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2016 (10) TMI 8 - AT - Income TaxDeduction u/s 10AA eligibility - Assessee is engaged in the business of manufacturing of cut & polished diamonds and its unit is situated in SEZ - Held that:- We are of the considered view that assessee in the course of running its undertaking in SEZ is allowed to send raw material outside the SEZ area for getting it in a finished form on job work basis through outside labourers and further this activity of getting goods manufactured through outside sources is duly covered under the manufacturing activities. Assessing Officer was not justified in invoking the provisions of section 10AA(9) of the Act as there was no material evidence put on record and a specific finding to work out the basis to estimate reasonable profits by vehemently applying net profit rate at 2% as against 18.94% declared by the assessee without appreciating the facts that business house having a similar type of activity cannot end up at a similar level of GP/NP as much depends on the business strategy, quality of goods sold, rates negotiated with the buyers and optimum utilization of the resources including the employees and machines. We do not find any reason to interfere with the finding of ld. CIT(A). We uphold the same. Accordingly, ground no.1 is dismissed. Secondly, the alternate view taken by ld. Assessing Officer for proportionately denying deduction u/s 10AA of the Act for goods manufactured from outside parties cannot stand for in view of our above discussion and the judgments of Hon. Bombay & Calcutta High Courts and decision of the Co-ordinate Bench Delhi in the case of Rajiv Bhatnagar vs. DCIT (2012 (12) TMI 1104 - ITAT DELHI) and it is well decided that such activities of getting manufactured goods from outside sources on job work basis are also covered under manufacturing activities. We find no reason to interfere with the order of ld. CIT(A) on this issue also. Ground no.2 is dismissed.
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