Nosch Labs Private Limited, Hyderabad V. Dy.CIT, Circle-16(1), Hyderabad

ITA 672/HYD/2013

• Counselvise Citation: 67222514 RSA 2013
• Duration Of Justice: 1 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARNEET S SACHDEV
• Assessee Lawyers: A V RAGHURAM
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI P.M.JAGTAP, ACCOUNTANT MEMBER ITA NO. 672 /HYD/201 3 : ASST. YEAR 200 8 - 0 9 M/S. NOSCH LABS (P) LIMITED, HYDERABAD ( PAN - AABCN 2833 Q) V/S. DY. COMMISSIONER OF INCOME - TAX CIRCLE 16(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V.RAGHURAM RESPONDENT BY : SHRI PARNEET S.SACHDEV CIT - DR DATE OF HEARING 21 . 01 .201 5 DATE OF PRONOUNCEMENT 23.1.2015 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER: THIS APPEAL FILED BY TH E ASSESSEE I S DIRECTED AGAINST THE O R DER DATED 4.3.20123 PASSE D BY THE LEARNED COMMISSIONER OF INCOME - TAX IV, HYDERABAD UN D ER S.263 OF THE INCOME TAX ACT,1961, REVISIN G THE ASSESSMENT MADE BY THE ASSESSING OFFICER UN D ER S .143(3) WITH DIRECTION TO HIM TO RECOMPUTE TH E DEDUCT I ON ALLOWABLE TO THE ASSESSEE UN D ER S.10B, AFTER EXCLUDING OTHER INCOME OF RS.24,27,261 FROM THE PROFIT OF THE BUSINESS. 2. THE ASSESSEE IN THE PRESENT C A S E IS A COMPA N Y, WHI C H IS ENGAGED IN THE BU S IN E SS OF MANUFACTURE, TRADING AND EXPORT OF BULK DRUGS AND IN TE RMEDIARIES. THE RETURN OF INCOME FOR THE YE A R UN D ER CONSIDERATION W AS FILED BY IT ON 22.9.2008, DE C L A RING TOTAL IN C OM E OF RS .4.88,99,305, AFTER CLAIMING DEDUCTION UN D ER S.10B AMOUNTING TO RS .16,06,05,559. IN TH E ASSESSMENT C OMPL E TED UN D ER S.143(3) VIDE O R DER DATED 27.12.2010, I TA NO. 672/HYD/2013 M/S. N OSCH LABS (P) LIMITED, HYDERABAD 2 THE CLAIM O F TH E ASSESSEE O F DEDUCTION UN D ER S.10B WAS ALLOWED BY THE ASSESSING OFFICER AND THE IN C O M E WAS ASSESSED ON THE S AME FIGURE AS RETURNED BY THE ASSESSEE. 3. T H E R E CORDS OF THE SAID ASSESSMENT SUBSEQ UE N T LY CAME TO BE EXAMIN E D BY THE LEARNED COMMISSIONER OF INCOME - TAX AND ON SUCH EXAMINATION, HE F OUN D THAT OTHER INCOME AMOU N TING TO R S .24,27,261 CONSI S TING OF INTEREST INCOME, TECHNICAL CONSU L TANCY CHARGES, EXCHAN G E FLUCTUATION , ETC. C ON S TITU TE D PART OF THE PROFIT OF THE BU S IN E SS OF THE ASSESSEE, AND WHIL E AL L OWIN G THE CLAIM O F THE ASSESSEE FOR DEDU CT ION UNDER S.10B, THE SAID OTHER INCOM E WAS NO T EXCLUDED BY THE ASSESSING OFFICER FROM THE PROFIT OF THE BU S IN ES S. ACCOR D ING TO THE LEARNED COMMISSIONER, THE SAID IN C OM E DID NO T CON S TITU T E INCOM E D ERIVED FROM THE EXPORTS OF THE ASSESSEE AND THE SAME THEREFORE , WAS LI A BLE TO B E REDUCED FROM THE PROFITS OF BU S IN E SS WHIL E COMPU T IN G DE D U CT ION UN D ER S .10B. HE THER EF ORE, WAS OF THE OPINION THAT THE ORDER PASSE D BY THE ASSESSING OFFICER UN D ER