AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 551
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....ection of books of accounts has been upheld by Ld. CIT(A) himself and the GP rate was applied by Assessing Officer on the basis of past history. That the appellant reserved its right to add, amend or alter the grounds or appeal on or before the date the appeal is finally heard". 2. Grounds raised in the cross objection filed by the assessee, read as under:- "That on the facts and circumstances of the case, the Ld. CIT(A) has erred in sustaining trading addition by applying GP rate of 11% on declared sales. 1. That the Ld. CIT(A) has erred in sustaining interest receipts as income from other sources. 2. That the Ld. CIT(A) has erred in sustaining addition in respect of bogus purchases. 3. That the appellant craves leave to add, amend, alter and modify/delete any of the grounds of appeal on or before it is finally heard". 3. First issue in the departmental appeal vide ground No. 1 relates to the deduction u/s 10BA of the I.T. Act, 1961 (hereinafter to be referred as the Act). 4. The facts related to this issue in brief are that the assessee filed its return of income on 26/9/2009 declaring NIL income after claiming deduction u/s 10BA of the Act for Rs. 29,13,843/- and tax has....
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....s re-established, reconstructed or revived by the same, assessee according to the provisions of Section 33B of the act. The Assessing Officer further stated that the assessee was not covered within the condition laid down in Section 33B of the Act to re-establish, reconstruct or revive the business and, therefore, it is an undertaking formed by splitting up or reconstruction of a business already in existence and conditions laid down in Section 10BA(2)(b) of the Act has not been fulfilled. As regards to the plea of the assessee that the I.T.A.T. has upheld the assessee's claim on this issue for the assessment year 2006-07. The Assessing Officer stated that the said order had been challenged in the Hon'ble High Court by way of filing appeal u/s 260A of the Act. Accordingly, the Assessing Officer held that the assessee company was not eligible for deduction u/s 10BA of the Act. 6. Being aggrieved, the assessee carried the matter to the Ld. CIT(A) and submitted that the assessee was engaged in the business of manufacturing and production of handmade articles using wood as main raw material and exported the items so manufactured/produced. It was further stated that I.T.A.T. Jodhpur Be....
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....ion of a business already in existence" was under consideration, agreed that the benefit of section 84 of the I.T. Act, 1961, attaches to the undertaking and not to the owner thereof. The successor will be entitled to the benefit for the unexpired period of five years provided the undertaking is taken over as a going concern. Under these facts and circumstances of the case, the mere change of ownership does not amount to splitting up or reconstruction. The authorities below, therefore, were not justified in denying the exemption u/s 10BA of the Act. We, therefore, set aside the order of Ld. CIT(A) and allow the ground raised in appeal by the assessee." So respectfully following the aforesaid referred to order of this bench of the Tribunal in assessee's own case for the assessment year 2006-07 we do not see any infirmity in the impugned order of the Ld. CIT(A) on this issue. 11. The next issue vide ground No. 2 relates to treating DDB and DEPB as part of export business. 12. As regards to this issue, the learned counsel for the assessee at the very outset stated that this issue is squarely covered in favour of the assessee vide order dated 20/6/2013 in I.T.A. No. 37/Ju/2013 in th....
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....the assessee. Thus prior to amendment the profits derived from export of articles was meant the amount which bore to the profits of the business, the same proportion as export turnover in respect of such articles bear to the total turnover of the business carried on by the assessee, whereas, after the amendment, the profits derived from export of articles or thing means the amount which bears to the profits and gains of the business of the undertaking and not from any other business carried on by the assessee. So, by this amendment only the profits of the business of the undertaking only is to be considered for working out the profits and gains as are derived by an undertaking from export out of India of eligible articles or things. The profits and the gains of the business of the undertaking is to be worked out as per the provisions of section 28(i). This does not include the profits of items does not include the profits of items under s.s. (iiia), (iiib), (iiic), (iiid) and (iiie) etc. Duty Draw Back and any profit on transfer of DEPB. Section 28 itself makes it abundantly clear that the profit on account of Duty Draw Back or on transfer of DEPB will not form part of profit and g....
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....niversal India remained unverifiable. He also mentioned certain other defects. The Assessing Officer pointed out that the G.P. rate had declined to 8.73% as compared to 13.80% in the immediately preceding year and 15.91% in the assessment year 2007-08. The explanation of the assessee was that there was world wide economy recession and the business of the assessee depended on the export to western countries where the recession developed and for that reason, the turnover in subsequent year declined sharply by 31.85%. It was further stated that the foreign currency was fluctuating throughout. It was also stated that the raw material and labour cost had arisen beyond the reach and that the minimum labour cost had arisen from Rs. 100/- to Rs. 150/- per day and the cost of raw material wood had arisen from average of Rs. 350/- to Rs. 450/- per cft.. The Assessing Officer however, was not convenienced with the reasoning given by the assessee and pointed out that in the case of M/s Sri Bhikshu Art's case, the G.P. rate declared, was 27.06%. The Assessing Officer estimated the G.P. rate @ 12% and made the addition. 17. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and r....
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....nable to apply G.P. rate of 10% instead of 11% directed to be applied by the Ld. CIT(A). Accordingly, we do not see any merit in this ground of the departmental appeal and the ground raised by the assessee is partly allowed. 21. The next issue agitated by the assessee in the cross objection, relates to the interest receipt, which is considered as "income from other sources". 22. The facts related to this issue in brief are that the assessee had shown interest income of Rs. 4,88,432/-. The Assessing Officer treated the said income as "income from other sources". The explanation of the assessee was that it had utilised its interest bearing funds for giving the loans & advance on which interest is received. It was also stated that if the interest received was to be considered under the head "income from other sources" then appropriate interest paid to various persons, was also be allowed to be set off against such income. However, the Assessing Officer was not convenienced and considered the interest received by the assessee amounting to Rs. 4,88,432/- as "income from other sources". Reliance was placed on the decision of the Hon'ble Madrass High Court in the case Pandian chemicals ....
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....observed that the assessee had shown purchases of wood from one Shri Sharafat Ahmad worth Rs. 3,68,900/- and Rs. 3,74,000/- on 16/12/2008 and 31/12/2008 respectively. He further observed that the assessee could not produce the said person to prove the genuineness of the purchases and the efforts made by the Assessing Officer to enquire from Shri Sharafat Ahmed also remained in vain, accordingly the Assessing Officer treated those purchases as non-genuine and made the addition of Rs. 7,42,900/-. 29. Being aggrieved, the assessee carried the matter to the Ld. CIT(A) and submitted that the payments were made by cheque and the name alongwith address of the seller was provided to the Assessing Officer. Therefore, the addition made was not justified. 30. The Ld. CIT(A) after considering the submissions of the assessee, observed that though the name and addresses with contact numbers were provided to the Assessing Officer but on the given address, such person was not traceable and even many calls made, remained unresponded. He, therefore, sustained the addition made by the Assessing Officer. Now the assessee has filed the cross objection. 31. The learned counsel for the assessee reiter....