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2015 (1) TMI 467 - AT - Income TaxDeduction u/s 80IE - manufacturing process - AO did not find correspondence purchase of raw material to evidence manufacture - AO further observed that less consumable stores have been used, less expenses were incurred during the course of manufacturing process. - Held that:- The conversion of gold bullion or gold bar to the gold chlorate powder is a manufacturing process, in the circumstances and facts of the present case since, the final and manufactured product is new and distinct object with different name character and use which is not possible in the case of raw material. Since, the purchase have not been doubted by the AO or the learned CIT(A) and arguments of learned DR at this stage that no purchases have been made cannot be help the revenue. As satisfied with the explanation of the assessee and therefore, the arguments of learned DR that the case does not inspire confidence cannot help the revenue. Thus in view of findings where assessee's activities have been held to be manufacturing activity and accordingly assessee is eligible for deduction u/s.80IE of the Act. Central Excise Duty Refund - Held that:- As regards assessee's claim of deduction with regard to excise duty refund the explanation submitted by the assessee in this regard is found to be convincing and in view of the scheme of the Union Government with regard to North Eastern State which is akin to and similar to the one in the case of Shree Balaji Alloys(2011 (1) TMI 394 - Jammu and Kashmir High Court) and therefore, in the present circumstances and facts of the case, we are bound by the decision of Shree Balaji Alloys(supra) and the said receipts are held to be capital receipts. Disallowance of interest - Held that:- As assessee explained that a sum of ₹ 24 lac was paid to Smt. Meena Kumari Pradhan for the purposes of land which was not materialized which has been returned back to the assessee company and interest was paid on capital borrowed for purchase of shares, thus since both the investments were made for the business purposes and the assessee company had earned more than investment made. Thus CIT(A) is not justified in disallowance of interest. Appeal of the assessee is allowed.
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