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2010 (4) TMI 892 - AT - Income TaxDenying deduction under s. 10B of the profits in excess of the ALP by invoking the provisions of s. 10B(7) r/w s. 80-IA(10) - Held that:- the provisions of s. 80-IA(10) do not give an arbitrary power to the AO to fix the profits of the assessee. The AO has to specify as to why he feels that the profits of the assessee are being shown at a higher figure. He has further to show as to how he has computed the ordinary profits which he deems to be the ordinary profits which the assessee might be expected to generate. The fact that the AO has also not shown any calculation on the basis of which he has determined the excess profit received by the assessee cannot stand in view of the fact that he has not shown as to what he feels is the actual ordinary profit which the assessee could have generated nor has he shown any particulars he has used for arriving at such a figure especially when the assessee himself has filed the calculation showing the error in the difference between the profits and the ALP as filed before the TPO. Under these circumstances the reduction of the eligible profits of the assessee as done by the AO by invoking the provisions of s. 80-IA(10) r/w s. 10B(7) is unsustainable and consequently the same is deleted. CIT(A) not giving relief by treating the income from the scrap sales as business income - Held that:- As it is noticed that as per the provisions of s. 10B, it is the profits and gains derived by the assessee from a 100 per cent export oriented undertaking that are eligible for deduction. The sale of scrap is not profit and gain derived by the assessee from the 100 per cent export oriented undertaking. The sale of scrap is not an export and on that ground itself the assessee is not entitled to relief. Further while filing its return of income, the assessee itself has treated the income from the sale of scrap as income from other sources. It is not open to the assessee to modify its stand in its return in the course of assessment proceedings other than by filing a revised return as held by the Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT (2006 (3) TMI 75 - SUPREME COURT). Under these circumstances, the findings of the learned CIT(A) stand confirmed. CIT(A) directed AO to allow 5 per cent of the interest income as expenditure relatable to the earning of the interest income - Held that:- Merit in the submissions of the DR that the assessee has not produced any evidence of having incurred any expenditure for the purpose of earning the interest income. In the absence of any expenditure having been incurred the Act does not provide for any ad hoc estimated expenditure. This is because the income of the assessee itself is assessed as per the books of account maintained by the assessee, wherein all the expenditure have been claimed. Under these circumstances, no expenditure is liable to be allowed. Even otherwise, as per the provisions of s. 57(iii), as the assessee has not been able to point out any expenditure which has been laid out or expended wholly or exclusively for the purpose of making or earning such interest income from the bank, no ad hoc expenditure is allowable. Under these circumstances, the findings of the CIT(A) stand reversed and ground of the Revenue is allowed.
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