Sameer E-Clipse (Products) Pvt.Ltd., Baroda V. The Income tax Officer,Ward-4(3), Baroda

ITA 506/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1077 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 14-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 26-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income
• Section: 80HHC; 10B; 6; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.506/AHD/2013 / ASSTT. YEAR: 2008-2009 SAMEER E - CLIPSE (PRODUCTS) P.LTD. (NOW KNOWN AS ECLIPSE GLOBAL PVT. LTD.) 903/10, GIDC INDL. ESTATE MAKARPURA VADODARA 390 010 PAN : AAGCS 7973 R VS ITO, WARD - 4(3) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI BHAVIN MARFATIA, CA REVENUE BY : SHRI SANJAY KUMAR, SR.DR / DATE OF HEARING : 14/06/2016 / DATE OF PRONOUNCEMENT: 18/07/2016 $%/ O R D E R THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF THE LD.CIT(A)-III, BARODA DATED 13.12.2012 PASSED FOR T HE ASSTT.YEAR 2008-09. 2. SOLITARY SUBSTANTIAL GRIEVANCE OF THE ASSESSEE I S THAT THE LD.CIT(A) HAS ERRED IN DENYING THE DEDUCTION UNDER SECTION 10B OF THE INCOME TAX ACT ON THE INCOME OF RS.16,05,675/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ELECTRONICALLY ON 29.9.2008 DECLARING TOTAL INCOME AT NIL. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE AT THE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF MANUFA CTURE AND EXPORT OF ALUMINUM BLINDS. IT HAS CLAIMED DEDUCTION UNDER SE CTION 10B OF THE INCOME ITA NO.506/AHD/2013 2 TAX ACT. AS FAR AS THE ISSUE DISPUTED IN THE PRESE NT APPEAL IS CONCERNED, THE ASSESSEE HAS INCLUDED A SUM OF RS.19,26,669/- IN TH E TURNOVER FOR THE PURPOSE OF CLAIMING EXEMPTION UNDER SECTION 10B. ACCORDING TO THE AO, THIS AMOUNT REPRESENTS TO SERVICES AND MAINTENANCE PROVIDED BY THE ASSESSEE. THE LD.AO AFTER ALLOWING THE EXPENDITURE INCURRED ON THIS FRO NT, EXCLUDED THE AMOUNT OF RS.15,04,869/-. THE LD.AO ASSESSED THIS AMOUNT UND ER HEAD INCOME FROM OTHER SOURCES. ON APPEAL, THE LD.CIT(A) HAS AGRE ED WITH VIEW OF THE AO, BUT RE-WORKED OUT THE QUANTUM. THE FINDING OF THE LD.CIT(A) READS AS UNDER: 4. I HAVE CONSIDERED THE APPELLANT'S SUBMISSIONS AN D THE AO'S OBSERVATIONS. THE PRESENT ISSUE INVOLVES TWO DIFFER ENT TYPES OF INCOME. SO FAR AS DEVELOPMENT CHARGES OF RS.3,20,694/- IS C ONCERNED, THE SAME HAS BEEN RECEIVED BY THE APPELLANT FOR DEVELOPING T HE TOOLS FOR MANUFACTURE OF BLINDS AS PER THE PRODUCT REQUIREMEN TS OF THE CUSTOMER. THUS, THE APPELLANT'S SUBMISSION THAT THE PRODUCT D EVELOPMENT CHARGES ARE INEXTRICABLY LINKED WITH THE MANUFACTURING OF T HE PRODUCTS IS ACCEPTABLE. HENCE THIS INCOME HAS BEEN DERIVED FROM THE ACTIVITY OF MANUFACTURE OF THE INDUSTRIAL UNDERTAKING AND ACCOR DINGLY DEDUCTION