ACIT 18(1), MUMBAI V. S.K. INTERNATIONAL EXPORT CO., MUMBAI

ITA 628/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87916 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 15-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Keywords: Business income; Question of law
• Section: 80IB; 10B; 28; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI VIVEK VARMA, JM ./ I.T.A. NO. 628/MUM/2011 ( / ASSESSMENT YEAR: 2007-08) ASST. CIT, CIRCLE 18(1), 1 ST FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400 012 / VS. S. K. INTERNATIONAL (EXPORT) CO., A-2, UNIT NO. 79, SHAH & NAHAR INDL. ESTATE, S. J. ROAD, MUMBAI-400 013 ./! ./PAN/GIR NO. AAAFS 5529 G ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ' % & / APPELLANT BY : SHRI R. K. SAHU #$ ' % & / RESPONDENT BY : SHRI K. GOPAL ' ( ) % * + / DATE OF HEARING : 14.10.2014 ,-. % * + / DATE OF PRONOUNCEMENT : 13.01.2015 / / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-29, MUMBAI (CIT(A) FOR SH ORT) DATED 04.10.2010, ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2007-08 VIDE ORDER DATED 15.12.2009. 2. THE APPEAL RAISES TWO ISSUES, WHICH WE SHALL TAK E UP IN SERIATIM, AS FOLLOWS: 2 ITA NO. 628/MUM/2011 (A.Y. 2007-08) ASST. CIT VS. S. K. INTERNATIONAL (EXPORT) CO. 3. ISSUE NO. 1 - REIMBURSEMENT OF FREIGHT CHARGES (RS. 74,14,903/-) : THE ASSESSEE, A MANUFACTURER AND EXPORTER OF READYM ADE GARMENTS, WAS DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED TO HAVE D ISCLOSED A RECEIPT BY WAY OF FREIGHT CHARGES AT RS.74.15 LACS. IN EXPLANATION OF THE GEN ESIS OF THE SAID RECEIPT, IT WAS EXPLAINED BY THE ASSESSEE THAT THE SALE INVOICE IN RESPECT OF GOODS EXPORTED (OUTSIDE INDIA) ARE ON CIF (I.E., COST PLUS FREIGHT AND INSU RANCE) BASIS. THE ASSESSEE EXPORTER PAYS THE FREIGHT AND INSURANCE, WHICH FOR THE YEAR AMOUN TS TO RS.81.30 LACS, AND WHICH IS THEN RECOVERED FROM THE CUSTOMERS. THERE IS THUS NO QUES TION OF IT BEING REGARDED AS A SOURCE OF INCOME AND, IN FACT, THERE IS A NEGATIVE IMPACT ON THE PROFIT OF THE ASSESSEE ON THIS ACCOUNT. RELIANCE TOWARD SAME WAS ALSO PLACED ON TH E DECISIONS IN THE CASE OF GALA INTERNATIONAL (IN ITA NO. 6519/MUM/1998) AND C. A. GALIKOTWALA & CO. LTD. (IN ITA NO. 1512/MUM/1996), WHEREIN IT HAD BEEN HELD THAT T HE FREIGHT COLLECTED IS TO BE REDUCED FROM BOTH THE EXPORT AND TOTAL TURNOVER, I.E., IN C OMPUTING THE INCOME DERIVED FROM EXPORT. THE ASSESSING OFFICER (A.O.), HOWEVER, ASSE SSING THE SAME AS INCOME FROM OTHER SOURCE, THE LD. CIT(A) IN APPEAL FOUND THAT THERE W AS A CLEAR NEXUS BETWEEN THE INCOME AND THE FREIGHT EXPENSES. EVEN ASSUMING FREIGHT TO BE IN AN INDEPENDENT SOURCE OF INCOME, THE EXPENDITURE INCURRED BY THE ASSESSEE WO ULD HAVE TO BE ALLOWED U/S.57(III), RESULTING IN A LOSS UNDER THE HEAD INCOME FROM OTH ER SOURCE. THE A.O.S VIEW THEREFORE COULD NOT BE SUSTAINED. AGGRIEVED, THE REVENUE IS I N APPEAL. 