Sec 10B does not go to the matter of export turnover and 100% is exempted to EOU and CIT aught not to give to exclude the expenses to claim deduction

Last updated: 05 April 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
Facts of the case is that the assessee filed return of income for the relevant Assessment Year 2005-06 on 28.10.2005 disclosing ‘Nil’ total income after claiming deduction u/s. 10B of the Act of Rs.6,30,71,257/-. Assessment u/s. 143(3) of the Act was completed on 10.07.2007 accepting the returned income as the assessee company being a 100% export oriented unit and deduction claimed u/s. 10B of the Act for Rs.6,30,71,257/- was allowed in full in the original assessment. Subsequently, after examining the proposal and assessment records, CIT found that the assessment was erroneous and prejudicial to the interest of revenue, inter alia, on the following grounds: “i) Firstly, the Assessing Officer had allowed exemption u/s. 10B where freight & Insurance charges were excluded from the Total Turn Over (TTO) while computing exemption u/s. 10B. At the same time, expenses like courier charges, clearing & forwarding charges relating to export of articles or things were not deducted from the Export Turn Over (ETO). He also didn’t consider exchange rate fluctuation loss of Rs.41,158/- while computing Total Turn Over (TTO) & Export Turn Over (ETO). ii) Second, the Assessing Officer didn’t consider the interest income and profit on sale of assets under the head “Other sources” & “Capital gain”, respectively. On the contrary, the other income was allowed as profits of the business of the undertaking.”

Citation :
M/s. World Wide Safety Pvt. Ltd. (PAN: AAACW 3085 G)(Appellant) Vs. Commissioner of Income-tax-III, Kolkata (Respondent)