2014 (7) TMI 751

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... directed against the order dated 23.11.2011 of CIT(A) for the assessment year 2008-09. The only dispute raised by the assessee in this appeal is regarding addition made by AO u/s 10B (7) read with section 80IA (10). 2. The facts in brief are that the assessee who was in the business of export, had reimbursed a sum of Rs. 1987718/-to Pyramid Consulting Engineering Pvt. Ltd. (PCEPL) which is group .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... s to why the payment should not be estimated under the provisions of section 10B(7) read with section 80IA (10). The AO observed that the assessee did not submit any explanation. The AO, therefore, concluded that by taking the services of employees of the sister concern, the assessee had shown more than ordinary profits. He noted that the employees cost in case of the assessee including the hired .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... arned AR for the assessee submitted that the method adopted by AO for application of section 80I (10) was not correct. He has computed the revenue corresponding to the employee hired and had treated the same as profit earned by the assessee which was incorrect. There was no material produced to show that the payment made by the assessee for hiring of the employee of sister concern was less than th .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... profits the AO for the purpose of allowing deduction u/s 10B) may take the amount of profit as may be reasonably deemed to have been earned by the assessee. In this case the assessee which is engaged in the business of export had hired some employees from the sister concern which had been reimbursed at cost. The AO, therefore, has concluded that the assessee has produced more than ordinary profit .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ket price. In the absence of any such material it cannot be said that assessee had produced more than the ordinary profit because of close connection with the sister concern or that it had declared more profit in order to claim more exemption. In our view the approach adopted by lower authorities to add proportionate revenue is incorrect. We, therefore set aside the order of CIT(A) and delete the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X