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TMI Blog2012 (12) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the appeal of the revenue in the case of Gujarat Ambuja Exports Ltd. for the assessment year 1993-94 is the lead matter and this should be decided first and thereafter the other appeals can be decided and on related issues, this order in the case of Gujarat Ambuja Exports Ltd. can be followed in other appeals. We therefore, take up this appeal of the department i.e. I.T.A.No. 202/Ahd/1999. 3. Grounds raised by the revenue in this appeal are as under: "1. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance of loss of Rs.45,60,792/- totally ignoring the evidences relied upon by the assessee. 2. CIT(A) has erred on facts and in law in deleting the disallowance of loss of Rs.23,10,255/- made by A.O. totally disregarding the facts and circumstances as narrated by the A.O. 3. CIT(A) has erred on facts and in law in deleting the disallowance of Rs.91.46 lacs on account of godown hire charges without appraising the evidences discussed by the A.O. in the order. 4. CIT(A) has erred on facts and in law in giving relief in regard to deduction u/s 80HHC of Rs.65,57,776/- which is in facts contrary to the facts and circumstances of the case. 5. CIT(A) ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported the assessment order whereas the Ld. A.R. supported the order of Ld. CIT(A). He also submitted that the details of purchase, sales and stocks are available in the paper book on pages 62- 105, 106-128 and 129-146 respectively. He also pointed out that the directions of Addl. CIT u/s 144A is available on page 208 of the paper book. 3.1.3 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this issue was decided by Ld. CIT(A) as per para 4.5.1 to 4.5.6 and 4.6 of his order which are reproduced below: "4.5.1 I have considered the facts of the case, the observations of the Assessing Officer in the assessment order as well as in his remand report and the submissions of the appellantcompany very carefully. It is true that the transactions of SOYA DOC are amongst the group companies arid on such transactions the appellant-company has shown to have incurred a loss of Rs. 45,60,792/- and Gujarat Ambuja Cotspin Ltd. has shown a profit on such transactions. It is also true that the profit earned by Gujarat Ambuja Cotspin Ltd. has been shown in its balance sheet as well as in the return of income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available, which are placed on pages Nos. 62 to 146 of the paper book. From the perusal of the said documents, it is absolutely clear that the transactions are also recorded in the sales and purchases registers as well as in the stock register. In the stock register the date wise position of stock in quantity of SOYA DOC is also indicated, from a perusal of which it is clear that on the date of sale there were sufficient quantities available with the appellant company. It is also important to note here that all these documents were sent to the A.O. but in his remand - report, he has simply reiterated his arguments as made in the assessment order that such transactions are only on Paper, which is not correct in view of above mentioned facts and documentary evidences. 4.5.3 Coming to the directions of the DCIT u/s 144A of the Act on the basis of which the loss has been disallowed by the A.O. my attention was drawn to the said directions, placed on page Nos. 208 to 209 of the paper book, from which it is absolutely clear that the said directions were issued by the DCIT, pertaining to trading in wheat by the concerns of the group and the same was not pertaining to the transactions in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies as is the company Gujarat Ambuja Cotspin Ltd. which has earned profit of Rs.1,44,39,338/-. It would therefore, have not been possible for the companies suffering losses to have been a party to any non-genuine transaction resulting into loss for their share holders. 