S.143(3) ALLO W IN G TH E CLAIM OF THE ASSESSEE FOR DED UCT ION UN D ER S10B BY INCLU D IN G OTHER INC OM E IN THE P R O F ITS OF BUSINESS WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE RE VENUE. A C C OR D INGLY , A NOTICE UN D ER S.263 WAS ISSUED BY HIM REQUI R ING THE ASSESSEE TO SHO W CAU S E AS TO WHY THE SAME SHOULD NOT B E REVISED UN D ER S.263. IN REPLY, THE NAT URE OF EACH AND EVERY ITEM O F OTHER INCOME WAS EXPLAINED BY TH E ASSESSEE B E FOR E THE LEARNED COMMISSIONER AS UN D ER - .. I ) TECHNICAL CONSULTANCY: RS. 5 8,787/ - : IT WAS STATED THAT CONSULTANCY INCOME REPRESENTS AMOUNT RECEIVED FOR PROVIDING TECHNICAL DATA TO OVERSEAS CUSTOMERS IN CONNECTION WITH THE SUPPLY OF DRUGS. THE SAME SHOULD BE TREATED AS INCOME DERIVED FROM BUSINESS BY THE UNDERTAKING . II ) EXCHANGE FLUCTUATION:2,8 5 ,084/ - IT IS A TRADE PRACTICE TO NEGOTIATE PRICE IN TERMS OF US $ WITH I TA NO. 672/HYD/2013 M/S. N OSCH LABS (P) LIMITED, HYDERABAD 3 OVERSEAS CUSTOMERS OR SUPPLIERS. WHILE SUPPLYING TO CUSTOMERS INVOICES ARE RAISED IN TERMS OF US $ AND PROCURING MATERIALS FROM OVERSEAS SUPPLIERS INVOICES ARE BILLED TO THEM IN TERMS US $ WHEREAS SUCH PURCHASES AND SALES ARE REFLECTED IN THE BOOKS OF ACCOUNT IN INDIAN RUPEE S AT THE PREVAILING EXCHANGE RATE. HOWEVER WHILE SETTLING THE DUES OF SUPPLIERS OR CUSTOMERS TRANSACTIONS TAKE PLACE IN TERMS OF US $ AT THE PREVAILING EXCHANGE RATE AT THAT TIME. THE DIFFERENCE IN BOOKS OF ACCOUNT EITHER IN S UPPLIERS ACCOUNT O R C USTOMERS ACCOUNT TREATED AS EXCHANGE FLUCTUATIONS . IT I S EVIDENT THAT INCOME FROM EXCHANGE FLUCTUATIONS IS EMANATED FROM BUSINESS TRANSACTIONS. ACCORDINGLY TR E ATED AS BUSIN E SS INCOME FOR THE PURPOSE OF CLAIMING EXEMPTION U/S.1 OB. III ) LOSS ON FOREX OPTIONS RS.268724/ - MOST OF THE OVERSE AS SUPPLIER S SUPPLY GOODS ON CREDIT BA S IS AGAIN S T LE AND THE INVOICES ARE RAISED IN TERMS OF FOREIGN CURRENCY I. E., US $. TO MINIMIZE TH E RI S K FR O M E XCHANGE FLUCTUATION S BANKERS MAY IN S I S T/SUG G E S T TO TAKE FORWARD / OPTION CO NTRA C T S AG A IN S T TH E OUTST ANDING LIA B ILITI ES AND RECEIVABLE S A S TH E C AS E MAY BE . THE R ES ULTANT LO SS/G AIN AT THE TIME OF SETTLEMENT OF CONTRACT IS TE5ATED LOSS ON FOREX OPTIONS. HENCE, THE SAME SHOULD BE ADJUSTED UNDER OTHER INCOMES WHICH ARE NOTHING BUT INCOME DERIVED FROM BUSINESS. IV ) SUPPLIERS' DISCOUNT RS.1540633/ - . IN THE NORMAL COUR S E OF BUSINESS PURCHASES ARE PROCURED ON CREDIT BASIS FOR A CERTAIN PERIOD. SOMETIMES THE SUPPLIER S MAY REQUEST FOR EARLY PAYMENT FOR WHICH THEY E XTEND CERTAIN AMOUNT AS DISCOUNT' DEPENDING ON THE MUTUAL NEGOTIATIONS AT THE TIME OF PAYMENT. THESE DISCOUNTS ARE NOTHING BUT REDUCTION IN PURCHASE. HENCE, DISCOUNTS SHOULD B E TREATED AS BU S INESS INCOME FOR THE PURPOSE OF CLAIMING D E DUCTION