Admissibility of deduction under section 10AA pursuant to conversion of business loss into positive income due to disallowance

short overview : Since at the time of filing of return under section 139(1), assessee could not have possibly claimed deduction under section 10AA in view of business loss, but it was a case where deduction became claimable only as a result of disallowance proposed in assessment, therefore, it could not be said that there was a failure on assessee’s part to claim deduction under section 10AA so as to attract rigors of section 80A(5) and, therefore, AO was directed to grant deduction under section 10AA.

Assessee could not have made a claim for profit linked deduction under section 10AA for the reason that business income computed at the relevant time was a loss figure, on account of disallowance of forex loss under section 37(1) returned loss stood converted into positive business income for the relevant year and as a consequence, assessee claimed deduction under section 10AA. AO invoked section 80A(5) and accordingly denied deduction.

it is held that  Since at the time of filing of return under section 139(1), assessee could not have possibly claimed deduction under section 10AA in view of business loss, but it was a case where deduction became claimable only as a result of disallowance proposed in assessment, therefore, it could not be said that there was a failure on assessee’s part to claim deduction under section 10AA so as to attract rigors of section 80A(5) and, therefore, AO was directed to grant deduction under section 10AA.

Decision: In assessee’s favour.

IN THE ITAT, KOLKATA BENCH

A.T. VARKEY, J.M. & A. L. SAINI, A.M.

DIC Fine Chemicals (P) Ltd. v. DIT

ITA No. 2502/Kol/2018

12 June, 2019

Appellant by: D.S. Damle, FCA & Akkal Dudhwewala, FCA

Respondent by: C.J. Singh, JCommissioner, Sr. Departmental Representative

A.T. Varkey, J.M.

This appeal of the assessee arises out of the order of the learned Commissioner (Appeals)-4, Kolkata for the assessment year 2014-15 dated11-10-2018

2. The main grievance of the assessee is against the action of learned Commissioner (Appeals)upholding the assessing officer’s order of denying the benefit of deduction claimed under section 10AA of the Act. Briefly stated facts of the case are that the appellant is a private limited company, engaged in the business of manufacture of specialty inks and allied products. The only manufacturing unit of the appellant is located at Dahej SEZ in Gujarat. Being located in notified SEZ, profits of the manufacturing unitis legally eligible for deduction under section 10AA of the Act. For the assessment year 2014-15 the appellant filed its return of income declaring a loss of Rs. 7,96,40,878 and therefore in the computation of income and the return of income, deduction under section 10AA was reported to be NIL. Such loss was arrived at after Rs. 24,50,70,020 was charged to the P&L Account as revenue expenditure, on account of exchange fluctuation loss. In the course of assessment the appellant was called upon to furnish details of the exchange loss/gain. Vide letter, dated 20-12-2017 the appellant however brought to the notice of the assessing officer that exchange fluctuation loss to the extent of Rs. 24,50,70,020 pertained to FCCBs utilized for acquisition of capital assets which may not be allowable as expenditure in arriving at current year’s business income. The appellant accordingly furnished a revised computation of income disallowing the loss of Rs. 24,50,70,020 and claimed consequential depreciation on the enhanced cost of the capital assets. As a result, the original returned loss of Rs. 7,96,40,878 got revised to a positive business income of Rs. 12,55,84,483 against which deduction under section 10AA of Rs. 12,32,93,654 was claimed by the appellant. Along with the revised computation of income, a report of the Chartered Accountant in Form 56F was furnished before the assessing officer.

