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2015 (2) TMI 1159 - AT - Income TaxRecomputation of deduction under section 10B - Held that:- A.O. is not justified in reducing the export turnover claimed by the appellant for the purpose of computing deduction u/s 10B of the Act. The deduction u/s 10B of the Act is, therefore, worked out at ₹ 7,30,16,357/-by considering business profit at ₹ 15,50,66,523/-, export turnover at ₹ 58,46,09,183/- and total turnover at ₹ 1,24,15,48,014/-. The addition made by the A.O. is, therefore, confirmed to the extent of ₹ 15,96,439/- (Rs.7,46,12,796/- - ₹ 7,30,16,357/-). Addition made on account of GP addition on export sales - Held that:- Assessing Officer had compared the results shown by the assessee in the export sales to the results shown by the assessee in domestic sales and was of the view that the profits from export sales have been shown at high percentage as compared to the consolidated gross profit by the assessee for the year under consideration. In the first instance, we hold that the Assessing Officer is not correct in this approach as under the provisions of section 80IA(10), the comparison has to be made between the assessee and any other person; whereas in the facts of the present case; the comparison has been made between the results of export sales of manufactured items with the domestic sales of manufactured items carried on by the assessee itself. The provisions of section 80IA(7) of the Act are not attracted in such a scenario and have been incorrectly applied by the Assessing Officer while computing the deduction under section10B of the Act in the hands of the assessee. Also the profits declared by the assessee against export sales were found to be correct and no addition was suggested on account of arm’s length price of such transaction of sale of manufactured goods to parties outside India. In such circumstances, where the export sales have been found by the TPO to be at arm’s length price and no adjustment in this regard has been made by the Assessing Officer while completing assessment under section143(3) r.w.s.144C of the Act, we find no merit that while computing the exemption under section10B of the Act, the Assessing Officer has re-worked the profits eligible for such deduction by applying the consolidated gross profit of the year under appeal as the basis for earning the said income. We uphold the order of CIT(A) in deleting addition made on account of re-working exemption under section 10B Addition made under section 41(1) and Explanation 10 to section 43(1) of the Act on account of special capital incentive - Held that:- The order of the CIT(A) in holding that the grant of ₹ 30 lakhs received by the assessee during the year under consideration was a capital receipt and not taxable in the hands of the assessee. Further, there is no merit in invoking of the provisions of either section 41(1) or section 43(1)(b) of the Act. Working of the total turnover by excluding Excise Duty paid/payable, while computing the exemption under section 10B of the Act. - Held that:- As decided in assessee's own case for assessment year 2003-04 Excise Duty is to be excluded from total turnover while computing exemption under section 10B of the Act. Following the same parity of reasoning, we direct the Assessing Officer to re-compute the deduction under section 10B of the Act.
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