4. WE FIND OURSELVES TO BE IN COMPLETE AGREEMENT WI TH THE FINDINGS BY THE LD. CIT(A), WHOSE ORDER HAS NOT BEEN IMPUGNED BY THE AS SESSEE IN ANY MEANINGFUL MANNER. THE RECEIPT ON ACCOUNT OF FREIGHT IS NOT IN VACUUM, AND ITS BASIS LIES IN THE INCURRING OF THE FREIGHT AND INSURANCE EXPENSES BY THE ASSESSEE. BOTH THE INCURRING OF THE EXPENDITURE ON THESE COUNTS, AS WELL AS THE RAISING OF THE BILL S ON CUM FREIGHT AND INSURANCE BASIS ON THE OVERSEAS CUSTOMERS, HAS NOT BEEN DISPUTED BY TH E REVENUE. HOW THEN, WE WONDER, COULD IT ADOPT A VIEW AS THAT FOLLOWED BY THE A.O. FURTHER, THE SOURCE OF THE SAID RECEIPT DOES NOT CLEARLY LIE IN ANY SEPARATE OR INDEPENDENT SOURCE OF INCOME, I.E., DISTINCT AND APART FROM THE ASSESSEES BUSINESS OF MANUFACTURE A ND EXPORT OF GOODS OUTSIDE INDIA. WE, 3 ITA NO. 628/MUM/2011 (A.Y. 2007-08) ASST. CIT VS. S. K. INTERNATIONAL (EXPORT) CO. ACCORDINGLY, FIND NO MERIT IN THE REVENUES STAND, AND THE SAID RECEIPT WOULD STAND TO FORM AS A PART OF THE ASSESSEES EXPORT BUSINESS. W E DECIDE ACCORDINGLY. THIS DECIDES THE REVENUES GROUND # 1. 5. ISSUE NO. 2 DEPB RECEIPT (RS.92,42,507/-) : THIS ISSUE IS WITH REGARD TO THE ELIGIBILITY OR OTH ERWISE IN LAW OF THE DUTY ENTITLEMENT PASS BOOK SCHEME (DEPB) RECEIPT (RS.92. 43 LACS) FOR BEING INCLUDED IN COMPUTING THE DEDUCTION U/S.10B OF THE ACT. BOTH TH E ASSESSEE AND THE REVENUE HAVE RELIED ON A SERIES OF CASE LAW, BOTH BY THE TRIBUNA L AND THE HIGHER COURTS OF LAW, WHICH WE MAY ENLIST AS UNDER: I. BY THE REVENUE : LIBERTY INDIA VS. CIT [2009] 317 ITR 218 (SC); INDIA COMNET INTERNATIONAL VS. ITO [2008] 304 ITR 322 (MAD) (APPROVING ITS EARLIER DECISION IN CIT VS. MENON IMPEX (P.) LTD. [2003] 259 ITR 403 (MAD)); TESSITURA MONTI INDIA (P.) LTD. VS. ITO [2013] 22 ITR (TRIB) 329 (MUM) [141 ITD 531]; TRICOM INDIA LTD. VS. ASST. CIT [2010] 36 SOT 302 (MUM); ITO VS. V. J. HOME (P.) LTD. [2009] 125 TTJ 215 (JODH)/[2010] 38 SOT 4 (JODH) (URO). II. BY THE ASSESSEE : TOPMAN EXPORTS VS. CIT [2012] 342 ITR 49 (SC); CIT VS. ARTS & CRAFTS EXPORTS [2012] 246 CTR 463 (BOM) (22 TAXMANN.COM 53 (BOM)); CIT VS. MOTORALA INDIA ELECTRONICS (P.) LTD. (KAR) (IN ITA NOS. 428 & 427 OF 2007 DATED 11.12.2013); ARTS & CRAFTS EXPORTS VS. ITO [2012] 66 DTR 69 (MUM- TRIB); RAJESH EXPORTS LTD. VS. ASST. CIT (IN ITA NO. 51/BANG/2008 DATED 14.08.2008). THE DECISIONS RELIED UPON BY THE REVENUE-APPELLANT ARE ON THE PREMISE THAT DEDUCTION U/S.10B, THOUGH ON THE INCOME