U/S.1 OB. V ) INTEREST ON LC MARGIN MONEY RS.311051/ - : IT WA S S UBMITTED THAT CERTAIN DEPOSITS ARE TO B E GIVEN A S L C S MARGIN WITH BANKS WHO PROVIDE LETTER OF C R E DIT. THE INTEREST EARNED ON SUCH MARGIN IS DIRECTLY CONNECTED WITH BUSINESS TRANSACTI O N S . S INCE THIS MARGIN MONEY DEPOSITS ARE MADE OUT OF WORKING CAPITAL LOANS, SUCH INTEREST EARNED ON MARGIN MONEY IS TO BE TREATED AS INCOME DERIVED FROM THE BUSINESS. VI ) INTEREST RS.499711/ - : INTEREST EARNED ON ELECTRICITY DEP O S ITS , EEFC ACCOUNTS ALSO TREATED AS BUSINESS INCOME FOR THE REASON THAT INTEREST PAID ON LOANS CHARGED TO PROFIT AND LOSS ACCOUNT AND THE INTEREST EARNED ON DEPOSITS TO BE NETTED OFF WITH A RESULT IN INTERE S T INCOME OF RS.4997 11 / - . I TA NO. 672/HYD/2013 M/S. N OSCH LABS (P) LIMITED, HYDERABAD 4 4. ON THE BASIS OF THE ABOVE SUBMISSIONS, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED COMMISSIONER TH A T THE OTHER INCOME OF R S .24,27,261 REPR E SENTED ITS BUSINESS INCOME AND THE SAME WAS RIGHTLY IN C LU D ED IN TH E P RO FITS OF THE BU S IN E SS BY TH E ASSESSING OFFICER FOR THE PU RP O S E OF ALLO W IN G DEDUC T ION UN D ER S .10B. IT WAS CON T ENDED T H A T THE ORDER OF THE ASSESSING OFFICER ALLO W IN G THE CLAIM O F THE ASSESSEE FOR DEDUCTION UN D ER S .10B WAS NEITH E R ERRONEOUS NO R PREJU D I C I A L TO THE INTERESTS OF R EVENUE CALLING FOR ANY REVISION UNDER S.263. 5. TH E LEARNED COMMISSIONER DID NOT FIND MERIT IN TH E SUBMI SS IONS MADE ON BEHALF O F THE ASSESSEE. ACCO RD ING T O HIM, A LTHOUGH THE OTHER INCOME AMOUN T I N G TO RS .24,27,261 WAS ATTRIBUTABLE TO THE BU S IN ES S OF THE ASSESSEE, THE SAM E WAS CERTAINLY NO T D ERIVED FROM THE EXPORT BU S IN E SS, SO AS TO TREAT IT AS PART OF PROFITS OF BU S IN E SS FOR THE PU R PO S E OF ALLO W ING DEDUCTION UN D ER S .10B. RELYING , IN T ER ALI A, ON THE D ECISION OF HON'BLE SUPREME COURT IN TH E CA S E OF CIT V/S. STERLING FOODS (2 3 7 ITR 279 ), HE HELD TH A T THE FAILURE ON THE P A RT OF THE ASSESSING OFFICER TO E X CLUDE THE OTHER INCOME FROM THE PROFITS OF BUSIN E SS FOR PURPOSES OF ALLO W IN G DEDU CT ION UN D ER S.10B THU S REND E RED THE ORDER PASSED UN D ER S.143(3) ERRO NEO US AND PREJU D I C IAL TO THE INTEREST S OF RE V EN UE, AND THE SAME WAS REVISED BY HIM BY THE IMPU G N E D ORDER P A SSE D UN D E R S.263, WITH A DI RE C T ION TO THE ASSESSING OFFICER TO RECOMPU T E THE DEDU CTI ON ALLO W ABLE TO THE ASSESSEE UN D ER S.10B, AFTER EXCLUDING OTHER INCOME OF RS .24,27,261 FROM TH E PROFITS OF THE BU S IN ES S O F TH E ASSESSEE UNDERTAKING. AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER, ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. I TA NO. 672/HYD/2013 M/S. N OSCH LABS (P) LIMITED, HYDERABAD 5 6 . THE LEARNED COUN S EL F O R THE ASSESSEE SUBMI