4.5.6 Coming to the alternative finding of the A.O. that the impugned loss of Rs.45,60,792/- is a speculative loss as it is not supported by actual delivery of the goods, this finding is also not correct, as the appellant company has already filed the documentary evidences showing delivery of the stock, the transactions being recorded in the stock register and the impugned sales and purchases having been shown in the sales tax return and it cannot be said that such transactions were without actual delivery and, therefore, the impugned transactions cannot be considered as speculative in nature. It has also been brought to my notice during the course of appeal hearing that the transactions cannot be speculative in nature in view of the fact that the purchases and sale were from different companies and since the purchases and sales were not to the same company it is not possible to term the transactions as speculative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit in the transactions of sales and purchases within the group companies: Gujarat Ambuja Exports Ltd. Rs. 23,10,255 (loss) Gujarat Ambuja Cotspin Ltd. Rs. 1,09,726 (Profit) Gujarat Ambuja Proteins Ltd. Rs. 21,74,516 (Profit) Gujarat Vita .Pharma Ltd. Rs. 26,013 (Profit) The loss claimed by the appellant has been disallowed on the ground that the transactions within the group are non-genuine and on paper only. For the same reasons the income declared by other 3 concerns mentioned above has been held in their assessment order to be not proved from these transactions but taxed as income from other sources- It appears from the assessment order in the case of the appellant' that in making the above addition the Assessing Officer has followed the assessment orders in this group of cases for the earlier assessment years 91-92 and 92-93 wherein it was held that the trading in wheat amongst the group concerns was not genuine and was only on paper. It also appears from the assessment order that the appellant sought directions from the DCIT u/s 144A and latter issued directions to the Assessing Officer in all the cases of the group. Perusal of the DCIT's order u/s 144A dated 7.3.96 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that like the first ground, for this issue also, the tax effect is negligible i.e. Rs.13,446/- if these transactions are ignored in all the group companies. 3.2.3 We have considered the rival submissions perused the material on record and have gone through the orders of authorities below. This issue has been decided by Ld. CIT(A) as per para 5.5.9, which is reproduced below: "5.5.9 Thus, the impugned transactions cannot be considered as non-genuine and with a view to reduce the taxable income. The modus operandi of the other assessees in other assessments cannot be made applicable to the impugned transactions as the findings and circumstances of the transactions carte totally different and the transaction are followed by the actual delivery duly confirmed by the respective buyers and suppliers which are being different parties. In view of the above facts, the loss claimed by the appellant company of Rs.23,10,255/- on the transactions of wheat is required to be allowed as deduction. The A.O. is directed to allow loss of Rs.23,10,255/-. The other observations of the A.O. that alternatively the loss is speculative nature is also not correct as the transaction are supported by act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, cleaning & maintenance etc. It was also stated that the payment of service charges was compulsory, irrespective of the utilization of godown space and allied services. The Assessing Officer examined the said agreement in detail and extracted some details on pages 9& 10 of the assessment order. It appears that in connection with this claim of the appellant, the statement of one Shri M.L.Pareek, Sr. Regional Manager of CRL was recorded u/s 131. The details of such statement are given on pages 10 & 11 of the assessment order. Enquiries seem to have been made at Calcutta office of CRL also, the result of which is narrated on page 14 of the assessment order. From the said enquiries, the Assessing Officer found that the appellant has not been able to establish the necessity and business expediency of hiring of large scale godowns, that the godowns itself were not existence and hence, the agreement could not be validly accepted in the eye of law, that this was only a paper transaction that this was merely an after thought with a view to reduce the tax liability of the appellant company and, therefore, the claim cannot be allowed as genuine business expenditure as no services were util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relied on several High Courts' decisions/ more specifically the decision of the Gujarat High Court in CIT Vs- Narayan cotton & silk Mills, 135 ITR 546." 