DERIVED FRO M EXPORT, IS YET ONLY QUA THE PROFITS OF THE ELIGIBLE UNDERTAKING, I.E., AS DERIVED BY IT . THE COMPUTATIONAL FORMULA OF SECTION 10B(4) ONLY TAKES CARE OF THE LATTER PART, I.E., TH E INCOME OF THE UNDERTAKING THAT CAN BE SAID TO BE DERIVED FROM EXPORT, ON WHICH EXPORT OF ELIGIBLE ARTICLES AND THINGS, ENABLING SECURING CONVERTIBLE FOREIGN EXCHANGE FOR THE COUNT RY, THE DEDUCTION IS GRANTED. THE WORDS PROFITS OF THE BUSINESS OF THE UNDERTAKING IN SECTION 10B(4), ARE TO BE READ AS PROFITS DERIVED FROM ELIGIBLE UNDERTAKING. THE RE CEIPTS BY WAY OF DEPB, WHICH ARE STEP 4 ITA NO. 628/MUM/2011 (A.Y. 2007-08) ASST. CIT VS. S. K. INTERNATIONAL (EXPORT) CO. REMOVED FROM THE UNDERTAKING, IN-AS-MUCH AS THEY OW N THEIR ORIGIN TO THE SCHEME/POLICY FRAMED BY THE GOVERNMENT UNDER THE PROVISIONS OF TH E RELEVANT STATUTES (VIZ. CENTRAL EXCISE ACT, 1944; CUSTOMS ACT, 1942), WOULD THEREFO RE STAND EXCLUDED IN RECKONING THE PROFITS OF THE ELIGIBLE UNDERTAKING. THAT IS, THE D ECISIONS BY THE APEX COURT, AS IN THE CASE OF LIBERTY INDIA (SUPRA), OR EVEN PRIOR THERETO, VIZ. PANDIAN CHEMICALS LTD. VS. CIT [2003] 262 ITR 278 (SC); CIT VS. STERLING FOODS [1999] 237 ITR 579 (SC); INDIA LEATHER CORPN. (P.) LTD. VS. CIT [1997] 227 ITR 552 (SC), ETC. SHALL APPLY. THE SEC OND SET OF DECISIONS, I.E., AS RELIED UPON BY THE ASSES SEE, CANVASS THE VIEW THAT ONCE THE PROVISION LAYS DOWN THE FORMULA FOR THE COMPUTATION OF THE QUALIFYING PROFITS, I.E., AS ELIGIBLE FOR DEDUCTION, THERE IS NO QUESTION OF APP LYING THE DECISION OR RATIO OF ANY DECISION. THE SAME, AS EXPLAINED BY THE HONBLE HIG H COURT IN MOTOROLA INDIA ELECTRONICS (P.) LTD. (SUPRA), CANNOT BE CONSTRUED AS THE PROFIT DERIVED FROM THE BUSINESS OF THE UNDERTAKING. ACCORDINGLY, THE PROFITS OF THE UNDERT AKING ARE TO BE COMPUTED FOLLOWING THE REGULAR PROVISIONS OF THE ACT, I.E., U/S.28, IN THE MANNER PROVIDED AND GIVING EFFECT TO THE PROVISIONS OF SECTIONS 28 TO 43D. DEPB, OR DUTY DRA WBACK (DDB) FOR THAT MATTER, IS ONLY A BUSINESS INCOME U/S.28. THE FOREGOING SUMS UP THE CONTROVERSY ARISING IN THE INSTANT CASE. 6. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 6.1 THE FIRST THING FOR US TO CONSIDER IS IF THE IS SUE IS COVERED BY ANY BINDING DECISION. TOWARD THIS, WE FIND THE DECISION BY THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF ARTS & CRAFTS EXPORTS (SUPRA), RENDERED UNDER THE COGNATE PROVISION OF SE CTION 10BA. SO, HOWEVER, AS ITS READING WOULD SHOW, THE SAME IS BAS ED ON A CONCESSION BY THE REVENUE THAT THE DECISION BY THE APEX COURT IN LIBERTY INDIA (SUPRA), VIGOROUSLY RELIED UPON BY IT BEFORE US AS WELL AS IN THE OTHER DECISIONS RELIED UPON BY IT, HAS NO RELEVANCE IN THE FACTS OF THAT CASE. IN VIEW THEREOF, THE HONBLE COURT DE CLINED TO ENTERTAIN THE THIRD QUESTION OF LAW RAISED BY THE REVENUE BEFORE IT, AND DID NOT TH US ANSWER THE SAME, WHICH IS THE ONLY PERTINENT QUESTION AS FAR AS THE ISSUE/S ARISING IN THIS APPEAL IS CONCERNED. 