Although the assessing officer disallowed the exchange fluctuation loss of Rs. 24,50,70,020 while assessing the appellant’s business income but relying on the decision of the Hon’ble Supreme Court in the case of CIT v. Goetze India Ltd. (2006) 284 ITR 323 (SC) : 2006 TaxPub(DT) 1528 (SC) the assessing officer denied the benefit of corresponding deduction claimed under section 10AA observing that such claim was not made in the return of income or in the revised return. The assessing officer also denied the benefit of the capitalization of exchange fluctuation loss and consequent higher claim of depreciation on the same ground. Aggrieved the assessee preferred an appeal before the learned Commissioner (Appeals). The learned Commissioner (Appeals) noted that although the decision of the Hon’ble Supreme Court in the case of CIT v. Goetze India Ltd. (2006) 284 ITR 323 (SC) : 2006 TaxPub(DT) 1528 (SC) prevented the assessing officer from entertaining fresh claim in the assessment proceedings without revised return but relying on the decision of the Hon’ble Bombay High Court in the case of CIT v. Pruthvi Brokers & Shareholders (P) Ltd. (2012) 252 CTR 151 : 2012 TaxPub(DT) 2671 (Bom-HC) the learned Commissioner (Appeals) held that fresh claim can be raised before the appellate authority. The learned Commissioner (Appeals) although entertained the appellant’s claim for adjudication but denied the same on two limbs viz., (a) the appellant did not file the audit report in Form 56F along with the return of income and therefore in terms of section 10A(5) read with section 10AA(8), the claim was not tenable, and (b) the claim for deduction was not made in the return of income filed under section 139(1) and therefore in terms of section 80A(5), the claim was inadmissible. The learned Commissioner (Appeals) further observed that the forex loss of Rs. 24,50,70,020 was not eligible for deduction under section 10AA as it did not represent ‘profits & gains derived from export of article or thing’ and therefore even on merits the claim of deduction under section 10AA was not tenable. Aggrieved by this order of the learned Commissioner (Appeals), the assessee is now in appeal before us.

3. We have heard the rival submissions and perused the order of lower authorities. We find that facts of the case are undisputed and they are in narrow compass. In the first instance the lower authorities disallowed the appellant’s claim on the ground that accountant’s report in Form 56F was not filed along with the return of income and therefore the statutory requirements of section 10A(5) read with section 10AA(8) were not complied with. After considering the relevant provisions of section 10A(5), we find that these are on the same lines as in the case of various other sections of the Act such as S. 80IA,80IB etc. which grant profit based deductions to the assessees. The Legislature has provided for grant of profit-based deductions subject to the condition that the assessees shall furnish audit reports in the forms prescribed in the IT Rules along with the returns of income. In that context the question arose as to whether the requirement of filing of the audit report along with the return of income was mandatory or directory being procedural requirement. In several decisions on which the reliance was placed by the learned Authorised Representative before the lower authorities as also before us, it has been judicially held that filing of the audit report in support of the deduction claimed is mandatory but so however the same being procedural in nature it is sufficient for an assessee to file such audit report at any time till completion of assessment or even at the stage of appeal. There is a unanimity of view amongst various judicial authorities that even though filing of the audit report in support of the deduction is mandatory but filing such report along with the return of income is merely directory and therefore if an assessee files such report before the assessing officer in the course of assessment then it is sufficient compliance with the requirement of law for claiming the profit linked deduction.

In this regard we draw strength from the observations of the jurisdictional Hon’ble Calcutta High Court in the case of CIT v. Berger Paints Ltd. (2002) 254 ITR 503 (Cal) : 2002 TaxPub(DT) 1198 (Cal-HC) wherein it was held as follows :–

“In the instant case, the auditing of the assessee’s claim and accounts was not in dispute, but the assessee did not file on the same date along with his return of income of the report of such audit in the prescribed form as required above. Rule 5AB of the Income Tax Rules, 1962 prescribes that the auditor must support the assessee’s claim in Form No. 3AA as given in the said rules. The case of the revenue was that since this Form from the auditor was tendered by the assessee at a date much later than the filing of the return, the assessee lost its right of claiming the benefit.

The words ‘shall not be admissible’ occurring in sub-section (5) of section 32AB are directory and not mandatory in nature. No doubt, if the auditor’s report is not available at all, a claim for deduction cannot be made by the assessee but for achievement of this, it is not necessary to interpret the above phrase as mandatory with regard to the part of the existence of the auditor’s report and only directory with regard to the part containing the time of furnishing of the report. The existence of the auditor’s report is mandatory under sub-section (1)(ii) of section 32AB. Thus, the interpretation of the said phrase occurring in sub-section (5) as directory does not do away with the compulsory requirement of producing the auditor’s report for assessment and deduction. In considering the language of section 139 and specially the part of it appearing in sub-section (9) and the Explanation thereto, the following points emerge as relevant and important.

In the Explanation to section 139(9), unless the conditions specified therein are fulfilled, the return of income is to be regarded as ‘defective’.

