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TMI Blog2017 (9) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer is an increase in the business profits of the assessee. The contention of the Revenue that in computing the deduction under section 10A the addition made on account of the disallowance of the provident fund/ESIC payments ought to be ignored cannot be accepted. No statutory provision to that effect having been made, the plain consequence of the disallowance made by the Assessing Officer must follow. The second question shall accordingly stand answered against the Revenue and in favour of the assessee. We do not think that an identical argument, and more or less relying on the same provisions, made before us by Mr. Pinto can be accepted. It cannot be accepted because the Tribunal's reliance on Gem Plus (2010 (6) TMI 65 - BOMBAY HI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 10A of the IT Act. The Assessing Officer had, in terms of the scrutiny assessment, issued notices and when the international transactions with the associate concern were shown, a reference was made under Section 92CA(1) of the IT Act to the Transfer Pricing Officer for determination of the Arm's Length Price of such international transactions with the associate concern. The Transfer Pricing Officer made a draft order suggesting an adjustment of ₹ 16,83,86,191/in the Arm's Length Price. However, against this draft order, an objection was filed before the Dispute Resolution Panel under Section 144C(2) of the IT Act. These objections were disposed of on 4th September, 2012 and the assessment order impugned before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof. We are concerned in this case with the rejection of the claim of deduction under Section 10A on the disallowance made under Section 10(10CC). The sum disallowed as deduction was ₹ 2.98 crores. The expenditure incurred in foreign exchange amounting to ₹ 30.38 crores while determining the export turnover for the purpose of Section 10A was also disallowed. 7. The assessee raised before the Tribunal the grounds and as far as the matter at hand is concerned, it was urged that in making the disallowance in respect of foreign exchange losses, the Assessing Officer has not considered the judgment of the Hon'ble Supreme Court in the Case of Commissioner of Income Tax vs. Woodward Governor India (P) Ltd., reported in 312 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, namely, profit to be increased by the amount of disallowance made under Section 40(a)(v) since the assessee has no income other than the income eligible for deduction under Section 10A of the IT Act. 10. Mr. Pikale is right in relying on the Division Bench judgment in Gem Plus (supra) as it had considered an identical question. The question no. (b) in Gem Plus (supra) was as under : (b) Whether on the facts and in the circumstances of the case, the Tribunal was justified in directing the Assessing Officer to grant the exemption under section 10A of the Act on the assessed income, which was enhanced due to disallowance of the employer's as well as employees' contribution towards Provident Fund/Employees' St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting the Assessing Officer to grant the exemption under section 10A. On this position, in the present case it cannot be disputed that the net consequence of the disallowance of the employer's and the employees' contribution is that the business profits have to that extent been enhanced. There was, as we have already noted, an add back by the Assessing Officer to the income. All profits of the unit of the assessee have been derived from manufacturing activity. The salaries paid by the assessee, it has not been disputed, relate to the manufacturing activity. The disallowance on the provident fund/ESIC payments has been made because of the statutory provisions section 43B in the case of the employer's contribution and section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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