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DCIT-5 (1) (2) , Mumbai Versus M/s Dinurje Jewellery Pvt. Ltd.

2016 (9) TMI 446 - ITAT MUMBAI

Addition made on account of interest for delayed realisation of revceivables from AE - TPA- Held that:- We modify the order of CIT(A) in deleting entire upward adjustment made on account of interest receivable on delayed realisation of export proceeds from A.E., and restrict the disallowance to ₹ 49,66,277/- as there was delay of 76 days more than the delay in case of credit extended by the assessee to Non-AE. Interest rate has been confirmed for earlier year was US LIBOR rate for debts of .....

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,66,277/-. - Computation of book profit u/s.115JB without including income earned from unit in 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 ORD .....

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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 appreciating the fact that the facts in the instant case are distinguishable from the one's in the case of M/s.lndo American Jewellery Ltd." 3. "On the facts and in the circumstances of the case and in law, the Ld. .....

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(A) has erred in holding that in spite of omission of words 10A and 10B in Explanation 1(f) and (ii) of Section 115JB by the Finance Act, 2007 w.e.f. 01/04/2008, assessee will not be liable for tax u/s. 115JB of the Act as it's unit is in the Special Economic Zone and hence covered within the exemption provided in clause (6) of Section 115JB of the Act." 5.. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in holding that the assessee's 10A .....

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t/loss of 10A and 10B units have been expressly brought within the purview of MAT effective from A.Y. 2008-09, 6. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred is not considering the clarification given in para 44 of the Board s Circular 3/2008 regarding amendment in Sec. 115JB by the Finance Act, 2007 which is applicable to the assessee s case in the Assessment Year under consideration, 3. The revenue for the assessment year 2010-2011, has raised the foll .....

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nstant 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 t .....

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nd contended that all the grounds so raised by revenue in both the appeals under consideration are covered by the order of the Tribunal in immediately preceding assessment year. 6. We have gone through the orders of authorities below as well as order of the Tribunal in assessee s own case. The ground raised by the revenue with regard to deletion of addition made on account of interest for delayed realisation of revceivables from AE, the CIT(A) has deleted the addition after observing as under :- .....

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resaid adjustment. Besides this, I find that similar issue was decided by the Jurisdictional ITAT, Mumbai Benches 'K' Mumbai vide ITA No.5875/MUM/2013 and ITA.No.6221/MUM/2013 wherein the Hon'ble ITAT after taking note of the appellant's case wherein the appellant has adopted the uniformity in not charging interest from both the AE and non-AEs has categorically held that the appellant's case is covered by the decision of the Hon'ble Bombay High Court in the case of CIT vs .....

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f the appellant. Thus, the appellant's this ground of appeal is allowed. 7. It is clear from the above order of CIT(A) that the CIT(A) has deleted the addition after following the order of the Tribunal. The Tribunal have followed the decision 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 pr .....

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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 submitted the following calculation to say that +/- 5% range in t .....

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e would not fall within the +/- 5% range. Therefore, we amend para 7.4 and 7.5 as under: 7.4 The above calculation of the assessee have not been disputed by the Revenue at any stage of the proceedings . Therefore, we are of the opinion that addition, if any, should be restricted only to a sum of ₹ 9.70 lacs as calculated above. 7.5 In view of above discussions, we hold that addition of ₹ 9.70 lacs is required to be made and rest of the addition confirmed by Ld. CIT(A) is deleted. The .....

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as well as M.A. order dated 20-2-2015 in assessee s own case as well as order of the Hon ble Bombay High Court, as discussed by the Tribunal in its order dated 8-8-2014, we modify the order of CIT(A) in deleting entire upward adjustment made on account of interest receivable on delayed realisation of export proceeds from A.E., and restrict the disallowance to ₹ 49,66,277/- as there was delay of 76 days more than the delay in case of credit extended by the assessee to Non-AE. Interest rate .....

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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 .....

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he order of the Tribunal dated 8.8.2014 in assessee s favour. 13. We have gone through the orders of the authorities below and found that addition so made by AO has been deleted by CIT(A) after following the order of the Tribunal in assessee s own case. The precise observation of the CIT(A) was as under :- 9. I have considered the AO's order as well as the appellant's submission. Having taken note to the same, I find that this issue of the appellant is covered in favour of the appellant .....

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