE CHARACTER OF THE BUSINESS OF THE ASSESSEE AND DIREC T THE AO TO INCLUDE THE AMOUNT OF RS. 15,29,771 AS BUSINESS INCOME AS SHOWN IN THE P&L ACCOUNT AND COMPUTE THE EXEMPTION AS PER LAW. ITA NO.1615 & 1209 /M/08 6 14. GROUND NO. 2 IS AGAINST THE DECISION OF THE REV ENUE AUTHORITIES TO EXCLUDE RS. 2,23,46,705/- BEING THE EXPORT PROCEEDS , RECEIVED WITHIN THE STIPULATED TIME. 15. THE FACTS ARE THAT THERE WAS A DELAY IN THE REC EIPT OF EXPORT PROCEEDS, THE AO REJECTED THE ASSESSEES PLEA, THAT THE PROCE EDS CAN BE RECEIVED AT ANY TIME, EVEN AFTER THE REGULAR TIME PERIOD HAS ELAPSE D. THE CIT(A) SUSTAINED THE OBSERVATION MADE BY THE AO IN THE ASSESSMENT OR DER, WHEREIN THE AO EXCLUDED THE IMPUGNED AMOUNT OF RS. 2,23,46,705/- F ROM THE TOTAL EXPORT PROCEEDS FOR THE COMPUTATION OF EXEMPTION. 16. AGGRIEVED BY THE DECISION OF THE CIT(A), THE AS SESSEE IS IN APPEAL BEFORE THE ITAT. 17. BEFORE US, THE AR OF THE ASSESSEE COMPANY SUBMI TTED THAT THERE IS NO DISPUTE BY THE REVENUE AUTHORITIES THAT THE EXPORT PROCEEDS WERE REALIZED BY THE ASSESSEE COMPANY, THE ONLY ISSUE IN DISPUTE IS THAT THE RECEIPTS OF THE PROCEEDS HAD GOT DELAYED BY MORE THAN SIX MONTHS. IN THIS CONTEXT, THE AR SUBMITTED THAT SO FAR AS THE RECEIPT FOR FOREIGN EX CHANGE IS CONCERNED, THE CONTROLLING AUTHORITY IS RESERVE BANK OF INDIA. THE AR SUBMITTED THAT EVEN THE EXPLANATION TO SECTION 10A(3), THE ACT ITSELF CLARI FIES THAT RBI IS THE COMPETENT AUTHORITY. IN THE CASE OF THE ASSESSEE THERE WAS A D ELAY, WHICH IS NOT IN DISPUTE, BUT THE FACT THAT WHERE THE CONTROLLING AU THORITY ITSELF DOES NOT PRESCRIBE ANY BAR ON THE DELAY, THEN ACCORDING TO T HE AR, THE BAR SHOULD NOT BE CREATED BY THE REVENUE AUTHORITIES TO DENY OR RE STRICT THE EXEMPTION. THE AR TOOK US THROUGH THE CIRCULAR ISSUED BY THE CONTR OLLING AUTHORITY I.E. THE RBI, APPENDED IN THE APB THAT UNITS SITUATED IN SPECIAL ECONOMIC ZONES HAVE BEEN PERMITTED TO REALIZE AND REPATRIATE TO INDIA TH E FULL VALUE OF GOODS OR SOFTWARE WITHIN A PERIOD OF TWELVE MONTHS FROM THE DATE OF EXPORT. IT HAS NOW BEEN DECIDED TO REMOVE THE STIPULATION OF TWELVE MO NTHS OR EXTENDED PERIOD THEREOF FOR REALIZATION OF EXPORT PROCEEDS. ACCORDI NGLY, THERE SHALL BE NO PRESCRIPTION OF ANY TIME LIMIT FOR REALIZATION OF E XPORTS MADE BY UNITS IN SEZS. ITA NO.1615 & 1209 /M/08 7 HOWEVER THE UNITS IN SEZS WILL CONTINUE TO FOLLOW T HE GR/PP/SOFTEX EXPORT PROCEDURE OUTLINED IN PART B OF ANNEXURE A.P.(DIR SE RIES) CIRCULAR NO. 12 DT. SEPTEMBER 9, 2000 AS AMENDED FROM TIME TO TIME . THE AR FURTHER SUBMITTED THAT THE AOS OBSERVATIONS THAT THE CIRCULAR IS ONL Y PROSPECTIVE WOULD BE OUT OF PLACE. THE AR HAS FURNISHED COMPLETE LIST OF EXP ORT PROCEEDS WHICH HAS BEEN DENIED BY THE REVENUE AUTHORITIES. THE AR REFE RRED TO THE CASE OF CIT V/S MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD., RE PORTED IN 339 ITR 291, 294, WHEREIN THE HONBLE BOMBAY HIGH COURT HAS HELD , THE EXTENSION HAS BEEN GRANTED IN SUBSTANCE AND THEREFORE, THE BENEFI T OF SECTION 10A HAS TO BE