In section 139(9) itself, when the defect is not rectified by the assessee even after giving of time, the assessee’s return shall be treated as ‘invalid’ and it will be as if the assessee had filed no return at all. Therefore, even in the case of the return itself, the documents and papers which should accompany it, do not cause it utter and complete failure from the very inception, even if those are not annexed with the return. A chance is always given to the assessee to put the matter right before the assessment. Sub-section (5) of section 32AB should not be interpreted in a manner even more stringent than the requirement of the filing of the return itself. Furthermore in the body of section 139, sub-section (1), the return of income an assessee has to ‘furnish’; the same word ‘furnish’ is used in sub-section (5) of section 32AB. But, in Explanation (b) to sub-section (9) of section 139 a requirement for a non-defective return is that the return is ‘accompanied by’ a statement showing the computation of tax. In sub-section (5) the same words ‘accompanied by’ are not used but only the words ‘along with’ are used. Thus, the phrase ‘accompanied by’ is more strongly indicative of a requirement of filing on the same day as the return itself than the words ‘along with’. Therefore, the Tribunal was right in allowing the assessee’s claim.

As regards claim of deduction under section 80HHC, the language employed is similar to the language of sub-section (5) of section 32AB. The word ‘shall’ is used; and the same phrase, i.e., ‘furnishing along with the return of income’, is also employed. There is no particular reason to take a different view in regard to section 80HHC than the view already taken in regard to sub-section (5) of section 32AB. The assessee having produced the necessary reports at the necessity time, deduction under section 80HHC was to be allowed.”

4. In the decided case the Hon’ble High Court was dealing with deduction permissible under section 32AB which contained sub-section (5) which was identically worded as section 10A(5) requiring the assessee to furnish an audit report in the prescribed form along with the return of income. In the light of the identically worded provisions of section 32AB(5) and section 10A(5), we are of the considered view that the ratio laid down in the judgment of the Hon’ble Calcutta High Court (supra) is applicable with equal force in considering allowability of claim under section 10A(5) read with section 10AA(8) of the Act.

5. Even in the context of provisions of section 10A(5), the Hon’ble Delhi High Court in the case of CIT v. Axis Computers India (P) Ltd. (2009) 178 Taxman 143 : 2009 TaxPub(DT) 1178 (Del-HC) held as follows :–

“2. This Court has already interpreted the latter provisions and has held the same to be directory and not mandatory. The contention of the revenue was that unless and until the audit report is filed along with the return, the benefit of section 10A cannot be available to the assessee. Recently, we have considered the identical provisions of section 80-IA(7) in the case of CIT v. Contimeters Electricals (P) Ltd. (IT Appeal No. 1366 of 2008, decided on 2-12-2008) and held that as long as the audit report is filed before the framing of the assessment, the provisions of section 80-IA(7) would be complied with inasmuch as the same are directory and not mandatory. A similar view would have to be taken in the present case also inasmuch as the provisions are the same. Consequently, we do not find any fault with the conclusions arrived at by the Tribunal. No substantial question of law arises for our consideration. The appeal is dismissed.”

6. We may also gainfully refer to the judgment of the Hon’ble Gujarat High Court in the case of Pr. CIT v. Gandhinagar Telerads (TA No. 58 of 2016), dated 1-2-2016 wherein the High Court observed as follows :–

“2. Issue pertains to deduction under section 10A of the Income Tax Act (“the Act” for short) claimed by the assessee. However, before the assessing officer though the assessee had filed its audit return in form No. 3CB and 3CD as required under section 44AB of the Act, but had not filed audit report in Form No. 56F as required under section 10A read with section 16D of the Income Tax Rules. On such basis, the assessing officer disallowed the claim of deduction. Commissioner (Appeals) as well as the Tribunal reversed such decision and granted the claim. In particular, the Tribunal noted the statutory language contained in subsection (5) of section 10A of the Act with subsection (4) of section 80HHC of the Act which also insists on the assessee furnishing the report of the accountant for claim of deduction under section 80HHC of the Act. The Tribunal referred to the decisions of this Court, particularly in case of Zenith Processing Mills v. CIT reported in (1996) 219 ITR 721 (Guj) : 1996 TaxPub(DT) 514 (Guj-HC) to come to the conclusion that when the assessee had eventually filed such returns, though at the appellate stage, the same must be seen as sufficient compliance. In our opinion, the Tribunal committed no error. As noted, the Revenue does not have any grievance or objection regarding the validity of the claim of assessee, except that the procedural requirement of filing of audition report in the prescribed format was not done. Undisputedly facts are that audit report was furnished even along with the return of the income, but in form No. 3CB and 3CD and not in the prescribed format. This error was corrected before the appellate authority. No question of law arises.