U/S.1OB IS ALLOWABLE ON THIS INCOME. THE AO IS DIRE CTED TO ALLOW DEDUCTION U/S.1OB ON THIS INCOME. ACCORDINGLY, THE PROPORTIONATE EXPENDITURE FOR EARNING THIS INCOME WILL ALSO BE TA KEN INTO ACCOUNT WHILE COMPUTING THE DEDUCTION U/S.1OB. 4.1 THE OTHER PART OF DISALLOWANCE IS THE AMOUNT OF RS.16,05,675/- EARNED BY THE APPELLANT AS MAINTENANCE CHARGES FOR THE PRODUCTS SOLD BY IT. THIS INCOME CANNOT BE SAID TO HAVE BEEN DERI VED FROM THE ACTIVITY OF MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING BY THE INDUSTRIAL UNIT OF THE APPELLANT. THIS IS ONE STAGE REMOVED FR OM THE MANUFACTURING PROCESS. HENCE, DEDUCTION U/S.1OB CANNOT BE ALLOWED ON THIS INCOME. THE DECISIONS RELIED UPON BY THE APPELLANT ARE OLD DECISIONS AND HAVE BEEN DELIVERED WITHOUT CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA 317 ITR 218 (SC) EXCEPT FOR THE DECISION IN THE CASE OF TOTAL PACKAGING SERVICES (S UPRA). BUT THE DECISION IN CASE OF TOTAL PACKAGING SERVICES WAS IN RELATION TO MODVAT CREDIT. SO FAR AS INCOME FROM MAINTENANCE OR SERVICE IS CONCERNED, THE ISSUE IS COVERED AGAINST THE APPELLA NT BY FOLLOWING DECISIONS: ITA NO.506/AHD/2013 3 (I) [2011] 12 TAXMANN.COM410(KOL.) (SB), DEPUTY COM MISSIONER OF INCOME-TAX, C.C. XX V. RAJESH KUMAR DROLIA. IN THIS DECISION THE BENCH HAS HELD AS FOLLOWS: 'THE ASSESSEE'S ARGUMENT WAS THAT AN INDUSTRIAL UND ERTAKING WAS ALSO TO UNDERTAKE ACTIVITY OF REPAIRING AND SERVICING, W HICH, IN TURN, COULD COMPLETE THE COMPANY'S PRODUCT PROFILE SO THAT CUST OMERS ARE OFFERED COMPREHENSIVE SERVICES INCLUDING AFTER-SALE SERVICE S. BUT THIS ARGUMENT OF THE ASSESSEE COULD NOT BE ACCEPTED, AS SERVICE A ND MAINTENANCE IS NOT AN INTEGRAL PART OF ACTIVITY OF INDUSTRIAL UNDE RTAKING AND AS IS CLEAR FROM THE OPENING WORD OF SECTION 80-IB THAT DEDUCTI ON IN RESPECT OF PROFITS AND GAINS FROM CERTAIN INDUSTRIAL UNDERTAKI NG IS TO BE ALLOWED UNDER THE PROVISIONS OF SECTION 80-IB WHILE COMPUTI NG TAXABLE INCOME IN RESPECT OF PROFITS DERIVED FROM AN INDUSTRIAL UN DERTAKING AND NOT FROM ANY OTHER ACTIVITY WHICH HAS NO IMMEDIATE OR D IRECT NEXUS TO THE ESSENTIAL ACTIVITY OF THE INDUSTRIAL UNDERTAKING. S ECTION 80-IB USES THE OPENING WORD THAT WHERE THE GROSS TOTAL INCOME OF A SSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS AND THE DEDUCTION UNDER THIS PROVISION BE ALLOWED IN COMPUTING THE TO TAL INCOME OF THE ASSESSEE FROM SUCH PROFITS AND GAINS OF AN AMOUNT E QUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THIS SECTION. THE APEX COURT HAS ALSO DRAWN A DISTINCTIO N BETWEEN THE EXPRESSION 'DERIVED FROM' AND 'ATTRIBUTABLE TO' IN THE CASE OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. V. CIT [1978] 1 13 ITR 84 , WHEREIN IT IS HELD THAT