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2019 (11) TMI 650 - AT - Income TaxDeduction u/s 10AA - business activity of manufacture and export - HELD THAT:- In the instant case, it is not in dispute that the assessee is eligible for claim of deduction u/s 10AA of the Act. It is also not in dispute that the assessee has only one business undertaking which is engaged in the business of manufacturing and export of gold, silver and base material jewellery plain & studded with precious & semi precious stones situated at Sitapura Industrial Area, Jaipur and the total turnover of the business is equivalent to the total turnover of the undertaking as well as the export turnover. The expenditure to the extent of 25% of purchases where are held as non-genuine and disallowed by the Assessing officer relates to the same business activity of manufacture and export in respect of which assessee is held eligible for deduction under section 10AA of the Act. The deduction under section 10AA therefore needs to be allowed on the enhanced profits after taking into consideration the disallowance of ₹ 2,80,500 in light of accepted legal position by the CBDT and following the consistent position taken by the Co-ordinate Benches. Assessing Officer is therefore directed to recompute the deduction u/s 10AA taking into consideration the addition of ₹ 2,80,500/. In the result, the Ground of the assessee’s appeal is allowed. Disallowance of employees contribution to PF by invoking provisions of section 2(24)(x) r.w.s 36(1)(va) - HELD THAT:- It is not disputed that the assessee has deposited the employee’s contributions towards PF before the due date of filing of the return of income. Hence, the matter is squarely covered by the decision of Hon’ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner and Jaipur [2014 (12) TMI 65 - RAJASTHAN HIGH COURT] and the ground of appeal no. 1 is thus allowed Disallowance of deduction u/s 10AA - considering the receipt on account of freight, clearing & insurance charges as income from other sources as against business income - HELD THAT:- In the instant case, the assessee has incurred freight, clearing and insurance expenses in respect of export of goods and has recovered an amount from its customers, thus there is an excess recovery towards such expenses and such recovery has been reflected in the profit/loss account. In its computation of income for claiming deduction under section 10AA, the assessee has excluded such recovery of expenses from the export turnover as well as total turnover. Whether such excess recovery of freight and other expense in respect of export of goods is derived from business and the eligible for deduction under section 10AA is squarely covered by the decision of the Hon’ble Rajasthan High Court in case of Pr. CIT, Jaipur vs. Vedansh Jewels (P.) Ltd. [2018 (8) TMI 117 - SC ORDER] held that surplus amount in the freight export account and in the insurance export is derived from export activities and on those accounts deduction under section 10AA is allowable.
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