AI Drafter 
TaxTMI 
TaxTMI 
2016 (4) TMI 824
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....isposal of the same in the interest of substantial justice to the applicant. The Ld. CIT(A) confirmed the order of the A.O. He had further held that - I) The Section does not recognize the Foreign Exchange received by a third party allegedly on behalf of the Assessee. II) Conditions laid down u/s 10B are not fulfilled as the sale proceeds are not brought into India by the Assessee in convertible Foreign Exchange. On the above facts, following grounds of Appeal are raised: a) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the Assessee Firm is not entitled to Exemption u/s 10B on a sum of Rs.l,52,51,935/-. b) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not giving a finding that the definition of Export Turn Over u/s 10B of the Act also includes Deemed Export." c) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not holding that the export of goods through Partner Sh. Lokesh Arora, are Deemed Export of the Assessee Firm and therefore, entitled to deduction u/s 10B. d) The Appellant prays for addition, deletion, amendment or modification of any grounds of A....
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....s of the firm is Rs. 25,60,57.574/- against which the value of third party export is Rs. 403,66,362/- lacs only. The stated amount for disallowance of Rs. 9,64,64,001/- lacs is on the entire amount, which is accordance to the parameters of EOU scheme and bona-fide belief of deduction against deemed export against Rs. 403 lacs. 7. Further, it is to be kindly noted that the overall Gross Profit and Net Profit of the firm is 59.92% and 37.42% respectively. However, the same is not at par on all transactions Deemed Export through third party is having lower gross profit and resultant lower net profit on account of: Sates rate (Margin retained by Stone World) (ARE -1 of ESG issued by Excise Department, which allows Deemed Export under the scheme of EOU and Shipping bill of Stone world having the name of Earth stone group is annexed herewith, Both the documents are having sales rates, which clearly shows that the sales rate of Stone world are higher than what it had paid to Earth Stone Group against purchases for Deemed Export. Cost of raw materials: Due to cutting, tumbling and pasting. It is having higher raw material consumption than the other material. Further, M....
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....he assessee. He also observed that the assessee's attempted bifurcation of its profits into profits arising out of export business and profit earned out of local sales was also not acceptable. The AO observed that the provisions of Section 10B of the Act provides the procedure to compute the profit from export activity and the assessee though had tried to recast the profit on the basis of the nature of the turnover but it was only on estimate basis as the assessee had not maintained separate books of accounts in respect of its export business and local business. The AO held that the deduction u/s 10B of the Act was claimed excessive by the AO. He worked out the allowable deduction at Rs. 8,12,12,066/- instead of Rs. 9,64,64,001/- in the following manner: "Export Turnover Rs.21,55,72,197/- Local Sales Rs.4,04,85,277/- Total Turnover Rs.25,60,57,474/- Total Profit as per Computation Rs.9,64,64,001/- Allowable deduction u/s 10B of the Act: 96464001 x 21,55,72,197 25,60,57,474 Or Rs. 8,12,12,066/-" Accordingly, excess deduction of Rs. 1,52,51,935/- claimed by the assessee was disallowed and the income of the assessee was assessed at Rs. 1,52,51,940/-....
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....erent amount than the total turnover. The ld. CIT(A) held that the AO has correctly applied the provisions of Section 10B of the Act to compute the deduction equal to the profits derived from the export of articles or things, in the same proportion as the export turnover bears to the total turnover. Accordingly, disallowance of the alleged excess deduction claimed at Rs. 1,52,51,935/- was upheld. 9. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee exported the goods through M/s Stone World, proprietorship firm of one of the partners Sh. Lokesh Arora. It was submitted that in the application for removal of acceptable goods for export in Form A.R.E.1., the name of the assessee was appearing. A reference was made to page no. 116 of the assessee's paper book, which is the copy of said form dated 18.11.2007. He also referred to the copy of invoice placed at page no. 115 wherein consignee has been mentioned as overseas buyers in USA and name of the exporter is "Earth Stone Group" i.e. the assessee through M/s Stone World. Accordingly, it was submitted that the goods were....
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.... name of exporter is mentioned as "Earth Stone Group" i.e. the assessee vide shipping bill No. 1723123, those goods were sent to the consignee M/s Fitex Trade Networks Road, USA through the sister concern M/s Stone World which is evident from page no. 117 and 118 of the assessee's paper book. The detail has been given in Form A.R.E.1, which is a application for removal of excisable goods for export (copy of which is placed at page no.116 of the assessee's paper book). In the said form, a declaration has been given by the assessee that the goods were removed for the purpose of export to USA through M/s Stone World, New Delhi, shipping bill number is mentioned as 01723123. The invoice raised is placed at page no. 115 wherein consignee is overseas buyers and the name of the local buyer is M/s Stone World i.e. the sister concern of the assessee while the exporter has been mentioned as M/s Earth Stone Group i.e. the assessee, which clearly shows that the goods were directly sent by the assessee to the overseas buyers through M/s Stone World. Now question arises as to whether the assessee is eligible to claim the deduction u/s 10B of the Act on the said export sales made through third pa....