TT ED THAT WHIL E C ONSID E RIN G THE CL A IM O F TH E ASSESSEE FOR DEDUCTION UN D ER S.10B IN RESPECT OF OTHER INCOME, THE VITAL ASPECT THAT IS REQUIRED TO B E CON S I DE RED IS THAT THERE IS A FORMULA GIVEN IN SUB - SE CT ION (4 ) OF S.10B TO WORK OUT THE PROFITS DERIVED F R OM THE EXPORT OF ARTICLE O R THING OR COMPUTER SOFTWARE FOR THE PU R PO S E OF ALLO W IN G DEDU CT ION UN DE R S.10B. HE INVITED OU T ATTENTION TO THE P R O V I SI ON S OF SUB - S ECTION (4 ) OF S.10B, WHEREIN THE FORMULA IS GIVEN TO COMPU T E THE P R O F ITS DERIVED F R OM THE EXPORT OF ARTICLES OR THINGS OR COMPU T ER S OFTWARE, AS THE AMOUNT WHICH BEARS TO TH E P R OFITS OF THE BU S IN E SS OF THE UN D ERTAKING, TH E SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUCH ARTICLES OR THIN G S OR COMPUTER SOFTWARE BE A RS TO THE TOTAL TURNO V ER OF THE BUSIN ES S CARRIED BY THE UN DE RTAKI NG. HE CONTENDED THAT WH A T IS RELEVANT TO APPLY THI S FORMULA IS TO COM P UTE THE P RO FI TS OF THE UN D ERT A KING FIRST AND THEN TO USE THE SAID FORMULA TO COMPU T E THE P R O F ITS DERIVED F R OM THE EXPORT OF ARTICLES OR THIN G S OR COMPU T ER SOFTWARE. HE CON T ENDED THAT SINCE THE OTH E R INCOME IN QUESTION EARNED IS ADMITTEDLY FORM ING PART OF THE INCOME O F THE ASSESSEE F R OM THE P ROFITS OF TH E BUSIN ES S OF THE UNDERTAKING, THE SAME CANNOT BE EXCLUDED FOR THE PU RPO SE OF COMPUTING THE PROFITS DE R IVED BY T H E ASSESSEE F R OM THE EX PORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE, WHILE APPLYING THE FORMULA GIVEN IN SUB - SECTION (4) OF SECTION 10B. HE CONTENDED THAT THERE WAS THUS NO ERROR IN THE ORDER O F THE ASSESSING OFFICER PASSED UNDER S.143(3) IN NOT E X CLU D IN G OTHER IN C OM E IN QUES TION FROM THE PROFITS OF THE BUSINESS UN D ERTAKIN G FOR THE PU RP OSE OF COMPUTIN G DEDUCTION UN D ER S.10B AND THE LEARNED COMMISSIONER IS NO T JU S TIFIED IN REVISING THE SAID ORDER BY EXERCISING THE POW E RS CONFERRED UPON HIM UN D ER S.263. 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE , ON THE O T H E R HAND, SUBMI T TED THAT AS P E R PROVIS I ONS OF SU B - SEC T ION (1) OF S.10B, ONLY THE PROFITS AND G AIN S DERIVED F R OM THE EXPORT OF A R TICLES OR THIN G S OR COM P U T ER I TA NO. 672/HYD/2013 M/S. N OSCH LABS (P) LIMITED, HYDERABAD 6 SOFTWA R E OF THE ELIGIBLE UN DE RTAKIN G ARE ENTITLED FOR DEDUCT ION . HE CONTE N DED THAT THE EXPRESSION DERIVED FROM HA S A VERY NARRO W MEANING AS HELD INTER ALIA BY THE HON'BLE SUPREME COURT IN THE CA S E OF STERLING FOODS (SUPRA) RELI E D UPON BY THE LEARNED COMMISSIONER IN HIS I MP U G NED OR D ER, AND IT INCLUDES ONLY THAT INCOME WHICH HAS A DIRECT NEXUS OR FIRST DEGREE CONN E C T ION WITH TH E EXPORT ACTIVITY OF THE ASSESSEE. HE CONTENDED THAT T HE O T H E R INCOME IN QUESTION EARNED BY TH E ASSESSEE CANNO T B E SAID TO HAVE ANY DIRECT NEXUS OR FIRST DEGREE CONN E C T ION WITH THE EXPORT BUSIN E SS O F TH E ASSESSEE , AND THE SAME , THER EF ORE, IS NOT ELIGIBL E F OR DEDUC T ION UN D ER S.10B , AS RIGHTLY HELD BY THE LEARNED COMMISSIONER IN HIS IMPUGNED OR D ER PASSED UN D ER S.263. 