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2015 (4) TMI 1310 - AT - Income TaxComputation of deduction u/s 10A - HELD THAT:- Regarding bank interest respectfully following the earlier decision of the Tribunal we hold that AO should grant netting benefit to the assessee as per decision of Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd [2012 (2) TMI 101 - SUPREME COURT] Disallowance of job work charges - We direct the AO to redo the assessment by considering only the net receipt in respect of job work. The expenditure in this respect has to be worked out on the basis of either man hours put in the job work in comparison to the own manufacturing activity or on the basis of output ratio in the own manufacturing activity and job work. The assessee is directed to produce relevant details for allocation of the expenditure regarding job work activity. If it is not possible to work out the allowable expenditure on the above said basis then the AO should work out on some reasonable basis. Disallowance on account of exchange difference - we find that the assessee is having two kinds of loan one is short term loan against export bills which is clear from the schedule of the balance sheet and other is term loan. Even in the schedule 4, the assessee has shown secured loan in foreign currency which is term loan and further the working capital loan under the category of pecking credit, post shipment foreign currency account. As far as the working capital loan is concerned the exchange gain on such loan should be allowed as business income and so far as the exchange gain on secured term loan which is not for working capital the same cannot be treated as business income for the purpose of section 10A. Accordingly we direct the AO to verify the exact details of the foreign exchange gain in respect of two kinds of loan and then allow the claim of the assessee with respect to the working capital loan TP Adjustment - addition being interest calculated @ 18% on credit period to AE beyond 180 days on certain export invoices - whether Under transfer pricing regulation, export outstanding is not a transaction with AE and hence no addition is to be made? - HELD THAT:- To some extent there is a force in the contention of Ld. AR that if the assessee has to make payment of imports to same party then, receiving delayed export realization cannot be said to be bearing interest as assessee is already owing much more amount to its AE on account of import payments. Therefore, in the interest of justice, we consider it just and proper to restore this issue to the file of AO to examine and verify the facts and if on the dates when the impugned interest is computed in respect of export realization, the assessee is already having obligation to pay to its AE the amount regarding import made by it then, to that extent interest cannot be added as TP adjustment. We therefore, restore this matter to the file of AO with a direction to re-adjudicate this issue as per directions given above. For statistical purposes this ground is treated to be allowed. Applicability of MAT provisions - HELD THAT:- This issue is covered in favour of the assessee by the decision of Genesys International Corporation Ltd. [2012 (12) TMI 491 - ITAT MUMBAI] wherein it has been held that a unit located in SEZ is covered buy sub-s.(6) of s. 115JB irrespective of the fact that such unit is claiming deduction under s. 10A and, therefore, the book profit of the SEZ unit could not be included while computing book profit under s. 115JB for assessment year 2008-09, despite the fact that clause (f) of Expln. 1 to s. 115JB(2) has been amended to apply the provisions of MAT to units which are entitled to deduction under section 10A. Following the aforementioned decision similar view was also taken by G. Jewelcraft Ltd. [2014 (11) TMI 980 - ITAT MUMBAI] It is seen that Ld. CIT(A) has followed aforementioned decision of Tribunal in the case of Genesis International (supra). Respectfully, following the decision of Co-ordinate Bench we decline to interfere in the relief granted by Ld. CIT(A) and the appeal filed by the Revenue is dismissed.
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