THE EXPRESSION 'ATTRIBUTABLE TO' WA S WIDER IN IMPORT THAN THE EXPRESSION 'DERIVED FROM'. THE EXPRESSION OF WI DER IMPORT, NAMELY, 'ATTRIBUTABLE TO', WAS USED WHEN THE LEGISLATURE IN TENDED TO COVER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS. BUT IN THE INSTANT CASE, THE ASSESSEE'S SOURCE OF INCOM E WAS FROM REPAIRS AND MAINTENANCE, I.E., AFTER SALE-SERVICES AND IT M IGHT HAVE COMMERCIAL CONNECTION BETWEEN THE PROFITS EARNED AND THE INDUS TRIAL UNDERTAKING BUT INDUSTRIAL UNDERTAKING ITSELF WAS NOT THE SOURC E OF THIS PROFIT. THIS PROFIT FROM REPAIR AND MAINTENANCE EARNED BY ASSESS EE WAS NOT A DIRECT YIELD FROM INDUSTRIAL UNDERTAKING AS THE WORD USED IN SECTION 80-IB OF PROFITS AND GAINS DERIVED FROM.' (II) [2012] 17 TAXMANN.COM 259 (MAD.), INDIAN ADDIT IVES LTD. IN THIS DECISION, THE HIGH COURT HAS HELD THAT THE ASSESSEE , ENGAGED IN MANUFACTURE AND SELLING OF ADDITIVES ON COMMISSION BASIS IS NOT ENTITLED TO DEDUCTION UNDER SECTION 80-IB IN RESPEC T OF SERVICE INCOME AND COMMISSION. THIS DECISION OF THE HIGH COURT HAS BEEN APPROVED BY ITA NO.506/AHD/2013 4 HON'BLE SUPREME COURT IN ITS DECISION REPORTED IN 2 5 TAXMANN.COM 412 (SC). 4.1.1 HENCE, FOLLOWING THESE DECISIONS, IT IS HELD THAT THE AO HAS RIGHTLY DISALLOWED DEDUCTION U/S.1OB ON ACCOUNT OF INCOME R ECEIVED BY THE APPELLANT FROM MAINTENANCE CHARGES FOR THE PRODUCTS SOLD BY IT. 4. BEFORE ME, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT SUB-SECTION 4 OF SECTION 10(B) PROVIDES THAT DEDUCTION UNDER THIS SECTION SHALL BE COMPUTED BY APPORTIONING THE PROFITS OF THE BUSINESS OF THE UNDERTAKING IN THE RATIO OF EXPORT TURNOVER TO THE TOTAL TURNOVER. IN OTHER WO RDS, ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, IT WAS NOT MANDATORY F OR THE ASSESSEE TO INCLUDE ONLY THOSE PROFITS WHICH HAS RESULTED FROM MANUFACT URING ACTIVITY. THE PROFIT OF THE BUSINESS OF THE UNDERTAKING IS TO BE CONSIDE RED FOR APPROPRIATION. HE FURTHER CONTENDED THAT THIS ISSUE HAS BEEN EXAMINED BY THE HONBLE DELHI HIGH COURT AND SPECIAL BENCH OF THE TRIBUNAL. HE R ELIED UPON THE FOLLOWING DECISIONS: I) CIT VS. HRITNIK EXPORTS P.LTD., ITA NO.219/2014 (DE LHI HIGH COURT); II) MARAL OVERSEAS LTD. VS. ACIT, 136 ITD 177 (INDORE) (SB); III) LUBRIZOL ADVANCED MATERIALS INDIA P.LTD. VS. DCIT, 150 ITD 538 (AHD); IV) ITO VS. JEWELEX INTERNATIONAL PVT.LTD., ITA NO.3302/MUM/2009. HE PLACED ON RECORD COPIES OF THESE DECISIONS. 5. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ERS OF THE REVENUE AUTHORITIES. 