TMI Blog2016 (5) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... directed to be deducted from the total amount of claim of ₹ 5,82,65,233/-. Thus, allowable claim u/s. 10A of the Act was of ₹ 5,30,76,095/-. Therefore, the claim u/s.10A of the assessee-company was rightly allowed to the extent of ₹ 5,30,76,095/- and rest was rightly disallowed by the CIT(A). No interference is called for and we uphold the order of the CIT(A) in this regard.- Decided against revenue. Disallowance of interest expenses - Held that:- We find that that assessee has paid the interest on the borrowed fund and has also advanced loan but did not charge any interest on that because it was the business/commercial necessity to take and give the loan simultaneously for business purpose. As the assessee was having fund more than the amount of advance given without interest, it did not cause any adverse effect on the business prudence. Therefore, the disallowance made by the Assessing Officer was rightly deleted by the CIT(A) and these reasoned findings of the CIT(A) do not require any interference from our side.- Decided against revenue. Disallowance of Miscellaneous Expenses - Held that:- Assessing Officer, without put forth any cogent reasons, has made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d fringe benefit tax on these expenses. These reasoned and factual findings of the CIT(A) need no interference from our side - Decided against revenue. - ITA No. 3342/Ahd/2010 - - - Dated:- 22-3-2016 - SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER For The Revenue : Smt. Sonia Kumar, Sr-DR For The Assessee : Shri Vijay H. Patel, AR ORDER PER SHAILENDRA K. YADAV, JUDICIAL MEMBER: This appeal has been filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-XIV, Ahmedabad dated 30.09.2010 for Assessment Year 2007-08, on the following grounds:- 1) The Ld. Commissioner of lncome-tax(A)-XIV, Ahmedabad has erred in law and on facts in allowing the claim of the assessee u/s.10A of the Act amounting to ₹ 5,30,76,095/-. 2) The Ld. Commissioner of Income-tax (A)-XIV, Ahmedabad has erred in law and on facts in allowing the claim of interest expenses of ₹ 15,21,790/-. 3) The Ld. Commissioner of Income-tax (A)-XIV, Ahmedabad has erred in law and on facts in allowing the disallowance of ₹ 1,00,000/- made out of miscellaneous expenses. 4) The Ld. Commissioner of Income-tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section. 2. The assessee has not furnished any certificate regarding undertaking established in special economic zone from competent authority. 3. The assessee has not stated about the use of old machineries and whether the company was formed by splitting/ reconstruction of business despite of given it many opportunities of being heard. 4. Sale proceeds of articles or things or computer software exported out of India should be received in or brought into India by the assessee in convertible foreign exchange within a period of six months from the end of previous year or within such further period as the competent authority may allow in this behalf. The assessee vide various order sheet entries as narrated above was requested to furnish BRCs in this regard. The assessee furnished a chart which shows that there were sales in various categories as under: (a) Sales against EPCG , ₹ 26.65 crores (b) Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have made sales of ₹ 2299030. But out of these sales, a sum of ₹ 1499013 (199013+1300000) could not be realized till date. As per section 10A, the, assessee can avail the benefit of exemption u/s. 10A if sale proceeds are realized within the stipulated period. In this case, sales were not realized to the tune of ₹ 1499013/-. However, the assessee had claimed exemption on such sales for which the assessee was not eligible. Therefore, the claim of the assesses is not acceptable. 6. Further, on perusal of chart of sales to EOU , it was found that the assessee had claimed to have made sales of ₹ 5847405. But out of these sales, a sum of ₹ 4547200 could not be realized till date. As stated in earlier para, the assessee cannot claim exemption on sales which could not be realized. 