TMI Blog2021 (8) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... nor the turnover of the said company is comparable with the assessee as noted above, the profit of the assessee can only be incurred by invoking the provision to subsection 9 of 10AA r.w.s. 80(IA) only. Therefore, we do not find any infirmity in the order passed by Ld. CIT(A) which we affirm. In the result, ground No.1 of the Revenue s appeal is dismissed. Disallowance of interest of partner capital - AO held that non capital charge of interest and non-payment of remuneration for working partner has been done to enhance the profit of assessee-firm which is exempt from taxation and to reduce the taxable income of individual partner to that extent and worked out the interest of capital contribution of the partner @ 12% and thereby disallowed 1.79 crores and excluded from the deduction under section 10AA - HELD THAT:- In the present case, there is no such loss in the partnership deed for payments pertaining to interest and remuneration to the partners - The assessee has not charged any charge of remuneration to the partners and accordingly, assessee cannot be compared to charge / interest or remuneration to the partner. In view of the above discussion, we do find any infirmity in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2009-10 and accordingly claiming deduction under section 10AA of the Act for assessment year 2009-10 onwards. The assessee filed its return of income for assessment year 2013-14 on 28.09.2013, declaring nil income. The case was selected for scrutiny. During the assessment, the Assessing Officer noted that assessee has shown gross profit (GP) @ 84.01% and net profit (NP) at 76.16%.The assessee has claimed deduction under section 10AA of the Act. The Assessing Officer doubted high margin profitability of the assessee. The Assessing Officer asked the assessee to furnish details of comparable instances of companies engaged in manufacturing of similar product. The assessee field its reply, in reply the assessee contended that there is no comparable company which is manufacturing the hard incandescent mantles. The assessee-company developed the capacity to manufacturing hard mantles only because of acquisition of running plant from Malta. There is very few manufacturer of hard mantles across the globe. Hard mantles and soft incandescent mantles are widely used around the world for street lighting and camping purposes. The assessee is export in mantles to Europe and Germany. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly taken the income of assessee at ₹ 14.49 crores as income from other sources . The ld. CIT-DR prayed for reversing the order of Ld. CIT(A) and to restore the order of Assessing Officer. 5. On the other hand, the ld. Senior counsel of the assessee submits that the assessee is engaged manufacturing hard and soft mantle, which are widely used in Europe and Germany for street lighting. The assessee is having 100% export oriented unit in SEZ in Surat and product of the assessee is exported to Europe and Germany. The assessee supplied its product to Germany Government or self-government organization. The assessee-firm acquired sole running manufacturing unit of prime quality of hard mantle situated in Malta. The hard mantle manufactured at this plant was approved for the use on street lighting in Europe. The assessee got extremely attractive opportunity in view of the fact that there was no manufacturing of hard mantle in India and there are very few manufacturer around the world. Thus, the assessee-firm has monopoly in the business. On acquisition of manufacturing unit in Malta, the customer of the erstwhile manufacturing given approval of the product of the assessee. This f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer worked out the profit of the assessee @ 8% of the turnover without invoking provision of sub-section 9 of 10AA r.w.s. sub-section 80IA(10). The Assessing Officer thereby disallowed ₹ 14.90 crores and treated the same income for other sources . Before us the ld. Sr. counsel of the assessee vehemently argued that from assessment year 2009-10 onwards till assessment year 2015-16 the assessee has shown consisted profit except little reduce in assessment year 2014-15. We find merit in the submission of ld. Senior counsel of the assessee that the assessee has shown substantial profit in all years and the revenue has not doubted such profit except in the year under consideration. We further find merit in the submission of ld. Senior counsel of the assessee that similar profit almost consisted for about 80% had been accepted for assessment years 2009-10 to 2012-13 in the order passed under section 143(3) and the assessee has again shown similar profit for in assessment year 2015-16. The comparable instances of FMPPL is not applicable as the assessee is having 100% export oriented unit. The customer of assessee is in Europe or Germany. The FMPPL only manufacture soft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contribution of the partner @ 12% and thereby disallowed 1.79 crores and excluded from the deduction under section 10AA of the Act. Before Ld. CIT(A) the assessee made similar submission as made before us. The Ld. CIT(A) held that Assessing Officer mainly relied upon the decision of Tribunal in the case of ACIT vs. Meridian Impex (37 taxmann.com 22 (2013) ITAT, Rajkot Bench), wherein the supplementary deed was made for amounting the loss for non-payment of interest on capital and remuneration to the partner. However, in the present case, there is no such loss in the partnership deed for payments pertaining to interest and remuneration to the partners. The Ld. CIT(A) also referred and relied upon the decision of Hon'ble jurisdictional high court Alidhara Taxspin Engineers (supra), it was held by Hon'ble jurisdictional high court that mere incorporation of interest on partner capital account remuneration does not signify that they are mandatory in nature. We find that the case of assessee is on better footing as there is no such clause in the partnership deed itself. The assessee has not charged any charge of remuneration to the partners and accordingly, assessee cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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