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2016 (3) TMI 83 - AT - Income TaxDeduction u/s. 10B - Held that:- Assessee is eligible for deduction u/s. 10B, the fact of which was already acknowledged by the CIT(A) in the order for AY 2011-12. However, in AYs. 2007-08 to 2010-11, Ld. CIT(A) in his own way categorized the export of rough granite blocks into dimensional blocks and un-dimensional blocks and restricted the deduction to so called type-3 un-dimensional blocks. Even though Ld. CIT(A) deviated from the issue in analyzing the nature of rough granite blocks exported, however, he made amends in the order for AY. 2011-12 and allowed the deduction in all the granite blocks being exported by Assessee, subject to examination of eligibility of Ongole unit. This unit is also established much earlier and Assessee was allowed deduction on this unit also upto AY. 2006-07. Consequently, the direction of the CIT(A) asking the AO to examine the eligibility of Ongole unit is superfluous. Therefore, allowing Assessee’s ground on this issue, we direct the AO to allow the deduction of Ongole unit as claimed by Assessee. To that extent, Assessee’s appeals are allowed with reference to allowing of 10B claim in all the impugned AYs. 2007-08 to 2011-12. Addition on Excess Cash - Held that:- If there is enough cash balance on the day which can be explained, there cannot be any excess cash, considering that Assessee has no local sales and no need for generating cash outside the Books of Accounts when the incomes are exempt from tax. In view of that with reference to the addition of cash, we set aside the orders of the AO and CIT(A) on the issue and restore the matter to the file of AO for fresh examination of Assessee’s contentions and adjudication. Decided in favour of assessee for statistical purposes. Excess Stock in the course of search/survey at Hosur - Held that:- At this point of time, it is not possible to examine whether there is an excess stock of granite blocks in the quantity or in the valuation, considering the fact that this value was done with the help of Assessee-company’s officials. It is also contended that so called excess valuation is less than 5% of the total stock available with Assessee and AO accepted the closing stock value as the Books of Accounts were not rejected. Even though there is merit in Assessee’s contentions, it is difficult to adjudicate whether there is excess stock considering the fact that the sales and stock were reconciled on the date of search and certain amounts were quantified. Even though an estimation of excess stock in the middle of the year, while accepting the Books of Accounts of the year, is not generally permitted by various decisions of the ITAT, since Assessee is eligible for deduction u/s. 10B on the additions/disallowance made on these units, we are of the opinion that the same amount can be allowed for deduction u/s. 10B as the stock pertains to Hosur and Ongole units, which are eligible for deduction u/s. 10B. Assessee’s alternate contention is accordingly allowed.
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