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CIT vs. Hewlett Packard Global Soft Ltd (Karnataka High Court) (Full Bench)

COURT:
CORAM: , ,
SECTION(S): ,
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COUNSEL:
DATE: October 30, 2017 (Date of pronouncement)
DATE: November 1, 2017 (Date of publication)
AY: -
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CITATION:
S. 10A/ 10B: Entire law on the concept of "derived from" the undertaking and "purposive interpretation" of statutes explained. The incidental activity of parking surplus funds with banks or advancing of staff loans by assessees covered u/s 10-A or 10-B is an integral part of their export business activity and a business decision taken in view of the commercial expediency. Such incidental income cannot be delinked from the profits and gains derived by the undertaking engaged from the export of specified goods and cannot be taxed separately u/s 56 of the Act

Sections 10-A and 10-B of the Act are special provisions and complete code in themselves and deal with profits and gains derived by the assessee of a special nature and character like 100% Export Oriented Units (EOUs.) situated in Special Economic Zones (SEZs), STPI, etc., where the entire profits and gains of the entire Undertaking making 100% exports of articles including software as is the fact in the present case, the assessee is given 100% deduction of profit and gains of such export business and therefore incidental income of such undertaking by way of interest on the temporarily parked funds in Banks or even interest on staff loans would constitute part of profits and gains of such special Undertakings and these cases cannot be compared with deductions under Sections 80-HH or 80-IB in Chapter VI-A of the Act where an assessee dealing with several activities or commodities may inter alia earn profits and gains from the specified activity and therefore in those cases, the Hon’ble Supreme Court has held that the interest income would not be the income “derived from” such Undertakings doing such special business activity

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