3.3.1 Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) who has deleted this disallowance and now, the revenue is in appeal before us. 3.3.2 Ld. D.R. supported the assessment order whereas the Ld. A.R. supported the order of Ld. CIT(A). He further submitted that the rent was paid for the period from July 1992 to March 1993 and it was paid to M/s. Costal Roadways Ltd. He further submitted that agreement is on pages 288 to 292 of the paper book. 3.3.3 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this issue was decided by Ld. CIT(A) in para 7.6 of his order which is reproduced below: "7.6 I have considered the facts of the case of the relevant issue/ observations of the Assessing Officer as well as the submissions of the appellant company. At the outset, the facts of the present expenditure for godown rent of Rs.91.46 lacs are identical to that of similar payment of godown rent of Rs.72.48 lacs by GAPL for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h for the business purpose and even if such godown was not ultimately required to be used for the purpose of export, which were kept ready for such purpose, expenditure incurred on such hiring of godown has to be allowed as business expenditure on the basis of business expediency. In the light of these facts, we do not find any reason to interfere in the order of Ld. CIT(A). Regarding the tribunal decision rendered in the case of ACIT vs Gujarat Ambuja Proteins Ltd in I.T.A.No. 4119/Ahd/1995 assessment year 1992-93, dated 25.01.2012, we find that this tribunal decision is not applicable in the present case because the facts are different because in that case, the Tribunal decision is on the basis that the assessee has not brought any material to show the procurement plan and places from where the procurement was to be made and the storage period, volume to be procured at a time and quantity to be kept at a time etc. In the present case, on page 371 - 384, assessee has furnished the copy of outward register showing details of export with parties' names, vessels name, item, quantity, weight along with Despatch date and name of port being Porbandar, Dwarka, Kandla, Okha, Jamnagar etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this issue was decided by Ld. CIT(A) as per para 9.4 of his order which is reproduced below: "9.4 I have considered the facts of the case submitted by the appellant as well as observations of the Assessing Officer in his assessment order as well as in remand report. The Assessing Officer in the assessment Order has clearly mentioned that even on the basis of his calculation, the assessee is entitled for deduction of Rs.40,31,535/- u/s 80-HHC as against the claim made by the appellant company of Rs.65,57,776/-. However, even the said deduction as worked out by the Assessing Officer at Rs.40,3l,535/- has not been allowed as the report in Form No. 10 CCAC is treated as not correct as therein deduction claimed was for Rs.65,57,776/- Opposing this the appellant has relied upon the Judgement of Delhi I TAT in the case of shriram Pistons K Rings Vs. CIT, reported in 81 Taxman 164, wherein it has been held that report of accountant, as contemplated in sub-section (4), is required for limited purpose of making a valid claim for deduction and, therefore, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irections in this order. As regards interest, no deduction under section 80HHC will be allowable to the appellant as interest income has been held as income from other sources. The A.O. is directed to recalculate the deduction u/s 80HHC in view of the above directions and discussions made and hence, this ground of appeal is disposed off accordingly." 3.4.4 From the above para of the order of Ld. CIT(A) it is seen that it was decided by Ld. CIT(A) that even the A.O. has calculated this deduction as allowable to the assessee u/s 80HHC to the extent of Rs.40,31,535/- but he has not allowed deduction even for this amount on this basis that the report in Form 10CCAC is treated as not correct because in that report, deduction claimed was Rs.65,57,776/-. It is held by Ld. CIT(A) that under these facts, the deduction computed by the A.O. of Rs.40.31 lacs was clearly allowable and it cannot be disallowed in any case. For the balance amount of deduction claimed by the assessee, Ld. CIT(A) has directed the A.O. to recalculate deduction u/s 80HHC without ignoring the transaction of the assessee pertaining to SOYA DOC and Wheat because it is held by Ld. CIT(A) that the same are not bogus. