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2018 (4) TMI 327 - AT - Income TaxDeduction u/s 80IE - maintenance of separate accounts - assessee stated that separate books of accounts were maintained and while preparing the audited balance sheet, both the accounts were merged. - CIT-A determining the net profit at 12% for manufacturing unit - Held that:- AO, without any basis, had held that the profits of the manufacturing activity would have to be determined only at 12% of sales. This has got no rationale supported by proper workings. In addition to this, the ld AO further stated that the differential profit figure of ₹ 41,44,392/- needs to be added back to the trading profit of the assessee, without any basis. There is absolutely no connection between the trading activity and manufacturing activity of the assessee. Lot of common administrative expenses were in fact debited only in the manufacturing account as could be evident from the independent profit and loss account summarized supra, without making apportionment of common expenses between trading and manufacturing activity. If the same is done, then the assessee would be entitled for higher deduction u/s 80IE in view of increased profits in manufacturing activity. In this scenario, we hold that there is absolutely no basis for the conclusion of the AO that the differential profits figure of ₹ 41,44,392/- represents trading profit of the assessee. We hold that there is absolutely no case made out by the ld AO for shifting of profits from trading activity to manufacturing activity of the assessee and hence we have no hesitation in directing the ld AO to delete the addition of ₹ 41,44,392/- made in the assessment. - Decided in favour of assessee
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