5 ITA NO. 628/MUM/2011 (A.Y. 2007-08) ASST. CIT VS. S. K. INTERNATIONAL (EXPORT) CO. 6.2 THE SECOND QUESTION BEFORE US IS IF THE MATTER, IN VIEW OF THE CONFLICTING AND DIFFERING VIEWS BY THE DIFFERENT COURTS AND TRIBUNA L, OUGHT TO BE REFERRED BY US TO A LARGER BENCH, SO AS TO CONFORM TO THE PRINCIPLE OF JUDICIA L PROPRIETARY. TOWARD THIS, WE OBSERVE THAT BOTH THE PARTIES HAVE RELIED UPON A DECISION/S EACH BY THE HONBLE HIGH COURT. THE SAME, BEING AN APPELLATE FORUM HIGHER IN JUDICIAL H IERARCHY THAN THE APPELLATE TRIBUNAL, NO USEFUL PURPOSE WOULD BE SERVED BY REFERRING THE MAT TER TO A LARGER BENCH OF THE TRIBUNAL, EVEN AS THE DECISION BY THE NON-JURISDICTIONAL HIGH COURT IS PERSUASIVE AND NOT BINDING ON THIS TRIBUNAL (REFER: CIT V. THANE ELECTRICITY SUPPLY LTD . [1994] 206 ITR 727 (BOM.)). IN FACT, THIS SPECIFIC PROPOSITION, I.E., OF REFERENCE TO THE LARGER BENCH OF THE TRIBUNAL, WAS SPECIFICALLY ALSO PUT TO THE PARTIES DURING HEARING , ONLY TO BE DECLINED BY THEM. 6.3 WE THEREFORE PROCEED TO DISCUSS THE MATTER, BEG INNING BY REPRODUCING THE PROVISION IN ITS RELEVANT PART: SECTION 10B SPECIAL PROVISIONS IN RESPECT OF NEWLY ESTABLISHED HUNDRED PER CENT EXPORT-ORIENTED UNDERTAKINGS. (1) SUBJECT TO THE PROVISIONS OF THIS SECTION, A D EDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY A HUNDRED PER CENT EXPO RT-ORIENTED UNDERTAKING FROM THE EXPORT FOR ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAK ING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUT ER SOFTWARE, AS THE CASE MAY BE, SHALL BE ALLOWED FROM THE TOTAL INCOME OF T HE ASSESSEE: PROVIDED THAT WHERE IN COMPUTING THE TOTAL INCOME OF THE UN DERTAKING FOR ANY ASSESSMENT YEAR, ITS PROFITS AND GAINS HAD NOT BEEN INCLUDED BY APPLICATION OF THE PROVISIONS OF THIS SECTION AS IT STOOD IMMEDIATELY BEFORE ITS SUBSTITUTION BY THE FINANCE ACT, 2000, THE UNDE RTAKING SHALL BE ENTITLED TO THE DEDUCTION REFERRED TO IN THIS SUB-SECTION ON LY FOR THE UNEXPIRED PERIOD OF AFORESAID TEN CONSECUTIVE ASSESSMENT YEARS: PROVIDED FURTHER THAT FOR THE ASSESSMENT YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2003, THE DEDUCTION UNDER THIS SUB-SECTION S HALL BE NINETY PER CENT OF THE PROFITS AND GAINS DERIVED BY AN UNDERTAKING FRO M THE EXPORT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE; 6 ITA NO. 628/MUM/2011 (A.Y. 2007-08) ASST. CIT VS. S. K. INTERNATIONAL (EXPORT) CO. PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SECTION SHALL BE ALLO WED TO ANY UNDERTAKING FOR THE ASSESSMENT YEAR BEGINNING ON TH E 1ST DAY OF APRIL, 2012 AND SUBSEQUENT YEARS: PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SECTION SHALL BE ALLO WED TO AN ASSESSEE WHO DOES NOT FURNISH A RETURN OF HIS INCOM E ON OR BEFORE THE DUE DATE SPECIFIED UNDER SUB-SECTION (1) OF SECTION 139 . (4) FOR THE PURPOSES OF SUB-SECTION (1), THE PROFI TS DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE SHALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUCH ARTICLES OR THIN GS OR COMPUTER SOFTWARE BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE UNDERTAKING. AS ITS READING WOULD SHOW, THE CRUCIAL EXPRESSION C ALLING FOR INTERPRETATION ARE THE WORDS PROFITS AND GAINS AS ARE DERIVED BY A HUNDRE D PER CENT EXPORT-ORIENTED UNDERTAKING FROM THE EXPORT FOR ARTICLES OR THINGS OR COMPUTER SOFTWARE ., OCCURRING IN SECTION 10B(1), WHICH CONFERS AS WELL AS DELINEATES THE SCO PE OF THE DEDUCTION. IMPLICIT THEREIN IS THE CONDITION OF THE PROFITS OF THE ELIGIBLE UNDERT AKING DERIVED FROM ITS BUSINESS AS BEING THE QUALIFYING PROFITS. VIDE SUB SECTION (4) OF SEC TION 10B, THE PROFIT DERIVED BY A HUNDRED PER CENT EXPORT-ORIENTED UNDERTAKING (EOU) FROM EXPORT OF ELIGIBLE GOODS IS DEEMED TO BE AN APPROPRIATE FRACTION, I.E., THE RAT IO OF THE EXPORT TURNOVER OF SUCH GOODS TO THE TOTAL TURNOVER OF THE UNDERTAKING. CLEARLY, THEREFORE, THE PROFITS DERIVED FROM THE EXPORT (OF THE ELIGIBLE GOODS) ARE A PART OF THAT D ERIVED FROM THE BUSINESS OF THE ELIGIBLE UNDERTAKING, DETERMINED BY ALLOCATING THE SAME IN T HE RATIO OF THE EXPORT TURNOVER OF THE RELEVANT GOODS TO THE TOTAL TURNOVER OF THE UNDERTA KING. IT IS ONLY THE PROFITS DERIVED FROM MORE THAN ONE SOURCE THAT COULD BE APPROPRIATED OR ALLOCATED THUS, I.E., AMONGST THE DIFFERENT SOURCES FROM WHICH IT ARISES, AND WHICH I S WHAT IS CONTEMPLATED BY OR THE PROVISION OF S. 10B(4) IS TOWARD. THE BUSINESS OF T HE EXPORT OF ELIGIBLE GOODS IS A PART OF THE BUSINESS OF THE 100% EOU, AND WHICH MAY FURTHER BE A PART OF ITS TOTAL BUSINESS, INCLUDE AS IT MAY DOMESTIC TURNOVER/BUSINESS AS WEL L. THIS EXPLAINS OUR OBSERVATION THAT IMPLICIT IN THE WORDS DERIVED FROM THE EXPORT, DE FINING THE PRIMARY CONDITION, IS THAT THE PROFIT UNDER CONSIDERATION IS DERIVED FROM THE BUSI NESS OF THE ELIGIBLE UNDERTAKING. THE LIMITING RATIO OF SECTION 10B(4) ONLY SEEKS TO REST RICT THE BASE OR THE QUALIFYING PROFITS, 7 ITA NO. 628/MUM/2011 (A.Y. 2007-08) ASST. CIT VS. S. K. INTERNATIONAL (EXPORT) CO. DERIVED FROM TOTAL BUSINESS OF THE ELIGIBLE UNDERTA KING, TO THAT FROM