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2017 (10) TMI 1263 - AT - Income TaxClaim for deduction under section 10AA denied - as per AO all the karigars were located outside SEZ Unit and the assessee has no findings to show that the said karigars had taken permission from the Customs Authority to work within the SEZ Unit - AO held that no manufacturing activity was carried on by the assessee company in its SEZ Unit during - Held that:- As submitted that the assessee even has a sufficient evidence to show that the karigars had actually worked in its SEZ unit during the year under consideration to manufacture gold articles from the 24 carat gold by using the machinery installed in the SEZ unit. On being asked by the bench, he has submitted that the assessee can produce such evidence to meet the objections raised by the AO and to support and substantiate its claim for deduction under section 10AA if the matter is again sent back to the Assessing Officer for fresh consideration. Keeping in view all the facts of the case, we consider it fair and proper and in the interest of justice to sent back this matter to the file of the AO for fresh consideration. Even the learned DR has not made any material objection in this regard. The impugned order of the Ld. CIT (A) on this issue is therefore set aside and the matter is restored to the file of the AO for deciding the same afresh in accordance with law after giving one more opportunity to the assessee to support and substantiate its claim for deduction under section 10AA. Addition on account of making charges of 22 carat gold ornaments - Held that:- The market value of 22 carat gold ornaments gets increased only when they are finally ready and it remains as good as raw gold at the semi-finished stage because of the various reasons explained by the assessee. It, therefore, follows that the market value of 22 carat gold ornaments at semi-finished stage remains equivalent to raw gold price and since the valuation of the same was done by the assessee without including making charges as per the method of cost or market whichever is lower that was being consistently followed, we find ourselves that the Ld. CIT (A) that there was no under valuation of stock of 22 carat gold ornaments in process by the assessee as alleged by the AO. The addition made by the AO on this issue, therefore, was not sustainable and we find no infirmity in the impugned order of the Ld. CIT (A) in deleting the same Disallowance for depreciation on the machinery installed in SEZ unit - Held that:- As the learned representatives of both the sides have agreed that this issue is consequential to the issue involved in ground no 1 in as much as if the assessee is found to have carried on the manufacture activity in its SEZ unit making it eligible for deduction under section 10AA, the depreciation on machinery installed in the said unit is liable to be allowed as a corollary. Since the issue involved in ground no 1 has been sent back by us to the Assessing Officer for deciding the same afresh, we also send back the issue involved in ground no 3 to the Assessing Officer for deciding the same afresh depending on his ultimate decision on the issue involved in ground no 1.
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