TMI Blog2016 (9) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... Special Economic Zone (SEZ), which is exempt u/s.10A - Held that:- We confirm the action of CIT(A) for directing the AO to exclude the profit earned from unit exempt u/s.10A while computing book profit u/s.115JB of the I.T.Act. - ITA No.3912&3913/Mum/2015 - - - Dated:- 14-7-2016 - SHRI R.C.SHARMA, AM AND SHRI AMIT SHUKLA, JM For The Revenue : Shri Mukundraj M. Chate For The Assessee : Shri P.Daniel ORDER PER R.C.SHARMA (A.M) : This is an appeal filed by the revenue against the order of CIT(A), dated 25-2-2015, for the assessment year 2009-2010 2010-2011, in the matter of order passed u/s.143(3) r.w.s.144C of the IT Act. 2. The revenue for the assessment year 2009-2010, has raised the following grounds :- 1. The Ld. CIT(A) has erred in allowing relief to assessee in respect of interest charged on outstanding amount/debt received from Associated Enterprise ignoring the fact that TPO has charged interest only on the amount outstanding against the AE by considering the amount outstanding for greater than 365 days with Associated Enterprise for benchmarking the transaction. 2. The Ld. CIT(A) has erred in allowing relief to assessee without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noring the fact that TPO has charged interest only on the amount outstanding against the AE by considering the amount outstanding for greater than 365 days with Associated Enterprises for bench marking the transaction. 2. The Ld.CIT(A) has erred in allowing relief to assessee without appreciating the fact that the facts in the instant case are distinguishable from the one s in the case of M/s. Indo American Jewellery Ltd. 4. Rival contentions have been heard and record perused. Facts in brief are that assessee company is engaged in manufacturing, trading and export of diamonds, located in SEEPZ as a unit notified as SEZ. During the year under consideration assessee had an export to its AE. The TPO made adjustment with regard to the interest for delay in realisation of outstanding dues against the AE. The AO also held that profit earned by 10A unit of assessee is also liable to be included u/s.115JB of the Act while computing book profit. 5. At the outset, ld. AR placed on record order of the Tribunal in assessee s own case in ITA Nos.5875 6221/M/2013, for the assessment year 2008-09, order dated 8-8-2014. Ld. AR drew our attention to the grounds raised by revenue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Hon ble Bombay High Court in the case of Indo American Jewellery Ltd. wherein it was held that when there is complete uniformity in the act of assessee in not charging interest from both the AE and non AE debtors and delay in realisation of export proceeds in both the cases are same, there is no justification for addition of notional interest on the outstanding amount of export proceeds realised belatedly and deleted the addition. After the Tribunal passed its order dated 8-8-2014 deleting entire addition on account of interest, the revenue has filed M.A., which was disposed off by the Tribunal on 20-2-2015, wherein the Tribunal observed as under :- 2.2 Thus, it is the case of the Revenue that to the extent it relates to ₹ 9. 70 lacs, since no interest was charged by the assessee from its AE even for 20 days, then international transaction of the assessee to that extent would not be at ALP and, therefore, addition to that extent has been incorrectly deleted. Net receivable amounts by the assessee from its AE was a sum of ₹ 28.27 crores on which, if the interest is calculated @ 7% for 20 days, then the same would come to ₹ 9.70 lacs. The Revenue has sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,66,277/-). Thus, an amount of ₹ 49,66,277/- will be the transfer pricing adjustment on account of charging of interest to trade debt in r/o A.E. s. Thus, instead of deleting entire addition as done by CIT(A), we upheld the addition to the extent of ₹ 49,66,277/-. 10. In the result, ground taken by the revenue is allowed in part in the A.Y.2009-2010. 11. Similar ground has been taken by the revenue in the A.Y.2010-11. However, during this year credit allowed to AE is 350 days and credit allowed to Non-AE is 425 days. Hence, credit allowed to AE is less than Non-AE and hence no adjustment is called for. Accordingly, by following the order of Tribunal in assessee s own case, we do not find any infirmity in the order of CIT(A) deleting the adjustment made by the AO on account of interest for delayed realisation of receivables from its AE. 12. Next grievance of the revenue relates to rejecting the assessee s computing book profit u/s.115JB without including income earned from unit in Special Economic Zone (SEZ), which is exempt u/s.10A of the Act. While computing book profit u/s.115JB of the I.T.Act AO included profit of unit exempt u/s. 10A. This issue is also co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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