7. As per section 10A, export turnover does not include freight, telecommunication charges, insurance attributable to the delivery of articles or things outside India. Invoice No. 6 dated 9-9-2006 reveals that the assessee had incurred USD 350 on freight amount and USD 250 on insurance. Thus, the sum of ₹ 26883 (600 x 44.805) was incurred by the assessee. During the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Authorities for the claim of exemption u/s. 10A of the Act. The Assessing Officer has mentioned in the assessment order that the copy of only 4 BRCs were furnished by the assessee on 24.12.2009. The chart of the sale of the exports has also mentioned in the assessment order, which reads as under (a) Sales against EPCG ₹ 26.65 crores (b) Sales within zone ₹ 22.99 lacs (c) Sales to ECU ₹ 22.99 lacs (d) Sales (100% export) ₹ 3.74 crores 3.1 The Assessing Officer has further mentioned that in respect of sale of ₹ 26.65 crores, only 119 invoices were raised which were realized within the stipulated time. As per CIT(A), the Assessing Officer has mistaken the facts that the number of BRCs should be the same as the invoices raised but the fact is otherwise. It is not necessary that whatever the number of invoices has been raised, the BRCs should be in the same number. More invoices can be raised to a single party and BRCs can be o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted the same. Subsequently, the same were sent to the Assessing Officer for his comments under Rule 46A. The concerned Assessing Officer furnished the remand report vide letter dated 07.05.2010. A copy of the remand report was provided to the Authorized Representative of the assessee. The Authorized Representative furnished the comments on remand report vide letter dated 28.05.2010 and he had also furnished calculation of exempted amount and other amount as well. An amount of ₹ 1,75,93,582/- was not received within the period of 6 months as stipulated in the Section. Further ₹ 91,75,435/- on account of sales within zone, sales to EOU and sales 100% export were not received in time. Thus, the total amount of ₹ 2,67,68,997/- was not received by the company within the statutory time limit as prescribed under the Act. Therefore, the deduction claimed by the assessee u/s. 10A of the Act was directed to be revised proportionately. Before the CIT(A), the Authorized Representative of the assessee furnished the working vide letter dated 03.06.2010. As per the said working, on an amount of ₹ 30,05,70,495/-, if the claim amount was ₹ 5,82,65,233/-, then on &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find that that assessee has paid the interest on the borrowed fund and has also advanced loan but did not charge any interest on that because it was the business/commercial necessity to take and give the loan simultaneously for business purpose. As the assessee was having fund more than the amount of advance given without interest, it did not cause any adverse effect on the business prudence. Therefore, the disallowance made by the Assessing Officer was rightly deleted by the CIT(A) and these reasoned findings of the CIT(A) do not require any interference from our side. We uphold the same. 5. Next issue is with regard to the disallowance of Miscellaneous Expenses of ₹ 1 lakh. The Assessing Officer has disallowed ₹ 1 lakh out of total expenses of ₹ 9,44,247/- on the ground of possibility of nonbusiness expenses. 5.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised by the assessee and having considered the same, the CIT(A) deleted the disallowance in question amounting to ₹ 1 lakh. Revenue has opposed the order of the CIT(A), inter alia, submitting that the CIT(A) erred in allowing the disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent years when purchases were booked long back, the said liabilities needs to be disallowed. The Assessing Officer did not find the explanation of the assessee tenable and disallowed the said amount u/s. 41(1) of the Act. 7.1 Matter was carried before the First Appellate Authority and having considered the submissions of the assessee, the CIT(A) granted relief to the assessee. The order of the CIT(A) has been opposed by the Revenue, inter alia, submitting that the CIT(A) has erred in deleting the disallowance made u/s 41(1) of the Act, amounting to ₹ 13,34,951/-. On the other hand, ld. Authorized Representative supported the order of the CIT(A) and submitted that all the liabilities are still in existence and neither the assessee nor the creditors have written off the said liabilities from their respective books of accounts. He further contended that there are two conditions stipulated u/s. 41(1) of the Act which needs to be satisfied before disallowance u/s. 41(1) and therefore in the present case the provisions of the said section are not attracted. Moreover, before the CIT(A), the Authorized Representative for the assessee has produced confirmation of some of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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