6. I HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. BEFORE EMBARKING UPON AN INQUIRY ON THE FACTS OF THE PRESENT CASE, ITA NO.506/AHD/2013 5 I DEEM IT PERTINENT TO TAKE NOTE OF THE DECISIONS R ELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE. IN THE CASE OF HRITNIK EXPORTS P .LTD. (SUPRA), HONBLE DELHI HIGH COURT, WHILE CONSIDERING THIS ISSUE TOOK INTO CONSIDERATION PARA-79 OF THE SPECIAL BENCH DECISION IN THE CASE OF MARAL OVE RSEAS LTD. (SUPRA), WHEREIN THE TRIBUNAL HAS PROPOUNDED ITS INTERPRETAT ION AS TO HOW SECTION 10(B)(1)(4) ARE TO BE CONSTRUED. HONBLE DELHI HIG H COURT, THEREAFTER, TOOK NOTE OF ITS EARLIER DECISION RENDERED IN ITA NO.438 OF 2014 AND RECORDED A FINDING THAT SECTION 10B IS NOT ON SIMILAR FOOTING OF 80HHC AND/OR 80HHB. THE DECISION OF THE HONBLE DELHI HIGH COURT CONTAI NING ORDER OF THE ITAT, SPECIAL BENCH READ AS UNDER: 78. SECTION 10B SUB-SECTION (1) ALLOWS DEDUCTION IN RESPECT OF PROFITS AND GAINS AS ARE DERIVED BY A 100% EOU. SEC TION 10B(4) LAYS DOWN SPECIAL FORMULA FOR COMPUTING THE PROFITS DERIVED BY THE UNDERTAKING FROM EXPORT. THE FORMULA IS AS UNDE R :- PROFIT OF THE BUSINESS OF THE UNDERTAKING EXPORT TURNOVER X TOTAL TURNOVER OF BUSINESS CARRIE D OUT BY THE UNDERTAKING 79. THUS, SUB-SECTION (4) OF SECTION 10B STIPULATED THAT DEDUCTION UNDER THAT SECTION SHALL BE COMPUTED BY APPORTIONIN G THE PROFITS OF THE BUSINESS OF THE UNDERTAKING IN THE RATIO OF TURNOVER TO THE TOTAL TURNOVER. THUS, NOT-WITH-STANDING THE FACT TH AT SUB-SECTION (1) OF SECTION 10B REFERS THE PROFITS AND GAINS AS ARE DERIVED BY A 100% EOU, YET THE MANNER OF DETERMINING SUCH ELIGIB LE PROFITS HAS BEEN STATUTORILY DEFINED IN SUB-SECTION (4) OF SECTION 10B OF THE ACT. AS PER THE FORMULA STATED ABOVE, THE ENTIR E PROFITS OF THE BUSINESS ARE TO BE TAKEN WHICH ARE MULTIPLIED BY TH E RATIO OF THE EXPORT TURNOVER TO THE TOTAL TURNOVER OF THE BUSINE SS. SUB-SECTION (4) DOES NOT REQUIRE AN ASSESSEE TO ESTABLISH A DIR ECT NEXUS WITH THE BUSINESS OF THE UNDERTAKING AND ONCE AN INCOME FORMS PART OF THE BUSINESS OF THE UNDERTAKING, THE SAME WOULD BE INCLUDED IN THE PROFITS OF THE BUSINESS OF THE UNDERTAKING. THU S, ONCE AN INCOME FORMS PART OF THE BUSINESS OF THE ELIGIBLE U NDERTAKING, THERE IS NO FURTHER MANDATE IN THE PROVISIONS OF SE CTION 10B TO EXCLUDE THE SAME FROM THE ELIGIBLE PROFITS. THE MOD E OF DETERMINING THE ELIGIBLE DEDUCTION U/S 10B IS SIMIL AR TO THE ITA NO.506/AHD/2013 6 PROVISIONS OF SECTION 80HHC INASMUCH AS BOTH THE SE CTIONS MANDATES DETERMINATION OF ELIGIBLE PROFITS AS PER T HE FORMULA CONTAINED THEREIN. THE ONLY DIFFERENCE IS THAT SECT ION 80HHC CONTAINS A FURTHER MANDATE IN TERMS OF EXPLANATION (BAA) FOR EXCLUSION OF CERTAIN INCOME FROM THE PROFITS OF T HE BUSINESS WHICH IS, HOWEVER, CONSPICUOUS BY ITS ABSENCE IN SE CTION 10B. ON THE BASIS OF THE AFORESAID DISTINCTION, SUB-SECTION (4) OF SECTION 10A/10B OF THE ACT IS A COMPLETE