2013 (5) TMI 447

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....sment proceedings, the AO noticed that the assessee has made interest free advances to its sister concern of Rs.5 lakhs to M/s Kabisco Agro Food India Pvt. Ltd. and Rs.70,00,000/- to Shri Narayan Das J.. Pagrani. The AO observed that the assessee has borrowed funds and out of borrowed funds the assessee has made advances of Rs.75,00,000/-. Accordingly, he disallowed a sum of Rs.6 lakhs at the rate of 8%. 3.2 In appeal, learned CIT(A) restricted the disallowance to Rs.47,869/- by observing that the AO has not worked out the disallowance properly as proportionate disallowance has to be made. Accordingly, he restricted the addition to Rs.47,869/-. 3.3 After considering the submissions and perusing the material on record, we found that th....

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....uded in the profits of business of the assessee as computed under the head 'Profits and Gains of Business or Profession', is to be deducted under clause (1) of Explanation (baa) to section 80HHC for determining the profits of the business. The ratio of the Hon'ble Supreme Court is squarely applicable on the facts of the present case. Therefore, we direct the AO that interest income has to be set off against interest expenditure. If the interest expenditure is less or the interest income is more then the difference of excess interest received by the assessee is to be reduced while calculating the deduction under Section 10B of the Act. We order accordingly. 5. Regarding sale proceeds of Bardana of Rs.13,52,862/-, it is seen that in view o....

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....ion under Section 10B of the Act by the AO at 90% of the profit derived from export of EOU. 6.1 In view of the amendment to Section 10A & 10B, the AO disallowed the deduction claimed under Section 10A & 10B of the Act. In fact the AO disallowed the entire deduction under Section 10B(4) by observing that the assessee had not filed audit report under Form No.56G. However, this report was filed before the CIT(A) and copy of the same was sent to the AO for his objection. As per the order of the CIT(A), the AO vide his remand report dated 17-8-2011, has initially objected to the admission of additional evidence, however, on the basis of merit, the AO has not filed any objection. The AO also raised a fresh ground denying the deduction under Se....