8 . W E HAVE CON S ID E RED THE RIVAL SUBMI S SION S AND ALSO P E RUSED THE RELEVANT MATE R IAL ON RECORD. THE I SS U E THAT ARISES FOR OUR CON S I DER ATION IN TH E PR E SEN T APPEAL I S WH E THE R THE OTHER IN C OM E IN QUESTION EARNED BY THE ASSESSEE IS LIABLE TO B E IN CLU D ED OR EX CLUDED FROM THE PROFITS O F THE BU S IN ES S OF THE UN D ERTA K IN G FOR THE PU R PO S ES OF COMPUTING THE DEDUCTION UN D ER S .10B. IT IS NO DOUBT TRUE THAT THE DEDUCTION UN D ER S .10B IS ALLO WA BL E IN RESPECT OF PROFITS AND GAIN S DERIVED BY THE ELIGIBLE UNDERTAKIN G FROM THE E X PORT OF ARTICLES OR THIN G S OR COMP UTE R SOFTWARE. IT I S ALSO TRUE TH AT THE E X PRE S SION DERIVED FROM IS GIVEN A NARROW MEANING INTER ALIA BY TH E HON'BLE SUPREME COURT IN THE CA S E OF STERLING FOODS (SUPRA) BY HOL D ING THAT ANY IN C OM E FOR BEING SAID TO B E DERIVED FROM ANY BU S IN E SS OF THE UN D ERTAKIN G SHOULD H A VE A DIRECT NEXUS OR FIRST DEGREE CONN E C T ION WITH THAT BU S IN E SS OF THE UNDERTAKING. IT IS , HOWEVER , REL E VANT TO NO T E THAT THIS NARROW MEANIN G HAS BEEN GIVEN ESPECIALLY IN TH E CON T EXT OF S.80 HH AND S. 80 I A ETC. WHE R E THE TERM P ROFITS AND G A I N S DERIVED IS NEI T H ER DEFI NED NO R ANY FORMULA IS GI V EN TO COMPU T E THE P R O F ITS AND GAINS DERIVED FROM. IN S.10B OF TH E A C T , WHICH IS RELEVANT IN THE PR E SEN T CON T E X T AS WELL AS IN S.80HHC , A FORMULA , I TA NO. 672/HYD/2013 M/S. N OSCH LABS (P) LIMITED, HYDERABAD 7 HOWEVER , HAS BEEN GIVEN TO COMP U TE TH E P R O F ITS DERIVED F R OM THE E X PO R T OF ARTICLES OR THIN G S OR COMPU TE R SOFTWA R E. IN SUB - SECTION ( 3 )(A) OF S.80HHC , IT IS PROVIDED THAT THE P R O F ITS DERIVED FROM E X PORTS SHALL BE T HE AMOUN T WHI C H BE A RS TO THE PROFITS OF THE BU S IN E SS THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUCH GOODS B E ARS TO THE TOTAL TURNOVER OF TH E BU S IN ES S CARR I ED ON BY THE BUSINESS AND KEEPING IN VIEW THIS FORMULA GIVEN IN SUB - SEC T ION ( 3 ) OF S.80HHC, IT WAS HELD BY THE HON'BLE SUPREME COURT IN TH E CA S E OF MYSODET (P) LTD. V/S.CIT (305 ITR 276) THAT S.80HHC STATU TORILY FIXES THE QUANTUM O F DEDUCTION ON TH E BASIS OF A P R OPO R TION OF THE BU S IN E SS PROFITS UNDER THE HEAD PROFITS AND GAIN S O F BU S IN E SS OR PROFESSION IRRESPECTIVE O F WHAT COULD STRICTLY B E DESCRIB E D AS PROFITS DERIVED FROM EXPORT OF GOODS OUT O F I NDIA. IT WA S ALSO OB S ERV E D BY THE HON'BLE SUPREME COURT THAT EVEN THE ILLUSTRATION GIVEN IN TH E B OARD S