CODE PROVIDING THE MECHANISM FOR COMPUTING THE PROFITS OF THE BUSINESS ELIGI BLE FOR DEDUCTION U/S 10B OF THE ACT. ONCE AN INCOME FORMS PART OF THE BUSINESS OF THE INCOME OF THE ELIGIBLE UNDERTAKING OF THE ASSESSEE, THE SAME CANNOT BE EXCLUDED FROM THE ELIG IBLE PROFITS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10B OF T HE ACT. AS PER THE COMPUTATION MADE BY THE ASSESSING OFFICER H IMSELF, THERE IS NO DISPUTE THAT BOTH THESE INCOMES HAVE BEEN TRE ATED BY THE ASSESSING OFFICER AS BUSINESS INCOME. THE CBDT CIRC ULAR NO. 564 DATED 5TH JULY, 1990 REPORTED IN 184 ITR (ST.) 137 EXPLAINED THE SCOPE AND AMBIT OF SECTION 80HHC AND THE MODE O F DETERMINATION OF PROFITS DERIVED BY AN ASSESSEE FRO M THE EXPORT OF GOODS. I.T.A.T., SPECIAL BENCH IN THE CASE OF IN TERNATIONAL RESEARCH PARK LABORATORIES V. ACIT, 212 ITR (AT) 1, AFTER FOLLOWING THE AFORESAID CIRCULAR, HELD THAT STRAIGH T JACKET FORMULA GIVEN IN SUB-SECTION (3) HAS TO BE FOLLOWED TO DETERMINE THE ELIGIBLE DEDUCTION. THE HONBLE SUPREME COURT I N THE CASE OF P.R. PRABHAKAR; 284 ITR 584 HAD APPROVED THE PRINCI PLE LAID DOWN IN THE SPECIAL BENCH DECISION IN INTERNATIONAL RESERARCH PARK LABORATORIES V. ACIT (SUPRA). IN THE ASSES SEE S OWN CASE THE I.T.A.T. IN THE PRECEDING YEARS, AFTER CONSIDER ING THE DECISION IN THE CASE OF LIBERTY INDIA HELD THAT PROVISIONS O F SECTION 10B ARE DIFFERENT FROM THE PROVISIONS OF SECTION 80IA W HEREIN NO FORMULA HAS BEEN LAID DOWN FOR COMPUTING THE ELIGIB LE BUSINESS PROFIT. 80. IN VIEW OF THE ABOVE DISCUSSION, QUESTION NO. 2 IS ANSWERED IN AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE. ACCORDIN GLY, THE ASSESSEE IS ELIGIBLE FOR CLAIM OF DEDUCTION ON EXPO RT INCENTIVE RECEIVED BY IT IN TERMS OF PROVISIONS OF SECTION 10 B( 1) READ WITH SECTION 10B(4) OF THE ACT. THE AFORESAID VIEW IS IN CONSONANCE WITH THE DECISI ON OF THIS COURT DATED 1ST SEPTEMBER, 2014 PASSED IN ITA 438/2014, C OMMISSIONER OF INCOME TAX-VII VERSUS XLNC FASHIONS IN WHICH THIS C OURT HAS HELD AS UNDER :- ITA NO.506/AHD/2013 7 DEDUCTION UNDER SECTION 10B OF THE INCOME TAX ACT, 1961 (ACT, IN SHORT) IS TO BE MADE AS PER THE FORMULA PRESCRIB ED BY SUB- SECTION (4), WHICH READS AS UNDER: 10B. SPECIAL PROVISION IN RESPECT OF NEWLY ESTABLI SHED HUNDRED PER CENT EXPORT- ORIENTED UNDERTAKINGS- .. (4) FOR THE PURPOSES OF SUB-SECTION (1), THE PROFIT S DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE S HALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS O F THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TURN OVER IN RESPECT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFT WARE BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY TH E UNDERTAKING. SUB-SECTION (4), THEREFORE, IS