TMI Blog2011 (5) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... s enhancement - increase on comparison to previous year - Held that:- CIT(A) recorded that the assessee had given full details of dealers commission in respect of Lucknow and Jungpura region for verification on test-check basis but no verification was done by the AO and AO did not find any dealer commission or any portion thereof to be bogus or excessive. This being a pure question of fact and particularly in view of the fact that the similar expenses had already been allowed deduction in the previous years disallowance is need to be deleted - in favour of assessee. - ITA No.206/2008 - - - Dated:- 11-5-2011 - MR. JUSTICE A.K. SIKRI, MR. JUSTICE M.L. MEHTA, JJ, For Applicant: Mr.N.P. Sahni, Advocate For Respondent:Mr.Ajay Vohra with Ms.Kavita Jha and Mr.Somnath Shukla, Advocates M.L. MEHTA, J. 1. This appeal is under Section 260(A) of the Income Tax Act (hereinafter referred to as the Act ) and directed against the order of the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal ) dated 4th May, 2007. The assessee is a company which is engaged in the business of manufacture and sale of Xerox machines related items. In the return filed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EOU while arriving at its profits. The AO will take into consideration the bifurcated accounts prepared by the assessee for the purposes of arriving at profit from100% EOU and allow the deduction u/s 10B of the Act in accordance with law. The AO will afford the assessee the opportunity of being heard in this regard. 2. It is against this impugned order on both these counts that the Revenue is in appeal before us. 3. With regard to the decision of the authorities below on various other claims and allowances of the assessee, it was an accepted position that those stood covered by a judgment of the Allahabad High Court in ITAs No.30/2001 and 31/2001. Therefore, the appeal was admitted only on the aforesaid two grounds, which are as under:- c) Whether the ITAT was correct in law in allowing the exemption u/s 10B of the Income Tax Act, 1961 amounting to Rs.2,08,11,212/ in respect of profits of 100% EOU setup under software technology park scheme which was disallowed by the Assessing Officer and confirmed by the CIT(Appeals)? f) Whether the ITAT was correct in law in deleting the disallowance of Rs.1,29,74,000/- made by the Assessing Officer by restricting the claim of comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely: (a) Xerox (b) toner (c) service and trading and (d) 100% software. 6. The assessee was also asked to show the basis of Quadruplication of expenses in the above four units. Not getting any response to this, AO proceeded to make assessment noting that the balance sheet clearly suggested that the sales of Rs.2,30,56,212/- were made to Inter Units only and that there were no direct exports of software. He noted that both these invoices were raised by the assessee only and not by any separate 100% export oriented unit. In addition to this, he also noted some more facts to form a view regarding the assessee being not entitled to commission of 100%. Some of these were like this. (i) No separate bank account of software division is reflected in the balance sheet. (ii) All remittances against exports have come to Modi Xerox Ltd. (assessee) only. (iii) No separate fixed assets are reflected in the balance sheet (assets side) of the software division. 7. For all these reasons, the AO recorded finding of fact that there were no direct export of software by any separate 100% EOU setup in the STP area, NOIDA. No new units were setup but the profit in this alleged unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit had in fact been established and was entitled to claim the exemption as applicable under Section 10B of the Act. We are of the view that the matter needs to be examined by the Assessing Officer afresh in this regard. The Assessing Officer will not be influenced by any finding recorded by the Tribunal or by this Court. AO will proceed with an objective view of the factual position regarding the claim made by the assessee under Section 10B. Therefore, the matter is being remitted to the AO in this regard. 10. With regard to the claim of commission paid by the assessee to the consumers, dealers and others by way of various schemes to promote the sale of products, the assessee has debited commission under the head selling and distribution, administrative and other expenses to the tune of 15,20,21,000/- for the relevant assessment year. On calculation, this came to be 3.27% of the total sales of Rs.353.64 crores as against 2.90% of the total sales of the previous assessment year. The AO being not satisfied with the increase in the commission asked the assessee to give the details of the commission paid dealer-wise with addresses etc. The AO recorded that the assessee failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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