ALLOWED TO THE ASSESSEE ON THE GROUND THAT THE EXTE NSION IS DEEMED TO HAVE BEEN GRANTED . THE AR SUBMITTED THAT IN THE CASE OF THE ASSESSEE , IT IS THE COMPETENT AUTHORITY WHO IS ISSUING THE CIRCULAR FOR THE PROJECTS IN THE SEZS, WHERE, NOW, ACCORDING TO THE CIRCULAR THERE IS NO T IME LIMIT FOR REALIZATION OF EXPORT PROCEEDS. THE AR THEREFORE, SUBMITTED THAT T HE REVENUE AUTHORITIES WERE WRONG TO EXCLUDE THE UNREALIZED EXPORT PROCEED S FOR COMPUTATION OF THE EXEMPTION. 18. AGAINST THE SUBMISSIONS MADE BY THE AR, THE DR SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES AND HE FURTHER SUBMITTED THAT THOUGH THE COMPETENT AUTHORITY HAS ISSUED THE CIRCULAR, BUT TH AT MAY NEVER BE THE INTENTION THAT THERE WOULD BE A BLANKET PERMISSION TO THE EXPORTERS FOR REALIZATION OF THEIR EXPORT PROCEEDS. 19. WE HAVE HEARD THE SUBMISSIONS AND PERUSED T HE MATERIAL AND EVIDENCE PLACED ON RECORD, WE FIND THAT THE REVENUE AUTHORIT IES HAVE NEVER DISPUTED THE RECEIPT OF THE EXPORT PROCEEDS, AS IS EVIDENT F ROM THE OBSERVATIONS OF THE CIT(A) IN HIS ORDER, WHEREIN HE MENTIONS, .TILL DATE, THE CONFIRMATIONS/CLARIFICATIONS FROM THE RESPECTIVE BA NKS IS NOT ON RECORD. GOING BY THIS OBSERVATION, WE HAVE TO ACCEPT THAT THE SUB MISSIONS MADE BY THE AR THAT ONLY THE DELAY IN RECEIPT OF EXPORT PROCEEDS W OULD NOT BAR THE ELIGIBILITY FOR THE CLAIM OF EXEMPTION UNDER SECTION 10A. IF TH E GRIEVANCE OF THE REVENUE AUTHORITIES IS BASED ONLY ON THE CLARIFICATION/CONF IRMATION, THEN THE CASE OF ITA NO.1615 & 1209 /M/08 8 JURISDICTIONAL HIGH COURT OF BOMBAY, IN THE CASE OF CIT V/S STANLEY MORGAN (SUPRA) SHALL SQUARELY APPLY ON THE ISSUE, THAT THE EXTENSION HAS BEEN GRANTED IN SUBSTANCE AND THEREFORE, THE BENEFIT OF SECTION 10A HAS TO BE ALLOWED TO THE ASSESSEE ON THE GROUND THAT THE EXTENSION IS DE EMED TO HAVE BEEN GRANTED. 20. WE ARE OF THE VIEW THAT THE REVENUE AUTHORI TIES WERE INCORRECT IN EXCLUDING RS. 2,23,46,705 FROM THE EXPORT TURNOVER FOR THE COMPUTATION OF EXEMPTION UNDER SECTION 10A. WE, THEREFORE, SET ASI DE THE DECISION OF THE REVENUE AUTHORITIES ON THIS ISSUE AND DIRECT THE AO TO INCLUDE THE AMOUNT OF UNREALIZED EXPORT PROCEEDS IN THE EXPORT TURNOVER A ND ALLOW THE EXEMPTION AS PER LAW. 21. GROUND NO. 2, IS THEREFORE ALLOWED. 22. GROUND NO. 3 IS AGAINST THE NON ALLOWANCE OF SETOFF IN RESPECT OF UNABSORBED BUSINESS LOSS AND DEPRECIATION BROUGHT F ORWARD FROM EARLIER YEARS. 23. THE AR, BEFORE US, SUBMITTED THAT PROVISIO NS OF SECTION 10A(6) ARE NOT APPLICABLE TO THE LOSS BROUGHT FORWARD FROM THE PRE CEDING ASSESSMENT YEARS PRIOR TO THE ASSESSMENT YEAR IN WHICH EXEMPTION WAS CLAIMED FOR THE FIRST TIME. THE AR SUBMITTED THAT THE OBSERVATIONS OF THE REVENUE AUTHORITIES WERE CONTRARY TO THE PROVISIONS OF THE ACT. 24. THE DR SUPPORTED THE VIEWS TAKEN BY THE R EVENUE AUTHORITIES. 