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greed upon in the purchase order and as proposed in the letter dated 15.10.1992, the loss incurred on the sales should be allowed. The Assessing Officer, from the letter, purchase order and confirmation of UPL noticed that the sale was not in accordance with either the purchase order or the prevailing market rate. He observed that the assessee earned huge interest income exceeding Rs.3 Crores during that year under consideration which was credited to the profit and loss account as such and by selling the goods to UPL at reduced rates, the assesses arranged to incur the said loss for getting adjustment of the same against the other taxable income with a view a to reduce the tax liability. He, therefore, issued show cause notice to the-appellant to show cause as to why the said loss should, not be disallowed. The appellant vide letter dated 27.3.96 explained the reasons, which are reproduced by the A.O. on pages 23 to 24 of the assessment order. In brief the explanations were to the following effect :- (i) As the appellant vas a now entrant, to the business they wanted to play safe and, therefore, the prices were prefixed considering the trend of prices in the market from year to ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectly (supplied by the supplier M/s. Dwarka Cement Works Ltd. to UPL and hence, there was no necessity to involve the assessee group in these transactions. In further support, the A.O. also relied upon sales of SOYA DOC to 3 other parties at lesser rates, which was explained by the assesses as supplied against H Form, which entitled the assessee to get some benefits in compensation of the price difference, which amounted to the assessee getting the market value on the sale, whereas the goods sold to UPL was at less than market price and without getting any export benefits. The A.O. also noted that in the month of Oct., 1992, goods to the extent of 8,200/- M.T. was agreed to be supplied by the assessee in the initial stage but the assessee has also supplied 82312.500 M.T. @ 5,900/- as per the terms and condition of the said purchase order. The A.O., therefore, considered that at the most the loss incurred in this particular transaction can be allowed, which worked out to Rs.9,05,410/-. In his opinion, the balance of Rs.95,55,520/- could not be allowed as the same was not in accordance with the terms and conditions o the purchase order. He thus disallowed the loss of Rs.95,55,520/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding is given by Ld. CIT(A) that interest pertaining to term loan from Bank of Baroda although it is pertaining to 4th quarter of financial year 1991-92 but the same was reported in the books of account only in the month of April 1992 as the exact amount of interest could be quantified only after finalization of books of account for the financial year 1991-92 for the reason that there was a dispute about the rate of interest. He submitted that the amount in dispute was paid in the present year and, therefore, even if it is pertaining to the preceding year, the same is allowable in the present year as per Section 43B. 4.1.2 Ld. D.R. supported the orders of authorities below. 4.1.3 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this finding is given by Ld. CIT(A) that the amount of interest pertaining to interests on term loan from Bank of Baroda. This is also stated by the A.O. on page 12 of the assessment order that the amount of Rs.6,99,954/- is in respect of term loan interest. On page 110 of the paper book is the copy of the ledger account as per which, 4 amounts each of Rs.5.05 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he result, this appeal of the assessee is allowed. 5. Now, we take up the revenue's appeal for the same assessment year in the same case of Gujarat Ambuja Cotspin Ltd. in I.T.A.No. 203/Ahd/1999. The grounds raised by the revenue in this year are as under: "1) the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.109 lacs made by the A.O. in respect of wheat transactions. 2) Ld. CIT(A) has erred on facts and in law in reducing the addition made by the A.O. u/s 80HHC despite the act that the certificate of the C.A. was not reliable. 3) Ld. CIT(A) has erred on facts and in law in deleting the profits in respect of transactions with group concerns amounting to Rs.1,44,39,338/- irrespective of the fact that it was rightly done so by the A.O. 4) The Ld. CIT(A) erred in law and on facts in directing the A.O. to give deduction u/s 80-I without deduction u/s 80HH from the total income. 5) The Ld. CIT(A) erred in law and on facts in deleting the addition of Rs.14.45 lacs and Rs.5.34 lacs on account of purchase price of wheat from group concerns." 5.1 Regarding all these grounds, Ld. D.R. supported the assessment order whereas Ld. A.R. supported the order of Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk out the deduction allowable to the assessee u/s 80HH and 80-I. The ground of revenue is not regarding this aspect. The ground of the revenue is that Ld. CIT(A) has erred in giving direction to allow deduction u/s 80- I without reducing the deduction u/s 80HH from the total income. On this aspect, the matter is now covered in favour of the assessee by the judgement of Hon'ble Gujarat High Court cited by Ld. A.R. and hence by respectfully following the same, we decline to interfere in the order of Ld. CIT(A) on this issue. Ground no.4 is rejected. 