3. Counsel for the Revenue however, relied on the decision of Division Bench of this Court in case of Panasonic Energy India Co. Ltd. v. Asstt. CIT reported in (2014) 367 ITR 245 (Guj) : 2014 TaxPub(DT) 3877 (Guj-HC), wherein in context of claim under section 80IB of the Act, the Court refused to entertain the request of the assessee to submit the report in the prescribed format for the first time before the High Court. Facts in the present case are substantially different.

4. In the result, tax appeal is dismissed”

7. In the present case it is an admitted position that in the course of assessment the appellant had filed audit report in Form 56F when the revised computation of total income was furnished before the assessing officer. Once this fact is not in dispute then following the ratio laid down in the foregoing judicial precedents, it is to be held that the deduction under section 10AA could not be denied for non-filing of the audit report in Form 56F along with the return of income.

The first material objection of the lower authorities denying the claim of deduction under section 10AA therefore fails.

8. The second material objection of the learned Commissioner (Appeals) upholding the assessing officer’s order denying the benefit of section 10AA was his reliance on the provisions of section 80A(5) of the Act.

Before we deal with this issue, it is relevant to set out the relevant provision of section 80A(5) which read as follows :–

“Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading “C.-Deductions in respect of certain incomes”, no deduction shall be allowed to him thereunder.

9. The provisions of sub-section (5) were inserted in the Act by the Finance Act (No. 2) of 2009 with retrospective effect from 1-4-2003. The Explanatory Notes to the provisions of the Finance Act (No. 2) of 2009 were issued by the CBDT through Circular No. 5/2010, dated 3-6-2010. Para 25 of the said Circular explained the legislative rationale for amending Section 80A and the relevant Para 25 reads as follows :–

“25.1 The profit linked deductions in Chapter VI-A are prone to considerable misuse. Further, since the scope of the deductions under various provisions of Chapter VI-A overlap, the taxpayers, at times, claim multiple deductions for the same profits.

25.2 With a view to preventing such misuse, the provisions of section 80A of the Income Tax Act have been amended to provide the following, namely–

(i) deduction in respect of profits and gains shall not be allowed under any provisions of section 10A or section 10AA or section 10B or section 10BA or under any provisions of Chapter VI-A under the heading “C.-Deductions in respect of certain incomes” in any assessment year, if a deduction in respect of same amount under any of the aforesaid has been allowed in the same assessment year;

(ii) the aggregate of the deductions under the various provisions referred to in (i) above, shall not exceed the profits and gains of the undertaking or unit or enterprise or eligible business, as the case may be;

(iii) no deductions under the various provisions referred to in (i) above, shall be allowed if the deduction has not been claimed in the return of income.

25.3 Applicability–This amendment has taken effect retrospectively from 1-4-2003, and will accordingly, apply in relation to assessment year 2003-04 and subsequent years.”

10. From co-joint and harmonious reading of the provisions of section 80A(5) and CBDT Circular, we find that the amended provisions sought to deny profit-linked deductions prescribed in the Act where an assessee “fails” to make a claim for such deduction in the return of income. The learned Authorised Representative brought to our attention that the word legislatively used in section 80A(5) is ‘fails’ and not ‘omits’ to make a claim in the return of income. Inviting our attention to the return of income filed in prescribed form ITR-6, the learned Authorised Representative submitted that the appellant could not have claimed the deduction under section 10AA since the income returned was loss. We note that under the electronic system of filing returns of income as notified by the CBDT, the assessee could have made a claim for deduction under section 10AA only in Form ITR-6 at Schedule 10AA in Sl No. (a). It was brought to our notice that the relevant field in the ITR for claiming profit-linked deduction would not have accepted any figure or amount of permissible deduction if the figure reported under the head ‘Profits & Gains of Business’ was a loss. It was also brought to our notice that there was no field elsewhere in the ITR-6 wherein the assessee could report that it operated an SEZ unit eligible for deduction under section 10AA at Dahej, Gujarat. In this factual background the learned Authorised Representative submitted that it was not a case where the assessee had “failed” to make a claim of deduction under section 10AA while filing the return of income within the time prescribed in section 139(1).

