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2021 (1) TMI 232 - AT - Income TaxDeduction u/s 10AA - business activity of manufacture and export - DR submitted that the addition have been made u/s 69C which is a deeming provision and the same cannot be considered for benefit u/s 10AA which is restricted to the profit and gains derived from export - HELD THAT - As decided in own case 2019 (11) TMI 650 - ITAT JAIPUR wherein similar contentions were advanced by the ld DR and considering the same, the AO was directed to recompute the deduction u/s 10AA taking into consideration the additions so made by him. Considering the fact that there are no changes in the facts and circumstances of the present case, following the decision taken by the Coordinate Bench in assessee s own case for A.Ys 2009-10 2014-15, the Assessing Officer is hereby directed to recompute the deduction u/s 10AA taking into consideration the addition of ₹ 2,03,739/- made by him
Issues Involved:
1. Validity of the order passed under Section 147 of the Income Tax Act, 1961. 2. Rejection of books of accounts under Section 145(3) of the Income Tax Act, 1961. 3. Treatment of purchases from M/s Arihant Exports as bogus and related disallowances under Section 69C of the Income Tax Act, 1961. 4. Addition on account of alleged commission paid for obtaining accommodation entry. 5. Recalculation of deduction under Section 10AA after considering trading addition. Detailed Analysis: 1. Validity of the order passed under Section 147 of the Income Tax Act, 1961: The assessee contested the validity of the reassessment proceedings initiated under Section 147. The original return was filed on 20.09.2013, and the assessment was completed under Section 143(3) on 27.01.2016. The reassessment was initiated based on information from the Investigation Wing, Mumbai, regarding bogus purchases. The Tribunal did not find merit in the assessee's contention, and the reassessment proceedings were upheld. 2. Rejection of books of accounts under Section 145(3) of the Income Tax Act, 1961: The Assessing Officer (AO) rejected the books of accounts under Section 145(3) due to discrepancies and the finding of bogus purchases. The Tribunal upheld this rejection, agreeing with the AO's assessment that the books did not reflect the true state of affairs. 3. Treatment of purchases from M/s Arihant Exports as bogus and related disallowances under Section 69C of the Income Tax Act, 1961: The AO treated purchases amounting to ?7,54,587 from M/s Arihant Exports as bogus and added 25% of these purchases (?1,88,647) as unexplained expenditure under Section 69C. The Tribunal upheld this addition, noting that the assessee failed to provide sufficient evidence to substantiate the genuineness of these purchases. 4. Addition on account of alleged commission paid for obtaining accommodation entry: The AO further added ?15,092, being 2% of the alleged bogus purchases, as commission for obtaining accommodation entries. This addition was also upheld by the Tribunal, as it was consistent with the findings regarding the bogus nature of the purchases. 5. Recalculation of deduction under Section 10AA after considering trading addition: The assessee argued that the deduction under Section 10AA should be recalculated after considering the trading addition. The Tribunal referred to the CBDT Circular No. 37/2016 and previous decisions in the assessee's own case, which stated that disallowances related to business activity should enhance the profits eligible for deduction under Section 10AA. The Tribunal directed the AO to recompute the deduction under Section 10AA, considering the addition of ?2,03,739, following the consistent position taken in earlier cases. Conclusion: The Tribunal upheld the reassessment proceedings, the rejection of books of accounts, and the additions related to bogus purchases and commission. However, it directed the AO to recompute the deduction under Section 10AA, considering the trading addition, in line with the CBDT Circular and previous case law. The remaining grounds of appeal were dismissed as infructuous. The appeal was disposed of with these directions.
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