5.5 Regarding ground No.5, we find that this issue was decided by Ld. CIT(A) as per para 6.6 of his order, which is reproduced below: " I have considered the facts of the case and observations of the A.O. as well as the submissions made by the appellant. At the outset from the nature of transactions it is very clear that these transactions of purchases from the associate concerns are not pertaining to transaction of purchases and sales considered by the Assessing Officer separately in the assessment order, pertaining to which the Assessing Officer disallowed the loss- In these transactions the loss and corresponding profits were same am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected. 5.6 In the result, this appeal of the revenue is also dismissed. 6. Now, we take up the appeal of the revenue in the case of Gujarat Ambuja Proteins Ltd. for the assessment year 1993-04 in I.T.A.No. 204/Ahd/1999. We want to note that there was cross appeal of the assessee also for this very year in the case of this very assessee but it was submitted by both the sides before us that the same was already disposed off by the tribunal as per order dated 28.11.2006 and the issue involved in this appeal was totally different. 6.1 The grounds raised by the revenue are as under: "The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.1.25 crores totally disregarding the evidences collected and relied upon by the assessee. 2. The CIT(A) on facts and in law- ought not to have given relief in regard to addition made by the A0OS in respect of dividend on shares and debentures as on; the basis of the evidences collected by the A.O. the same was required to be tax rd as income from other sources only, 3. The CIT(A), in facts and on law has erred in giving the relief in regard to speculation loss of Rs.1.25 crores in total disregard of the evidences an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. for the assessment year 1993-94. 6.2 Regarding ground No.2, we find that this issue was decided by Ld. CIT(A) as per para 5.5 of his order which is reproduced below: "5.5 I find from the assessment order that the appellant has had income form capital gains. I also find from above submissions of the appellant that he appellant has large opening/closing stock in its share business and there have been large scale purchse4s and sales of shares as stock in trade. Therefore, a part of the income from dividend on shares and interest on debentures will pertain to shares /debentures held by the appellant as investment and the remaining part of the dividend / interest will pertain to the shares/debentures held as stock-in-trade. In view of this and in view of what I have held above in para 5.5.1, the A.O. is directed to obtain the requisite details and evidence form the appellant and work out the part of dividend/interest income taxable as income from other sources and the remaining part taxable as part of share business income of the appellant. The appellant is expected to furnish the requisite details and evidence before the A.O.. This ground of appeal is, therefore, treated as deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the A.O. 3) It is, therefore, prayed that the order of the Ld . CIT(A) may be cancelled and that of the A.O. may be restored to the above effect. 7.1 Ld. D.R. supported the penalty order whereas the Ld. A.R. supported the order of Ld. CIT(A). He also placed reliance on the judgement of Hon'ble Gujarat High Court rendered in the case of CIT Vs Secure Meters Ltd. as reported in 321 ITR 611 and also on the judgment of Hon'ble Apex Court rendered in the case of Reliance Petro Products Pvt. Ltd. as reported in 322 ITR 158. 7.2.1 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the judgements cited by the Ld. A.R. We find that in the present case, penalty was imposed by the A.O. u/s 271(1)(c) in respect of disallowance of Rs.1,44,38,852/- u/s 35D incurred on the issue of debentures. This penalty was deleted by Ld. CIT(A) as per paras 4, 4,1 and 4.2 of his order which are reproduced below: "4. I have considered the submissions of the A.R. carefully. I have also gone through the case laws cited by the Id. A.R. I find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, we are of the considered opinion that even after confirming the disallowance by the Tribunal in the quantum proceedings, penalty in the present case is not justified because the issue was debatable at the time of filing of return of income and, therefore, we decline to interfere in the order of Ld. CIT(A) on this issue. 