THE SPECIAL PROVISIO N WHICH ENABLES THE ASSESSEE TO COMPUTE THE PROFITS DERIVED FROM TH E EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE. WE DO NOT SEE ANY CONFLICT BETWEEN SUB- SECTION (1) AND SUB-SECTION ( 4) TO SECTION 10B, AS SUB-SECTION (1) STATES THAT DEDUCTION OF SU CH PROFITS AND GAINS AS ARE DERIVED BY A HUNDRED PERCENT EXPORT-OR IENTED UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS O R SOFTWARE WOULD BE ELIGIBLE UNDER THE SAID SECTION. SUB- SECT ION (1) IS A GENERAL PROVISION AND IDENTIFIES THE INCOME WHICH I S EXEMPT AND HAS TO BE READ IN HARMONY WITH SUB-SECTION (4) WHIC H IS THE FORMULA FOR FINDING OUT OR COMPUTING WHAT IS ELIGIB LE FOR DEDUCTION UNDER SUB-SECTION (1). NEITHER OF THE TWO PROVISIONS SHOULD BE MADE IRRELEVANT AND BOTH HAVE TO BE APPLI ED WITHOUT NEGATING THE OTHER. IN OTHER WORDS, THE MANNER OF C OMPUTING PROFITS DERIVED FROM EXPORTS UNDER SUB-SECTION (1), HAS TO BE DETERMINED AS PER THE FORMULA STIPULATED IN SUB-SEC TION (4), OTHERWISE SUB-SECTION (4) WOULD BECOME OTISE AND IR RELEVANT. THE ISSUE IN QUESTION IN THIS APPEAL WHICH PERTAINS TO THE ASSESSMENT YEAR 2009-10, RELATES TO DUTY DRAW BACK IN THE FORM OF DEPB BENEFITS. AS PER SECTION 28, CLAUSE (III-C) , ANY DUTY OF CUSTOMS OR EXCISE REPAID OR REPAYABLE AS DRAWBACK T O A PERSON AGAINST EXPORTS UNDER CUSTOMS AND CENTRAL EXCISE DU TIES DRAW BACK RULES, 1971 IS DEEMED TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE SAID PROVISION HAS TO BE GIVEN F ULL EFFECT TO AND THIS MEANS AND IMPLIES THAT THE DUTY DRAW BACK OR DUTY BENEFITS WOULD BE DEEMED TO BE A PART OF THE BUSINE SS INCOME. ITA NO.506/AHD/2013 8 THUS, WILL BE TREATED AS PROFIT DERIVED FROM BUSINE SS OF THE UNDERTAKING. THESE CANNOT BE EXCLUDED. EVEN OTHERWISE, WHEN WE APPLY SUB-SECTION (4) TO SE CTION 10B, THE ENTIRE AMOUNT RECEIVED BY WAY OF DUTY DRAW BACK WOULD NOT BECOME ELIGIBLE FOR DEDUCTION/EXEMPTION. THE AMOUNT QUANTIFIED AS PER THE FORMULA WOULD BE ELIGIBLE AND QUALIFY FO R DEDUCTION/EXEMPTION. THE POSITION IS SOMEWHAT AKIN OR CLOSE TO SECTION 80HHC OF THE ACT, WHICH ALSO PRESCRIBES A F ORMULA FOR COMPUTATION OF DEDUCTION IN RESPECT OF EXPORTS. IN VIEW OF THE AFORESAID, WE DO NOT FIND ANY MERIT IN THE PRESENT APPEAL AND THE SAME IS DISMISSED. KARNATAKA HIGH COURT IN COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE VERSUS MOTOROLA INDIA ELECTRONICS (P) LTD., ITA NO. 428/2007, DECIDED ON 11.12.2013, REPORTED AS [2014] 46 TAXMANN.COM 167 (KARNATAKA) HAS ALSO TAKEN A SIM ILAR VIEW, WHEREIN IT HAS BEEN HELD:- BY FINANCE, ACT, 2001, WITH EFFECT FROM 01.04.2001 , THE PRESENT SUB- SECTION (4) IS SUBSTITUTED IN THE PLAC E OF OLD SUB-SECTION (4). NO DOUBT SUB-SECTION 10(B) SPEAKS