He submitted that since the returned income was a loss, there was no possibility for the assessee to legally raise or make claim of deduction under section 10AA in the return filed under section 139(1) and therefore no “failure” as contemplated in law could be attributed to the assessee so as to invoke the rigors of section 80A(5) of the Act.

11. When we consider the foregoing submissions in the backdrop of Circular No. 5/2010 explaining the rationale for which section 80A(5) was enacted; we note that on the facts of the appellant’s case there was no failure to claim the deduction as contemplated by the said provision. The term ‘failure’ envisages a deliberate act or conscious decision on the part of the assessee not to seek or claim a deduction to which the assessee is prima facie eligible. In the present case admittedly at the time of filing of return the appellant could not have made a claim for profit linked deduction under section 10AA of the Act for the simple reason that business income computed at the relevant time was a loss figure. In the circumstances the appellant was not in legal position to put forth any valid claim for deduction under section 10AA and expecting the appellant to raise such claim in the return amounted to expecting the assessee to perform an impossible task. The Hon’ble Supreme Court in its judgment in the case of Gyani Chand v. State of Andhra Pradesh (Civil Appeal No. 5728 of 2005), dated 20-9-2016 has observed that it would not be fair on the part of a Court to give a direction to do something which is impossible and if the persons has been asked to do something which is possible and if he failed to do so, he cannot be held guilty of contempt or contravening the directions of the Court. Applying the judicial principle to the present case we hold that since at the time of filing of return under section 139(1), the appellant could not have possibly claimed deduction under section 10AA in view of business loss, it cannot be said that there was a failure on the assessee’s part to claim deduction under section 10AA so as to attract rigors of section 80A(5) of the Act.

12. We find that in the Explanatory Notes, the Board had clarified that the provisions of section 80A(5) were enacted to prevent the misuse of multiple deductions claimed in respect of the same profits and therefore necessary safeguards was put in place in section 80A of the Act. It was not intended to deny legitimate deduction to which the assessee is otherwise legally entitled to. Meaning thereby Section 80A(5) is intended to apply to cases where the assessee reported profits in the eligible undertaking and yet failed to make a claim in the return of income and not in other cases.

13. In the facts of the given case we note that in the letters, dated 20-12-2017 & 22-12-2017 furnished before the assessing officer, the assessee had voluntarily brought to the assessing officer’s notice that the forex loss of Rs. 24,50,70,020 primarily pertained to FCCBs utilized for acquisition of capital assets and therefore the transaction was in capital field. The appellant had debited such loss in its profit & loss account in conformity with AS-11 and claimed deduction therefor in arriving at relevant year’s business income. However on being advised that such loss may not be considered to be revenue in nature; the appellant had voluntarily filed a revised computation of income before the assessing officer without claiming the forex loss of Rs. 24,50,70,020.We note that both the lower authorities concurrently held that the forex loss of Rs. 24,50,70,020 was not permissible as deduction. We therefore find that only because of such disallowance that the appellant’s returned loss of Rs. 7,93,24,382 stood converted in positive business income for the relevant year. But for the disallowance made in the course of assessment the appellant did not report any positive business income. We therefore find merit in the learned Authorised Representative’s submission that it was not a case where the assessee at the time of filing return was entitled to make a claim for deduction under section 10AA and yet “failed” to make the same. In our considered opinion, it was a case where on account of the disallowance made by the assessing officer, the loss returned by the assessee stood converted into positive sum and made the appellant eligible to claim deduction under section 10AA of the Act. We thus find that as per the position put forth by the assessee in the return of income filed, it could not have legally claimed such deduction but only as a consequence of the disallowance proposed in the assessment, the returned loss stood converted into positive income; consequent to which the appellant became eligible to avail deduction under section 10AA of the Act. We therefore find merit in the submissions of the appellant that there was no “failure” on the part of the appellant to claim deduction under section 10AA in the return of income so as to attract the rigors of section 80A(5) of the Act.

