TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 442
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....stions, stated to be substantial questions of law: [A]"Whether the Appellate Tribunal has substantially erred in law and on facts in allowing claim for deduction u/s 10A of the Income Tax Act?" [B]"Whether the Appellate Tribunal has substantially erred in law and on facts in deleting the disallowance of Interest expenses of Rs. 15,21,790/-" 2. The assessment year is 2007-08 and the corresponding accounting period is the previous year 2006-07. 3. The assessee company which is located in the SEZ, is engaged in the business of manufacturing of laser system for material processing. The assessee filed its return of income for assessment year 2007-08 on 30.10.2007 declaring total income of Rs. 1,47,41,231/-. The assessment came to be fram....
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.... 10A of the Act. While disallowing the aforesaid amount, the Assessing Officer further found that the assessee had failed to submit the working of exemption under section 10A and the expenses incurred on freight and telecommunication which were to be excluded in calculating the export turnover while computing the claim of exemption and also did not submit partial proof regarding sales invoices raised against bank realization certificate. It appears that during the course of assessment proceedings, the assessee had not submitted any evidence in support of its claim for deduction under section 10A of the Act, despite reasonable opportunity having been granted by the Assessing Officer. 6. Before the Commissioner (Appeals), the assessee submit....
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....and report submitted by the Assessing Officer and the comments of the assessee on the remand report, found that an amount of Rs. 1,75,93,582/- was not received within the period of six months as stipulated in the section. Further, Rs. 91,75,435/- on account of sales within zone, sales to EOU and sales of 100% export were not received in time. Thus, a total amount of Rs. 2,67,68,997/- was not received by the company within the statutory time limit as prescribed under the Act and accordingly, was of the view that the deduction claimed by the assessee under section 10 should be revised proportionately. The assessee furnished the working to the Commissioner (Appeals) as per which, on the amount of Rs. 30,05,70,495/-, if the claim amount was Rs.....
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....to several parties as mentioned therein without charging interest from them despite the fact that the assessee company had paid substantial interest to the bank and others totalling to Rs. 68,94,829/-. He, accordingly, called upon the assessee to give an explanation with regard to non-charging of interest on advances made, in response to which the assessee company said that the advances had been made during the course of business and that it had surplus funds in the form of share capital / reserve surplus and therefore, the assessee company did not charge any interest on such advances. The Assessing Officer did not accept the explanation of the assessee and disallowed the interest expenses of Rs. 15,21,719/- being 12% of Rs. 1,26,80,993/- a....
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....isallowance made by the Assessing Officer. The Tribunal, in the impugned order, has concurred with the findings recorded by the Commissioner (Appeals). 14. From the facts as emerging from the record, it is evident that while the assessee has paid interest on the loans taken from banking and other institutions, it had sufficient surplus funds of its own, out of which it had given interest-free loans and advances to the tune of Rs. 1,26,80,993/- to seven parties. The breakup of the funds available with the assessee has been furnished before the Commissioner (Appeals) by the assessee. A perusal thereof clearly reveals that the assessee had obtained secured loans of Rs. 2,20,80,792/-, whereas it had reserve surplus of Rs. 9,63,57,283/-, share ....