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2023 (10) TMI 461 - ITAT MUMBAIDeduction claimed u/s 10AA - Claim denied as conditions prescribed for claiming the deduction has not been fulfilled - HELD THAT:- AO in the order giving effect has passed orders for AY 2007-08 to AY 201-12 pursuant to the orders of the Tribunal, wherein he has allowed the deduction u/s 10AA. We also notice that the AO having gone through the various details submitted by the assessee with respect to claim of deduction u/s 10AA has himself held that the assessee is eligible or deduction u/s 10AA. As noticed that the year under consideration is not the first year in which the assessee has claimed the deduction under section 10AA and that it is well settled position that once the eligibility of deduction u/s 10A or 10B or 10AA has been accepted in the initial assessment year, then it cannot be withdrawn in the subsequent years for a breach of certain conditions which are required to be seen or examined in the first year of claim.. Therefore, we see merit in the contention of the Ld.AR that section 10AA deduction cannot be denied to the assessee for the said reason. Accordingly, we hold that the assessee is entitled for deduction u/s 10AA. Interest income to be considered for deduction u/s 10AA - AR submitted that the interest income cannot be excluded for the purpose of deduction u/s 10AA - DR argued there should be nexus between the interest income and the business of the assessee - HELD THAT:- In assessee’s case, we notice that the fixed deposits are held as margin money with the banks and that there is nexus between the interest earned and the business of the assessee. Therefore, respectfully following the above decision of Jardine Lloyd Thompson Private Limited [2023 (5) TMI 701 - ITAT MUMBAI] we hold that the interest income earned by the assessee from fixed deposits held for the purpose of margin money is eligible or deduction u/s 10AA of the Act. Income from gold dust to be considered for deduction u/s 10AA - CIT(A) held that the gold dust is generated only during the manufacturing activity of the assessee as a by-product and, therefore, intrinsically linked to the eligible business of the assessee - HELD THAT:- Plain reading of the computation mechanism as provided in subsection (7) of section 10AA leads to the conclusion that for the purpose of deduction u/s 10AA, it is the profits of the business that needs to be considered. In assessee's case we notice that the Assessing Officer had not disputed the fact that the interest on deposits being part of profits from business of the assessee and therefore there is merit in the contention that while computing the deduction as per subsection (7) of section 10AA, the same is to included as part of the profits of the business. In assessee’s case, AO has treated the income from sale of gold dust as part of the business income of the assessee (refer the statement of assessed income in assessment order) and, therefore, the AO himself has not denied the fact that the income from sale of gold dust is part of the business income of the assessee. Once the income has been accepted to be part of the business income of the assessee then the same needs to included for computation of deduction as per the provisions of subsection (7) of section 10AA. Accordingly we hold that income from sale of gold dust also to be considered for the purpose of arriving at the profits eligible for deduction u/s 10AA. The Assessing Officer is directed to re-compute the deduction u/s 10AA. Appeal of the assessee is allowed.
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