25. WE HAVE HEARD THE SUBMISSIONS MADE AND HAV E ALSO GONE THROUGH THE RELEVANT PROVISIONS OF SECTION 10A(6), WE THEREFORE , DIRECT THE AO TO COMPUTE THE EXEMPTION IN ACCORDANCE WITH LAW. 26. GROUND NO. 3 IS ALLOWED. ITA NO.1615 & 1209 /M/08 9 ITA NO. 1615/MUM/2008 (DEPARTMENTAL APPEAL) 27. THE ONLY GROUND RAISED BY THE REVENUE IS A GAINST THE DECISION OF THE CIT(A), WHEREIN THE CIT(A) HAD ALLOWED TO INCLUDE I NCOME FROM JOB WORK, AT RS. 14,87,872 FOR THE PURPOSES OF COMPUTING THE EXE MPTION UNDER SECTION 10A. 28. THE CIT(A) HAD OBSERVED THAT JOB WORK ACTIVI TY UNDERTAKEN BY THE ASSESSEE WOULD FORM THE BUSINESS ACTIVITY AND HE, A CCORDINGLY, DIRECTED THE AO TO RECOMPUTE THE EXEMPTION UNDER SECTION 10A. 29. THE DR, SUBMITTED THAT SINCE JOB WORK PER SE DOES NOT FORM PART OF THE EXPORT BUSINESS OF THE ASSESSEE, THEREFORE, THE INCOME FROM JOB WORK ACTIVITY SHOULD BE EXCLUDED FROM THE TURNOVER, THER EBY EXCLUDED FROM THE FORMULA FOR THE COMPUTATION OF EXEMPTION UNDER SECT ION 10A. 30. THE AR, APPEARING ON BEHALF OF THE ASSESSE E, SUBMITTED THAT THE UNIT OF THE ASSESSEE IS WITHIN THE SEZ. BESIDES THE ASSE SSEE COMPANY HAVING ITS OWN PRODUCTION, IT RECEIVES JOB CHARGES PRIMARILY F ROM THE UNITS WITHIN THE SEZ FOR DOING SOME JOB WORK FOR OTHER UNITS. THE AR POINTED OUT TO THE OBSERVATION MADE BY THE CIT(A) IN HIS ORDER IN DECI SION PART, WHEREIN, THE CIT(A) OBSERVES, I DO NOT SEE HOW THE AO WOULD BE JUSTIFIED IN HOLDI NG THAT SUCH RECEIPTS ON ACCOUNT JOB WORK CHARGES PERTAIN ING TO THE MANUFACTURE OF DIAMOND AND PLATINUM STUDDED JEWELLERY WOULD NOT BE PROFITS OF THE BUSINESS OF THE ASSESSEE . THE AR SUBMITTED THAT JOB WORK IS A PART AND PARC EL OF THE BUSINESS ACTIVITY OF THE ASSESSEE AND SHOULD BE INC LUDED IN THE TOTAL TURNOVER FOR THE PURPOSES OF THE COMPUTATION OF EXEMPTION. T HE AR SUBMITTED A COPY OF THE DECISION OF COORDINATE BENCH OF ITAT AT MUMB AI, IN THE CASE OF TROPICATE TEXTILES PVT. LTD. V/S DCIT, ITA NO. 1827 /MUM/2006 AND ITA NO. 2544/MUM/2006, THE HONBLE BENCH HAD DISMISSED THE APPEAL OF THE ITA NO.1615 & 1209 /M/08 10 DEPARTMENT (PARA 29 OF THE ORDER), RELYING ON THE D ECISION OF JEWELTEX INTERNATIONAL PVT. LTD. (SUPRA). 31. WE HAVE PERUSED THE FACTS OF THE CASE AND WE TOTALLY AGREE WITH THE OBSERVATIONS OF THE CIT(A) THAT JOB WORK ACTIVITY I S A PART AND PARCEL OF THE BUSINESS OF THE ASSESSEE. IN THE BUSINESS CONDUCTED BY THE ASSESSEE, ONCE A RECEIPT GETS IDENTIFIED AND TAKES THE CHARACTER OF A BUSINESS ACTIVITY, THE PROVISIONS OF SECTION 10A SHALL AUTOMATICALLY TAKE ITS OWN COURSE FOR THE COMPUTATION OF EXEMPTION AND ALLOWANCE THEREOF. RES PECTFULLY FOLLOWING THE FINDINGS OF THE HONBLE COORDINATE BENCH IN THE CAS E OF JEWELTEX INTERNATIONAL PVT. LTD. (SUPRA) DIRECTLY ON THE IMPUGNED ISSUE, W E DO NOT FIND ANY REASON TO DISTURB THE FINDINGS OF THE CIT(A) ON THIS ISSUE. W E, THEREFORE, DISMISS THE GROUND TAKEN BY THE REVENUE. 32. THE APPEAL FILED BY THE REVENUE IS DISMIS SED. IN THE RESULT : ITA NO. 1209/MUM/2008 IS PARTLY ALLOWED ITA NO. 1615/MUM/2008 IS DISMISSED. ORDER PRONOUNCED ON 24/04/2012. SD/- SD/- (P.M.JAGTAP) ( VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED APRIL, 2012 P/-* 27/04/2012 ITA NO.1615 & 1209 /M/08 11