9911796707
TMI Blog2025 (5) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in holding that the assessee has allocated export freight charges and foreign travelling charges between taxable unit-1 and exemption unit-2 (10AA deduction) when there is nominal claim of said expenses in unit-2 as compared with taxable unit-1 in a case where both the units are engaged in similar business of export of diamond studded jewellery and the turnover in unit-2 is higher than unit-1. (b) On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting disallowance of 10AA deduction of Rs. 4,02,78,019/- holding that the AO is not justified in treating export freight charges & foreign travelling expenses of unit-1 as those of unit-2 without appreciating that the assessee has during the course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erprises. On further appeal the CIT(A) deleted the disallowance made by the AO and allowed the appeal in favour of the assessee. The revenue is appeal before the Tribunal against the order of the CIT(A). Disallowance of deduction under section 10AA of the Act 3. During the course of assessment proceedings the Assessing Officer (AO) noticed that assessee has debited of Rs. 7,95,57,469/- on account of Export Freight Charges and foreign travelling charges of Rs. 9,98,568/- on its Unit-I. The AO further noticed that assessee also claimed deduction u/s 10AA of Rs. 7,99,21,235/- for AY 2022-23 for its Unit-II. The AO was of the view that the assessee has transferred its that expenditure i.e. Export Freight Charges of Rs. 7,95,57,469/- foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Unit II to Europe. The ld. AR further submitted that the AO has quoted Unit I making lesser profit as a reason for alleging that the expenses are over booked without appreciating the reason submitted by the assessee in this regard. The ld. AR also submitted that the AO did not properly examine the fact that in Unit II the Freight charges and Foreign Travel expenses have been booked under the head Selling & Distribution Expenses and assumed that no cost is incurred towards these expenses. During the course of hearing, the ld. AR took the bench through one sample invoice raised by Unit II, freight bills etc., to substantiate how expenses are incurred and tracked separately unit wise. Accordingly the ld. AR argued that there is no overlapp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountries i.e. US and Europe and by maintaining separate set of books these expenses are directly booked in the respective Units. Though the AO has alleged that expenses are diverted to Unit I, the AO did not consider the submissions of the assessee with regard to why the profits of Unit I is less. We also notice that the AO did not examine the breakup of Unit wise expenses towards Freight and Foreign Travel submitted by the assessee. During the course of hearing written submissions were made from the perusal of which it is noticed that for sample invoices from both Unit I & II the expenses are clearly identified separately and tracked separately (page 33 to 52 of PB). It is also noticed from the perusal of the submissions that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. AR also took us through the Form 16A issued by the assessee to M/s. Hariom Enterprises to submit that the AO failed to consider the documentary evidences submitted during the assessment proceedings. From the perusal of the evidences submitted by the assessee we notice that the AO failed to consider the fact that the assessee has made advance payments to M/s. Hariom Enterprises on which tax has been deducted at source. When the tax deducted on total payments including the advance is considered, we are convinced that there is no short deduction of tax at source by the assessee. For ease of reference the submissions of the assessee with regard to the payment and TDS details pertaining to M/s. Hariom Enterprises is summarised below Nature p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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