7.3 In the result, this appeal of the revenue is dismissed. 8. Now, we take up the cross appeals of the assessee and the revenue in the case of Gujarat Ambuja Exports Ltd. for the assessment year 1995- 96 in I.T.A.No. 1860 and 1944/Ahd/2000. 8.1 First, we take up the revenue's appeal. The grounds raised by the revenue are as under: "1) The Ld. CIT(A) /Dy. CIT(A) has erred in law and on facts in deleting the following additions: i) On account of loss in inter group transactions Rs.5,413/- ii) On account of short form capital loss through A Chhataria & Co. Rs.20,38,500/- 2) On the facts and in the circumstances of the case, the Ld. CIT(A) /Dy. CIT(A) ought to have upheld the order of the A.O. 3) It is, therefore, prayed that the order of the Ld. CIT(A) / Dy. CIT(A) may be set aside and that of the order of the A.O. be restored to the above extent." 8.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O. had any genuine doubt, he could have made proper entries from the broker. However, no such attempt was made in spite of the fact that identity, name and address of the broker was available and delivery numbers etc. were also on record. In this case, the Assessing Officer has reached the conclusion without causing proper enquiry and in a way has proceeded one sidedly. In the present case, the appellant had entered into different transactions and to support its claim of loss, the appellant had produced the relevant details. To incur the loss, the appellant had duly given and taken delivery of shares through the broker which fact had been duly acknowledged by the broker. The Assessing Officer could not prove that no delivery was involved and it was a mere accommodation given to the assessee by the broker. So much so that the broker through all transactions took place, was never examined and his sides of the story was not even considered. In nutshell, the Assessing Officer just made this disallowance on the basis of inferences which were not well placed as discussed above. There is nothing on record to prove that the loss was not genuine. On the rates involved in different trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O. should pass necessary order as per law after providing adequate opportunity of being heard to the assessee. 9.2 In the result, this appeal of the assessee is allowed for statistical purposes. 10. Now, we take up the cross appeals of the assessee and the revenue in the case of Gujarat Ambuja Exports Ltd. for the assessment year 2004- 05 in I.T.A.No. 1538 and 1964/Ahd/2009. 10.1 First, we take up the revenue's appeal in I.T.A.No. 1964/Ahd/2009. In this case, only grievance of the revenue is regarding exclusion of excise duty of Rs.1,21,18,095/- from total turnover for computation of deduction u/s 10B. 10.1.1 Ld. D.R. supported the assessment order whereas Ld. A.R. supported the order of Ld. CIT(A). He placed reliance on the Tribunal decision rendered in assessee's own case for the assessment year 2003-04 in I.T.A.No. 2511/Ahd/2007 dated 24.12.2010. He submitted a copy of this tribunal decision and drawn our attention to para 28 of this Tribunal decision. 10.1.2 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the decision cited by the Ld. A.R. in the assessee's own case for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction / exemption U/s. 10B of the Act, unabsorbed depreciation has to be reduced from the eligible profits. 3. The learned CIT (A) has erred in law and on facts in confirming the Action of Id. AO in holding that while calculating deduction U/s. 80HHC of the Act, unabsorbed depreciation has to be reduced from eligible profits. 4. Both the- lower authorities have erred in law and on fats in not properly appreciating and considering various submission, evidences and supporting placed on records during the course-of the proceedings and not properly appreciating various facts and law in its proper perspective. 5. The learned CIT (A) has erred in law and on facts in confirming the action of Id. AO in levying interest under section 234B / C of the Act. 6. The learned CIT (A) has erred in law and on facts in confirming the action of Ld. AO in initiating penalty proceedings U/s. 271(l)(c) of the Act without recordings the satisfaction contemplated under the said section. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal." 11.1 Regarding ground No.1, it was submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profits of business of undertaking, the same proportion as export turnover bear to the total turnover of the business carried on by the undertaking. In our considered opinion, for the purpose of giving effect to the subsection (4) of section 10B, profit of 10B undertaking has to be worked out first and thereafter, the allowable deduction has to be worked out in proportion to export turnover to total turnover. To work out the profit of 10B undertaking, only the brought forward unabsorbed deprecation of 10B undertaking should be considered and not brought forward unabsorbed deprecation of any other unit. We, therefore, set aside the order of Ld. CIT(A) on this issue and restore the matter back to the file of the A.O. for a fresh decision in the light of above discussion after providing adequate opportunity of being heard to the assessee. This ground is allowed for statistical purposes. 11.3 Regarding ground No.3, it was fairly conceded by the Ld. A.R. that this is covered against the assessee by the tribunal order in assessee's own case for assessment year 2003-04 in I.T.A.No. 2137/Ahd/2007 dated 29.12.2010. He drawn our attention to para 13 & 14 of this tribunal decision. Respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of Ld. CIT(A). He further submitted that the issue raised by the revenue in grounds NO.1 & 2 is covered in favour of the assessee by the judgement of Hon'ble Apex Court rendered in the case of CIT Vs Indo Nippon Chemicals Co. Ltd. as reported in 261 ITR 275 and also by the judgement of Hon'ble Gujarat High Court rendered in the case of CIT Vs Unique Industries as reported in 307 ITR 350. Regarding ground No.3, he placed reliance on the judgement of Hon'ble Karnataka High Court rendered in the case of CIT & Another Vs Sagar Talkies as reported in 325 ITR 133 and regarding ground No.4, he placed reliance on the judgement of Hon'ble Gujarat High Court rendered in the case of CIT Vs Amba Impex as report ed in 282 ITR 144. 12.1.2 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the judgements cited by the Ld. A.R. Regarding grounds No.1 & 2, we find that this issue is covered in favour of the assessee by both the judgements cited by the Ld. A.R. and hence, by respectfully following these two judgements, we decide this issue in favour of the assessee and accordingly, these two grounds of the revenue's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terfere in the order of Ld. CIT(A). Ground No.4 is also rejected. 12.4 Grounds N.5 & 6 are general. 12.5 In the result, appeal of the revenue is dismissed. 13. Now, we take up the assessee's appeal in I.T.A.No. 1539/Ahd/2009. 13.1 Ground No.1 is as under: "1. The learned CIT (A) has erred in law and on facts in confirming the action of Id. A.O. in disallowing deduction U/s. 10B of the Act in the sum of Rs. 2,23,09,295/- in respect of Cotton Yard Division." 13.1.1 It was fairly conceded by the Ld. A.R. that this issue has to be decided against the assessee because the period of ten consecutive assessment years for the purpose of benefit u/s 10B was over in assessment year 2004-05. Accordingly, this ground of the assessee is rejected. 13.2 Ground No.2 & 3 are as under: "2. The learned CIT (A) has erred in law and facts in confirming the action of Id. AO in not granting deduction U/s. 10B of the Act on Cotton Yarn Division on the income from commission on ocean freight Rs. 7,15,225/- Misc. income Rs. 6,57,491/-, Interest income Rs. 2,33,64,787/- and exchange fluctuation gain Rs. 8,47,31,260/-. 3. Alternatively and without prejudice, only the net and not gross income from commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file of the A.O. as per para 11.2.1 above. Accordingly, in the present year also, the order of Ld. CIT(A) is set aside and the matter is restored back to the file of the A.O. for a fresh decision with similar direction given by us in assessment year 2004-05. This ground is allowed for statistical purposes. 13.5 Grounds No.6 & 7 are as under: "6. The learned CIT (A) has erred in law and on facts in confirming the action of Id. AO in not granting deduction U/s. 10B of the Act on kadi Division on the income from Commission on Ocean fright Rs. 50,062/-, Misc. income Rs. 3,15,256/- and exchange fluctuation gain Rs. 7,94,732/- 7. Alternatively and without prejudice, only the net and not the gross income from Commission on Ocean -.freight, Misc. income, and exchange fluctuation gain from Kadi Division can be reduce while calculating deduction 7 exemption U/s. 10B of the Act on Kadi Division." 13.5.1 Ld. A.R. submitted that this ground is not pressed because one part i.e. regarding exchange fluctuation gain was decided by Ld. CIT(A) in favour of the assessee and for the remaining aspect i.e. commission from ocean freight and miscellaneous income, there is no merit in the assessee's gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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