THE EXPORT OF THE ELIGIBLE GOODS ONLY, I.E., ARE STATUTORILY ESTIMATE D. IT CANNOT BUT BY OTHERWISE IF THE WORDS DERIVED FROM, EMPLOYED BY THE LEGISLATURE IN SECT ION 10B(1), WHICH CONTROLS THE SCOPE OF THE DEDUCTION, AS WELL AS IN S.10B(4), IS TO BE GIVEN ITS PROPER MEANING, AS EXPLAINED BY THE APEX COURT IN SEVERAL DECISIONS, SOME OF WHICH ARE CITED SUPRA. WE ARE, THUS, IN AGREEMENT WITH THE INTERPRETATION AS ACCORDED BY TH E TRIBUNAL IN TESSITURA MONTI INDIA (P.) LTD. (SUPRA) THAT THE WORDS PROFITS OF THE BUSINESS OF THE UNDERTAKING WOULD SIGNIFY THE PROFITS AS DERIVED FROM THE BUSINESS OF THE UND ERTAKING. THAT IS, CONNOTE A RELATIONSHIP OF FIRST DEGREE BETWEEN THE PROFITS AND THE BUSINESS OF THE ELIGIBLE UNDERTAKING. THE TRIBUNAL, APPRECIATIVE AND ACKNOWLEDGING THAT THE W ORDS BUSINESS OF THE UNDERTAKING ARE WIDER IN SCOPE THAN THE WORDS OF THE UNDERTAKING, YET CLARIFIED THAT THE SAID RELATIONSHIP OF FIRST DEGREE BETWEEN THE PROFITS WOULD STAND TO BE WITH THE BUSINESS OF THE UNDERTAKING, I.E., THE ECONOMIC ACTIVITY THAT COMPRISES THE BUSI NESS OF THE ELIGIBLE UNDERTAKING, RATHER THAN BEING RESTRICTED STRICTLY TO THE ELIGIBLE UNDE RTAKING. AS SUCH, AS LONG AS A RECEIPT IS INTIMATELY OR INEXTRICABLY CONNECTED WITH THE BUSIN ESS OF THE UNDERTAKING, IT CANNOT BE EXCLUDED IN RECKONING THE ELIGIBLE PROFITS U/S. 10B (1). THE IMPUGNED RECEIPT BY WAY OF DEPB, PART OF WHICH WOULD IN FACT REPRESENT A PURE TRADING PROFIT, I.E., THE REALIZATION OF THE DEPB LICENSE/S THROUGH ITS TRANSFER TO A THIRD PARTY, ASSESSABLE U/S.28(1)(IIID), ARISES TO THE ASSESSEE NOT FROM THE SAID ECONOMIC ACTIVITY, B UT A FISCAL INCENTIVE, SO THAT THE SAME IS ONLY ITS IMMEDIATE SOURCE AND NOT THE ECONOMIC ACTI VITY ITSELF. THE BENEFIT OF DEDUCTION U/S.10B WAS ACCORDINGLY DENIED. THE DISCUSSION IN T HE SAID ORDER AT PARAS 4.3 AND 4.4(C) IS RELEVANT IN THIS REGARD, WHICH ALSO MAKES REFERE NCE TO THE DECISION BY THE APEX COURT IN LIBERTY INDIA (SUPRA), WHICH HAS APPLICATION IN-AS-MUCH AS THE WO RDS USED IN SECTION 80IB ARE DERIVED FROM THE BUSINESS OF THE UNDERTAKING OR DERIVED FROM THE ELIGIBLE BUSINESS. 6.4 FOR THE REASON AFORE-MENTIONED, WE ARE UNABLE T O SUBSCRIBE TO THE VIEW EXPRESSED PER THE DECISIONS RELIED UPON BY THE ASSESSEE, I.E. , THAT IN VIEW OF COMPUTATIONAL FORMULA OF SECTION 10B(4), THE ENTIRE PROFITS OF THE BUSINE SS OF THE UNDERTAKING, IRRESPECTIVE OF THEIR IMMEDIATE SOURCE, SHALL COMPRISE THE QUALIFYI NG PROFITS. THE WORDS PROFITS OF THE 8 ITA NO. 628/MUM/2011 (A.Y. 2007-08) ASST. CIT VS. S. K. INTERNATIONAL (EXPORT) CO. BUSINESS OF THE UNDERTAKING, OCCURRING IN SECTION 10B(4), HAVE TO BE ACCORDED A CONTEXTUAL MEANING