CIRCUL A R NO.564 DATED 5.7.1990 ISSUED IN THI S CONTEXT CLEARLY INDICATES THAT THE RATIO MENTIONED IN SUB - S EC T ION (3 ) OF S.80HHC HAS TO BE APPLIED TO T HE BU S IN E SS PRO F IT S COMPU T ED UN D ER THE P R O VI SION S OF S.28 TO S.433D O F THE AC T. 9 . IN TH E CA S E OF M ARAL OVERSEAS LTD. ( 2012) ( 146 ITTJ (IND) SB 129 ) , EXA C TLY SIMILAR ISSUE HAD COME UP FOR CONSIDERATION IN TH E CON T EXT OF INCOME RE CE IVED BY TH E ASSESSEE F R OM THE SALE OF EXPORT ENTI T LEMENT A ND SPECIAL IMPORT LICENCES AND KEEPING IN VIEW TH E FORMULA GIVEN IN SUB - S EC T ION (4) OF S.10B FOR CO M PU T IN G THE PROFITS AND GAIN S DERIVED BY THE EXPORT ORIENTED UN DE RTAKIN G , THE SP E CIAL BEN C H OF THIS TRIBUNA L HELD THAT ONCE AN INCOME FORMS PART OF PROFITS OF BU S IN ES S O F THE UNDERTAKING, THE SAME HAS TO B E IN C LU DE D IN THE P R O F I T S O F THE BU S IN E SS OF THE UN D ERTAKIN G FOR THE PU RP O S ES OF COMP UT IN G DEDUCTION UN D ER S.10B AS PER THE FORMULA GIVEN IN SUB - SEC T ION (4)OF THAT SEC T ION. I TA NO. 672/HYD/2013 M/S. N OSCH LABS (P) LIMITED, HYDERABAD 8 1 0 . IN THE PRESENT CA S E, THE O T H E R INCOME IN THE QUESTION EARNED BY THE ASSESSEE WAS TREATED BY THE ASSESSING OFFICER AS BU S IN E SS INCOME OF TH E ASSESSEE AND THIS PO SI TION I S NOT DIS P UTED EVEN BY THE LEARNED COMMISSIONER IN HIS IMPUGNED ORD E R PASSED UN D ER S.263. THIS BEIN G SO AND KEEPING IN VIEW THE RATIO OF THE JU D I C I A L P R ONOUNCEMENTS DISCUSSED ABOVE, WE HOL D THAT THE OTHER INCOME IN QUESTION RECEIVED BY THE ASSESSEE, WHI C H WAS ASSESSED TO TAX UN DE R THE H E AD PROFITS AND GAINS OF BU S IN ES S O R PROFESSION, I S NO T LIABLE TO BE EXCLUDED FROM THE P R O F ITS OF THE BU S IN ES S OF THE ELIGIBLE UN DE RTAKIN G FOR THE PU RP OSES OF CO M P U TING DE D UC T ION UN D ER S10B OF THE A C T, AS P E R THE FORMULA GIVEN IN SUB - S EC T ION (4) OF THAT SECTION. THERE WAS THUS NO ERROR IN TH E O RD ER OF TH E ASSESSING OFFICER P AS SED UN D ER S.143(3) ON THIS I S SUE, AS ALL E GED BY THE LEARNED COMMISSIONER, CA L LING FOR ANY REVISION UN D ER S.263. W E, THER E FORE, SET ASIDE THE IMPU G N E D ORDER O F THE LEARNED COMMISSIONER OF INCOME - TAX P ASSED UN D ER S.263 AND RESTORE THAT OF THE ASSESSING OFFICER. 1 1 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 23 RD JANUARY, 2015 . SD/ - SD/ - (D.MANMOHAN) (P.,M.JAGTAP ) VICE PRESIDENT ACCOUNTANT MEMBER DT/ - 23 RD JANUARY, 2015 C OPY FORWARDED TO: 1. M/S. NOSCH LABS (P) LIMITED, FLAT NO.402 TO 406, VIJAYA SAI TOWERS OPP. BJP OFFICE, KUKATPALLY, HYDERABAD 500 072. 2. DY. COMMISSIONER OF INCOME - TAX CIRCLE 16(1). HYDERABAD I TA NO. 672/HYD/2013 M/S. N OSCH LABS (P) LIMITED, HYDERABAD 9 3. COMMISSIONER OF INCOME - TAX(APPEALS) - I V , HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S