TMI Blog2014 (7) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... e only in that case it could be said that the assessee had paid less than the market price - The decision in Pyramid Entek P. Ltd Versus Assistant CIT RG 3. Thane [2014 (7) TMI 751 - ITAT MUMBAI] followed - the AO has not given any finding that by hiring the employees/professionals from the sister concern the assessee had paid less than market price resulting in shifting of profit from its non-eligible unit to eligible unit u/s 10B – Decided against Revenue. Restriction of disallowance u/s 40(a)(ia) of the Act – TDS not deducted on professional charges paid to sister concern – Held that:- Following the decision in CIT vs. Gem Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] - the deduction u/s 10B is allowed in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly the AO made an addition of ₹ 20,33,505/- by disallowing the benefit of Section 10B. On appeal, CIT(A) has upheld the action of the AO. 3. Before us the ld. AR of the assessee has submitted that an identical issue has been considered and decided by this Tribunal in Assessee's own case for the assessment year 2008-09 vide order dated 07/08/2013 in ITA No.567/Mum/2012. He has thus submitted that the issue is covered in favour of the assessee by the order of this Tribunal in the case of assessee. The ld. DR has relied upon the orders of authorities below. 4. Having considered the submissions of the ld. AR and ld. DR as well as the relevant material available on record we note that an identical issue has been considered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had resulted into more than ordinary profit. This could happen only if the assessee had paid less than the market value to the sister concern on account of hired employees. There is no material on record to show that sister concern had hired the employees at less than market price because only in that case it could be said that the assessee had paid less than the market price. In the absence of any such material it cannot be said that assessee had produced more than the ordinary profit because of close connection with the sister concern or that it had declared more profit in order to claim more exemption. In our view the approach adopted by lower authorities to add proportionate revenue is incorrect. We, therefore set aside the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amounts are paid. The CIT(A) accepted the contention of the assessee in view of the decision of the Special Bench and directed the AO to disallow under section 40(a)(ia) only to the extent of amount payable as on 31/03/2009. CIT(A) has further held that the disallowance made under section 40(a)(ia) is eligible for exemption u/s. 10B as it was also recorded by the AO in the assessment order though deduction was not allowed. Following the decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Gem Plus Jewellery India Ltd. (233 CTR 240) CIT(A) directed to grant consequential exemption under section 10B on the addition sustained under section 40(a)(ia). 7. We have heard the ld. DR as well as ld. AR and considered the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether on that basis the Tribunal was justified in directing the Assessing Officer to grant the exemption under section 10A. On this position, in the present case it cannot be disputed that the net consequence of the disallowance of the employer's and the employee's contribution is that the business profits have to that extent been enhanced. There was, as we have already noted, an add back by the Assessing Officer to the income. All profits of the unit of the assessee have been derived from manufacturing activity. The salaries paid by the assessee, it has not been disputed, related to the manufacturing activity. The disallowance of the provident fund/ESIC payments has been made because of the statutory provisions - section 43B in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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