TMI Blog2016 (2) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... at the foreign participation relates to the goods being manufactured at unit-I only. Merely by paying the initial deposit and showing the same as an advance in the balance sheet of unit- I, it cannot be said that the expenses pertains to unit-I only, as per the well laid down principle of the law that the entry in the books of accounts are not determinative of real nature of the transactions. Given that both the units are in the same business and 100% of its production is exported and there was no local sale in unit-I held by the AO, and in absence of any contrary facts brought to our notice by ld. AR, a more logical view which emerges is that the booking of stalls in the exhibition was done for both the units and the expenses should relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... un verified purchases amounting to ₹ 1,59,073/- which should be deleted. 2. Regarding ground No.1, the brief facts relevant for the matter under consideration are that the assessee, which is in business of manufacturing and trading of previous and semi-precious stones and studded Diamond jewellery, is having two units, unit-I and unit-II. The unit-II is 100% Export Oriented Unit (EOU) which is eligible for exemption u/s 10B of the Act. During the year under consideration, the assessee has debited an amount of ₹ 5,36,228/- towards Foreign Exhibition Participation expenses in the profit and loss account of unit-I. As per the AO, nature of business of both the units are exactly the same and both the units are exporting 100% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of ₹ 5,36,228/- represented the cancellation charges of booth No. 44103. 2.2 The ld. DR is heard. 2.3 We have heard the rival contentions and perused the material available on record. Firstly it is noted that the amount of ₹ 5,36,228/- which has been debited in the profit and loss account of unit-I relates to cancellation of participation in the exhibition being organized by the Gem Jewellery Export Promotion Council due to the business exigencies of the assessee. Secondly, it is noted that the initial deposit of ₹ 9,45,000/- was paid out of the books of accounts of Unit-I as evident from the account of the Gem Jewellery export promotion council maintained in the unit-I which is at page of 7 of paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the units and the expenses should relate to both units. In light of above, we are of the considered view that the AO has rightly apportioned the foreign participation cancellation expenses in the hands of both the units and necessary additions/ disallowances have been made in the hands of the respective units. Hence the ground of appeal taken by the assessee is dismissed. 2.4 Regarding ground No.2, the same relates to proportionate addition of ₹ 37,768/- in hands of unit-II which is 100% EOU @ 25% of unverifiable purchases. We have gone through the submissions of the ld. AR as well as the order of the lower authorities. Given that the said disallowance relates to unverifiable purchases and the fact that the said disallowance is i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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