ABOUT DEDUCTION OF SUCH PROFITS AND GAINS AS DERIVED FROM 100% EOU FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUT ER SOFTWARE. THEREFORE, IT EXCLUDES PROFIT AND GAINS F ROM EXPORT OF ARTICLES. BUT SUB-SECTION (4) EXPLAINS WH AT IS SAYS THAT PROFITS DERIVED FROM EXPORT OF ARTICLES O R THINGS OR COMPUTER SOFTWARE SHALL BE THE ACCOUNT WHICH BAR ES TO THE PROFITS OF THE BUSINESS OF THE UNDERTAKING AND NOT THE PROFITS AND GAINS FROM EXPORT OF ARTICLES. THEREFOR E, PROFITS AND GAINS DERIVED FROM EXPORT OF ARTICLES IS DIFFER ENT FROM THE INCOME DERIVED FROM THE PROFITS OF THE BUSINESS OF THE UNDERTAKING. THE PROFITS OF THE BUSINESS OF THE UND ERTAKING INCLUDES THE PROFITS AND GAINS FROM EXPORT OF THE A RTICLES AS WELL AS ALL OTHER INCIDENTAL INCOMES DERIVED FROM T HE BUSINESS OF THE UNDERTAKING. IT IS INTERESTING TO N OTE THAT SIMILAR PROVISIONS ARE NOT THERE WHILE DEALING WITH COMPUTATION OF INCOME UNDER SECTION 80HHC. ON THE CONTRARY THERE IS SPECIFIC PROVISIONS LIKE SECTION 80HHB WHICH EXPRESSLY EXCLUDES THIS TYPE OF INCOMES. THER EFORE, IN VIEW OF THE AFORESAID PROVISIONS, IT IS CLEAR TH AT, WHAT IS EXEMPTED IS NOT MERELY THE PROFITS AND GAINS FROM T HE ITA NO.506/AHD/2013 9 EXPORT OF ARTICLES BUT ALSO THE INCOME FROM THE BUS INESS OF THE UNDERTAKING. 7. THE LD.COUNSEL FOR THE ASSESSEE, THEREAFTER, MAD E REFERENCE TO THE ORDER OF THE ITAT, AHMEDABAD IN THE CASE OF LUBRIZOL ADVA NCED MATERIALS INDIA P.LTD. (SUPRA) AND ITAT, MUMBAI BENCH IN THE CASE O F JEWELEX INTERNATIONAL P.LTD. (SUPRA). THE RATIO IN BOTH THESE DECISIONS IS ALSO TO THE SIMILAR EFFECT. ON DUE CONSIDERATION OF THE FACTS OF THE PRESENT CA SE, IN THE LIGHT OF THE ABOVE DECISIONS, I FIND THAT IN ALL THESE DECISIONS, THE INCOME MIGHT NOT BEEN DERIVED BY THE ASSESSEE FROM MANUFACTURING, BUT WAS ASSESSE D AS BUSINESS INCOME. FOR EXAMPLE, IN THE CASE OF CIT VS XLNC FASHIONS, I TA NO.438 OF 2014 REFERRED BY THE HONBLE DELHI HIGH COURT RECEIPTS R ELATED TO DEPB BENEFITS. THE HONBLE COURT HAS OBSERVED THAT SUCH RECEIPTS A RE TO BE TREATED AS PROFIT DERIVED FROM BUSINESS OF THE UNDERTAKING. IN THE P RESENT CASE, THE INCOME OF THE ASSESSEE FROM MAINTENANCE OR SERVICES WAS NOT A SSESSED AS ITS INCOME FROM BUSINESS. IT HAS BEEN ASSESSED AS INCOME FRO M OTHER SOURCES. IT HAS ALSO TO BE KEPT IN MIND THAT THE ASSESSEE HAS NOWHE RE PLEADED THAT SERVICE WAS ONLY PROVIDED ON THE ITEMS SOLD BY IT. THEREFORE, TO MY MIND, THE LD.REVENUE AUTHORITIES HAVE RIGHTLY REJECTED THE CLAIM OF THE ASSESSEE. I DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT(A). THE APPEAL OF THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 18 TH JULY, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 18/07/2016