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2017 (10) TMI 1344 - HC - Income TaxEligibility for deduction u/s 10AA - surplus amount in the freight export account and in the insurance export as derived from export activities - whether ITAT has failed to appreciate the fact as brought on record by the Assessing Officer regarding disallowance of deduction u/s 10AA of deemed profit of ₹ 5021944/- not eligible for deduction u/s 10AA? - Held that:- There is no evidence demonstrating the existence of any arrangement between the assessee company and M/s Dwarka Jewels aimed at producing more than normal profit in the hands of the assessee company. Hence, the action of the authorities in invoking provisions of section 10AA(9) read with section 80IA(10) cannot be sustained. In the result, the consequent additions made by the Assessing Officer and partly upheld by the ld. CIT(A) is hereby deleted. In the results, grounds taken by the assessee are allowed and ground of the revenue is dismissed. Briefly the facts of the case are that the ld. A.O. disallowed the deduction u/s 10AA in respect of the amount comprising surplus of freight, Insurance charges and Misc. Balances w/off on the allegation that the same constituted indirect income not derived from export of goods. Next question that arises for consideration is the definition of export turnover which has been defined in explanation 1 to section 10AA of the Act and whether the same would have any effect in the instant case. The term “export turnover” has been defined as consideration in respect of export by the undertaking, being article or thing received in or brought into India by the assessee but doesn’t include freight, telecommunication charges or insurance attributable to the delivery of the articles or things outside India. In our view, the same may not have any effect as where the freight or insurance charges are reduced from the export turnover, the same have to be reduced from the total turnover as well. The same has been the consistent stand of the various Coordinate Benches. Thus we donot find any infirmity in the order of the ld CIT(A) and confirm the allowance of exemption under section 10AA in respect of freight and insurance excess receipts. On parity of reason, the same position would hold good for misc balances written off. In the result, the ground no.1 of the revenue is dismissed. - We are in complete agreement with the view taken by the Tribunal. - No substantial question of law
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