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2013 (5) TMI 447 - AT - Income TaxDisallowance of interest at the rate of 18% - Held that:- It is seen that a sum of Rs.41 lakhs was advanced during the year under consideration out of export proceeds received by the assessee. It means that the assessee has advanced the amount to its sister concern out of the profit of the year. Therefore, on this amount, disallowance of interest was not justified. However, a sum of Rs.29 lakhs was advanced on 28-3-2008 out of packing credit limits obtained by the assessee, therefore, on this amount, the disallowance has to be made. Partly in favour of assessee. Coputaion of profit derived from export of EOU for the purpose of computing deduction u/s 10B - Exclusion of interest received on margin money - Held that:- Applying the case of ACG Associated Capsules P. Ltd [2012 (2) TMI 101 - SUPREME COURT OF INDIA] to this case AO directed that interest income has to be set off against interest expenditure. If the interest expenditure is less or the interest income is more then the difference of excess interest received by the assessee is to be reduced while calculating the deduction under Section 10B. Sale of bardana and waste material generated during course of production of industrial undertaking has a direct and immediate nexus with industrial undertaking and, therefore, deduction under Section 80IB on the amount of sale of bardana and waste material generated during course of production is allowable. sEE Nirma Industries Ltd. Vs. ACIT, [2005 (4) TMI 242 - ITAT AHMEDABAD] & Wippro Limited Vs. DCIT, reported in [2005 (6) TMI 210 - ITAT BANGALORE-B). Therefore, the action of the AO in treating the sale of bardana as income from other sources, as CIT(A), is not justified. In favour of assessee. Allowance of deduction under Section 10B by the AO at 90% of the profit derived from export of EOU - Held that:- Assessee deserves to succeed on this issue also. It is seen that the 90% deduction was restricted only for one year i.e. for assessment year 2003-04, otherwise deduction under Section 10B is allowable at 100%. In earlier year also, the deduction was allowed 100%. Therefore,direct the AO to allow 100% deduction against 90% directed by the CIT.
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