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2017 (8) TMI 1608 - AT - Income TaxComputation of deduction u/s 10B - exclusion of freight and clearing charges from export turnover and total turnover - HELD THAT:- What was included in the export turnover shall also be included in total turnover. The CIT(Appeals) by placing reliance on the decision of this Bench of the Tribunal in ITO v. Sak Soft Limited [2009 (3) TMI 243 - ITAT MADRAS-D] has directed the Assessing Officer to recompute the deduction under Section 10B of the Act by reducing the freight and clearing charges and expenses for technical services both from export turnover and total turnover. Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Disallowance of provision for Gratuity - CIT(Appeals) by placing reliance in Section 40A(7)(b) of the Act, allowed the claim of the assessee on the ground that 40A(7)(b) of the Act is a special provision for allowing the Gratuity, therefore, the same overrides Section 43B - HELD THAT:- In Commonwealth Trust (I) Ltd. [2004 (4) TMI 51 - KERALA HIGH COURT] found that both Section 40A(7) and Section 43B of the Act should be construed harmoniously. This Tribunal is of the considered opinion that when Section 40A(7)(b) of the Act provides a special allowance for provision for payment of Gratuity fund, the same has to be given preference. As held by Kerala High Court, a harmonious reading of Section 40A(7)(b) and Section 43B(b) of the Act never intended to take away the benefit conferred under Section 40A(7)(b) of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Sale of API division - slump sale or not? - HELD THAT:- The agreement for sale clearly says that it is a transfer of API division as going concern to Actavis. In the agreement, there was no mention about the values of individual assets - details of plant and machinery were not available on record. When the details of plant and machinery are not available on record, it is not known how the individual assets were valued as claimed by the assessee. Assessee also could not produce the depreciation schedule for the individual machinery of the API division. The written down value of individual assets were also not furnished. The assets and liabilities of the company as on date of transfer was ₹ 20.26 Crores. The assessee is entitled for depreciation at the rate of 15% on plant and machinery. In view of these factual aspects coupled with the fact that API division was transferred as going concern without valuing the plant and machinery individually, this Tribunal is of the considered opinion that it is a case of slump sale. CIT(Appeals) is not correct in saying that it is not a slump sale. Deduction u/s 10B - adopting the profits arrived as per the provisions of Section 115JB of the Act and not to adopt the amount computed in the regular method - HELD THAT:- Clause (ii) of Explanation 1 to Section 115JB(2) of the Act clearly says that the amount of income to which provisions of Section 10 of the Act other than clause (38) thereof shall be reduced if such amount is credited to the Profit & Loss account. Therefore, the claim of the assessee that Section 10B of the Act is equal to Section 80HHC of the Act may not be correct. No similar clause as clause (ii) of Explanation to Section 115JB of the Act was brought to the notice of the Tribunal by the assessee. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of the authorities below are set aside and the issue of deduction under Section 10B of the Act is remitted back to the file of the AO to re-examine the matter afresh. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- AO on one end observed that the assessee has not earned any exempted income. However, the assessee claims that disallowance may be restricted to exempted income to the extent of ₹ 15,08,370/-. Therefore, the facts are not brought on record. Hence, the matter needs to be reexamined by the Assessing Officer. Accordingly, the orders of authorities below are set aside and the disallowance made under Section 14A of the Act is remitted back to the file of AO.
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