TaxTMI 
TaxTMI 
2012 (9) TMI 407
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....ue has formulated the following questions of law for consideration of this court. "Whether on the facts and in the circumstances of the case and in law the Tribunal was justified A) in coming to the conclusion that there was nothing on record to show that the profits arrived at by the assessee in respect of the 10A unit carrying on the business of manufacturing Industrial Sewing Machine Needless was not in the normal course of its business and that the abnormally high profit was due to extraordinary arrangement between the assessee and the German company entered into only with a view to boost the profits of assessee and therefore allowing deduction of Rs.20,54,27,335/? B) in holding that the there was no material available with the A.O. ....
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.... view of the income therefrom being exempt under Section 10A of the Act. This view of the Assessing Officer was strengthened by the fact that the trading division at Mumbai showed a loss of Rs.70.29 lacs. Consequently, the Assessing Officer called upon the respondent-assessee to explain the abnormal profits at Kandla division and also why the provisions of Section 10A(7) read with Section 80IA(10) of the Act should not be invoked. The above provision empowers an Assessing Officer to redetermine the profits which may be reasonably deemed to have arisen from such eligible business in case he is of the view that the undertaking has declared more than ordinary profits. The respondent-assessee responded to the query and pointed out that the reas....
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....it ratio as against 77.91% shown by the assessee. The deduction therefore under Section 10A of the Act was restricted by the Assessing Officer to Rs.13.17 crores and the balance of Rs.6.83 crores was brought to tax under the head 'Income from Other Sources'. Further, the Assessing Officer also held that the trading loss of Rs.70.29 lacs from its trading division at Mumbai should be first set off against manufacturing income at Kandla division before deduction under Section 10A of the Act can be claimed by the Kandla division. 6 Being aggrieved, on both the above counts the respondent-assessee filed an appeal to the Commissioner of Income Tax (Appeals). By an order dated 24.08.2007, the Commissioner of Income Tax (Appeals) held that the gro....
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....ng etc. This resulted in it being focused in reducing the cost of operation, which resulted in higher profits. The Tribunal therefore, held that the profits derived by the respondent-assessee from its export division at Kandla should be taken at Rs.20.53 crores and considered for relief under Section 10A of the Act. So far as, the second issue is concerned namely whether Section 10A deduction by Kandla division should be claimed after setting off the loss of its trading division at Mumbai or prior thereto the Tribunal held that the deduction to the Kandla division would be available on its profits under Section 10A of the Act. The losses suffered by Mumbai division (trading division) should not be set off against the profits of Kandla divis....