14. We also find that Circular No. 37/2016, dated 2-11-2016 was issued by the CBDT subsequent to enactment of section 80A(5) of the Act wherein the Board clarified that profit-based deductions permissible under the Act have to be granted with reference to business income, finally assessed. The CBDT clarified that if in arriving at the business income any disallowances are made by the assessing officer relating to the eligible business, then the deduction under Chapter VI-A is admissible on the profits so enhanced by the disallowances. In the present case the appellant had incurred forex loss in respect of FCCB which was incurred and used for the purposes of business. The loss was debited to profit & loss account of the eligible undertaking in conformity with AS-11 and therefore the same constituted an expenditure incurred or laid out for the purposes of assessee’s eligible business. However since such forex loss pertained to transactions in capital field, it was capital in nature and therefore in terms of section 37(1) the deduction therefor was not admissible. We therefore find that the disallowance, made in the appellant’s case, was in terms of section 37(1) of the Act and therefore as per the Circular No. 37/2016, the amount disallowed was required to be taken into consideration for determining the profits qualifying for deduction under section 10AA. For the reasons set out in the foregoing therefore, we are of the considered view that there was no contravention of section 80A(5) because there was no “failure” on the assessee’s part to claim deduction permissible under section 10AA of the Act while filing it’s return. On the contrary we are of the view that having regard to the peculiar facts of the appellant’s case, the assessee could not have legally claimed any deduction under section 10AA in the return of income filed electronically. It is only account of disallowance of the forex loss under section 37(1) that the returned loss stood converted into positive business income for the relevant year and as a consequence, the assessee became eligible to claim deduction. We also note that the assessing officer per se did not dispute or object to the assessee’s claim on merits but it was rejected only on technical grounds. We are of the considered view that there is no estoppel in law and an assessee cannot be denied a rightful deduction to which it is eligible unless there is specific bar in law from claiming such deduction. On the peculiar facts of the present case we find that statutory bar provided in section 80A(5) did not operate as there was no “failure” on the assessee’s part to claim deduction under section 10AA of the Act but it was a case where the deduction became claimable only as a result of disallowance proposed in the assessment.

Accordingly the second objection raised by the learned Commissioner (Appeals) in support of rejection of claim under section 10AA also fails.

15. Apart from the above two objections, even on merits the learned Commissioner (Appeals) held that the deduction under section 10AA was not admissible because profit assessed by the assessing officer was consequent to the disallowance of forex loss and therefore did not tantamount to “profit” derived from export of article or thing. In learned Commissioner (Appeals)’s opinion the conditions prescribed for claiming deduction in section 10AA did not stand fulfilled. We however find merit in the learned Authorised Representative’s submission that this finding of the learned Commissioner (Appeals) is fundamentally flawed. As pointed out by the learned Authorised Representative, in the assessment order the assessing officer per se never questioned eligibility of the appellant to claim deduction under section 10AA on merits and he never questioned the fact that the appellant’s only source of business income was it’s manufacturing undertaking located in SEZ at Dahej, Gujarat. Admittedly the forex loss which the lower authorities disallowed did not pertain to the trading transactions but pertained to transactions in “capital” field. The business income assessed by the assessing officer in the impugned order was therefore derived from the appellant’s business of manufacture of goods at it’s SEZ undertaking. We note that the Section 10AA grants deduction @ 100% of the profits derived from export of articles or goods’ manufactured at SEZ undertaking. By assessing officer’s own admission in working out the operating profits of the eligible unit, he had excluded the forex loss incurred being capital in nature. After excluding loss of capital nature, the assessing officer computed the appellant’s business profit derived from the eligible unit on stand alone basis. We are therefore of the considered view that the current year’s operating business income assessed by the assessing officer had nothing to do with the forex loss incurred in the capital transactions and the profits assessed by the assessing officer in the impugned assessment solely represented profits derived from ‘export of articles or goods’ manufactured at SEZ undertaking. In view of this factual position, merely because in the original return, deduction for forex loss was claimed, did not lead to conclusion that the consequent to the disallowance of forex loss, basic character or nature of the resultant profit was any thing other than profit of the eligible business. We therefore do not find any merit in the learned Commissioner (Appeals)’s finding denying the benefit of deduction under section 10AA on merits.

16. For the reasons set out in the foregoing therefore, we direct the assessing officer to grant deduction under section 10AA of the Act with reference to the business income assessed by him in respect of the profits derived by the appellant from its undertaking located at SEZ in Dahej, Gujarat.

17. In the result, the appeal of the assessee stands allowed.