TMI Blog2015 (4) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... short term loan against export bills which is clear from the schedule of the balance sheet and other is term loan. Even in the schedule 4, the assessee has shown secured loan in foreign currency which is term loan and further the working capital loan under the category of pecking credit, post shipment foreign currency account. As far as the working capital loan is concerned the exchange gain on such loan should be allowed as business income and so far as the exchange gain on secured term loan which is not for working capital the same cannot be treated as business income for the purpose of section 10A. Accordingly we direct the AO to verify the exact details of the foreign exchange gain in respect of two kinds of loan and then allow the claim of the assessee with respect to the working capital loan TP Adjustment - addition being interest calculated @ 18% on credit period to AE beyond 180 days on certain export invoices - whether Under transfer pricing regulation, export outstanding is not a transaction with AE and hence no addition is to be made? - HELD THAT:- To some extent there is a force in the contention of Ld. AR that if the assessee has to make payment of imports to same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing Income as Income from other sources and holding that these income are not entitled to be treated as Income from business for computing deduction u/s. 10A. 1. Bank Interest ₹ 1,21,299 2. Job Work Charges ₹ 73,762 3. Exchange difference ₹ 37,95,975 on loans Alternatively (i) Reasonable expenses related to job work charges be allowed on estimate basis and the amount so allowed. be reduced from total expenses and deduction u/s. 10A be revised accordingly. (ii) Exchange difference on loans be netted against related interest and other expenses. 2. The learned Assessing Officer has erred in making addition of ₹ 8,36,437/- being interest calculated @ 18% on credit period to AE beyond 180 days on certain export invoices. Without prejudice : Under transfer pricing regulation, export outstanding is not a transaction with AE and hence no addition is to be made. Alternatively: The assessee has enjoyed credit of more than 180 days from AE on purchases and thus, credit be given by cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2.2.1 Respectfully following the same we restore the issue regarding disallowance on account of job work to the file of AO with similar directions. We direct accordingly. 2.3 Regarding disallowance on account of exchange difference the directions of the Tribunal are as under: 12. Having considered the rival submissions and relevant material on record, we find that the assessee is having two kinds of loan one is short term loan against export bills which is clear from the schedule of the balance sheet and other is term loan. Even in the schedule 4, the assessee has shown secured loan in foreign currency which is term loan and further the working capital loan under the category of pecking credit, post shipment foreign currency account. As far as the working capital loan is concerned the exchange gain on such loan should be allowed as business income and so far as the exchange gain on secured term loan which is not for working capital the same cannot be treated as business income for the purpose of section 10A. Accordingly we direct the AO to verify the exact details of the foreign exchange gain in respect of two kinds of loan and then allow the claim of the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.12.2007 110 7,66,731 78 29,493 7.12.2007 112 10,55,499 72 37,477 11.12.2007 113 3,85,166 68 12,916 17.12.2007 115 8,89,530 7 3,071 20.12.2007 116 2,27,392 59 6,616 24.03.2008 120 4,75,115 7 1,640 27.03.2008 121 5,69,125 4 1,123 Total Interest 8,36,437 Accordingly, adjustment was made. 3.1 Before us it was pleaded by Ld. AR that assessee is neither charging interest from its AE and also not paying any interest to its AE. It was submitted that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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