AND, THEREFORE, ARE CIRCUMSCRIBE D BY THE QUALIFYING CONDITION OF SECTION 10B(1). AS EXPLAINED EARLIER, IMPLICIT IN T HE PROPORTIONATE FORMULA (OF SECTION 10B(4)) IS THE CONDITION THAT THE PROFITS BEING ALL OCATED THUS ARE DERIVED FROM SUCH BUSINESS OF THE ELIGIBLE UNDERTAKING. IT IS ONLY WH ERE THEY ARE SO THAT THE FURTHER RESTRICTION, I.E., TO THAT DERIVED FROM THE RELEVAN T EXPORTS, COULD BE DERIVED OR ARRIVED AT. ALL THAT WAS THEREFORE REQUIRED, I.E., IF THE ENTIR E PROFITS OF THE ELIGIBLE UNDERTAKING OR ITS BUSINESS, ARE TO BE CONSIDERED, AS HELD IN THE SAID DECISIONS, WAS TO DEFINE THE SAME AS THE PROFITS OF THE ELIGIBLE UNDERTAKING AS COMPUTED UN DER CHAPTER IV-D OR UNDER THE HEAD OF INCOME PROFITS AND GAINS OF BUSINESS OR PROFESSI ON, AS IN FACT DONE AT SEVERAL PLACES IN THE STATUTE. AS EXPLAINED BY THE APEX COURT IN, AMO NG OTHERS, CIT VS. TARA AGENCIES [2007] 292 ITR 444 (SC), THE INTENTION OF THE LEGIS LATURE HAS TO BE GATHERED FROM THE LANGUAGE USED IN THE STATUTE, AND WHICH MEANS THAT ATTENTION SHOULD BE PAID TO WHAT HAS BEEN SAID AS ALSO TO WHAT HAS NOT BEEN SAID. FURTHE R, THAT IT IS THE BOUNDEN DUTY AND OBLIGATION OF THE COURT TO INTERPRET THE STATUTE AS IT IS. IT IS CONTRARY TO ALL RULES OF CONSTRUCTION TO READ WORDS INTO A STATUTE WHICH THE LEGISLATURE IN ITS WISDOM HAS DELIBERATELY NOT INCORPORATED. CONTINUING FURTHER, THE DECISION IN THE CASE OF MOTOROLA INDIA ELECTRONICS (P.) LTD. (SUPRA) IS BASED ON THE FINDING OF A DIRECT NEXUS B ETWEEN THE INCOME UNDER REFERENCE AND THE BUSINESS OF THE ELIG IBLE UNDERTAKING. THE SAME, THUS, DOES NOT CONTRADICT WHAT STANDS STATED BY US IN THIS ORD ER, AND A DIFFERENT DECISION IN THE SAID CASE, I.E., VIS--VIS THAT IN THE INSTANT CASE, IS DUE TO THE DIFFERENCE IN THE FACTS, SO THAT THE SAID DECISION IS IN FACT SUPPORTIVE AND DISTINGUISH ABLE ON THE FACTS AT THE SAME TIME. 6.5 IN VIEW OF THE FOREGOING, IN OUR CLEAR VIEW, TH E RECEIPT BY WAY OF DEPB SHALL NOT FORM PART OF THE ELIGIBLE PROFIT OF THE ASSESSEES EOU U/S.10B(1) R/W S. 10B(4). WE DECIDE ACCORDINGLY. 9 ITA NO. 628/MUM/2011 (A.Y. 2007-08) ASST. CIT VS. S. K. INTERNATIONAL (EXPORT) CO. 7. IN THE RESULT, THE REVENUES APPEAL IS PARTLY AL LOWED. 0. *1 % 2/ 3 * % * 45 ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 13, 2 015 SD/- SD/- (VIVEK VARMA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ' 6) MUMBAI; 7( DATED : 13.01.2015 .(../ ROSHANI , SR. PS !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. ' 8* ( ) / THE CIT(A) 4. ' 8* / CIT - CONCERNED 5. ; < #*(=> , + =>. , ' 6) / DR, ITAT, MUMBAI 6. < ? @ ) / GUARD FILE !' ) / BY ORDER, */)+ , (DY./ASSTT. REGISTRAR) , ' 6) / ITAT, MUMBAI