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TMI Blog2019 (7) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of payment to SRG Consultancy Pte Ltd. has been allowed by CIT(A) in the instant assessment year and the Revenue is not in appeal. - We find merit in the alternate plea raised by assessee and allowability or its disallowance becomes academic. The deduction under section 10B of the Act merits to be allowed on the enhanced profits of business. - grounds of appeal is allowed Reduction of claim u/s 10B of interest received from MIDC MSEB - deposits are made for the purpose of carrying on business - HELD THAT:- We find merit in the plea of assessee that interest received from MIDC and MSEB is to be assessed as business income in the hands of assessee, on which deduction u/s 10B is to be allowed. Deduction u/s 10B - deduction reduced invoking of provisions of section 10B(7) r.w.s. 80IA(7) - no transfer of any raw material from Mahad EOU unit and Pirangut EOU unit to Pirangut DTA unit and hence, provisions of section 10B(7) r.w.s. 80IA(8) were not attracted - separate stock records were maintained - finished products were transferred at cost plus 10% as per Excise rules - non of goods transferred at less than market value - HELD THAT:- First step which needs to be met is the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on account of payments made of legal professional charges of ₹ 4,26,181/- to M/S SRG Consultants, LSR Associates, Bhate Ponkshe by holding the same, as expenditure incurred to bring in existence new assets / new units is capital expenditure the same is not in accordance with the provisions of the Act the facts prevailing in the case. The additions so made be deleted. Just in proper relief may be granted to the appellant. 3. On facts and circumstances prevailing in the case and as per provisions scheme of the Act it be held that disallowance made of ₹ 2,13,529/- resulting in reduction of claim u/s 10B of interest received from MIDC MSEB, is not in accordance with the provisions of the Act. The interest so received be treated as income eligible qualifying for deduction u/s 10D. Just in proper relief may be granted to the appellant. 4. On facts and circumstances prevailing in the case and as per provisions scheme of the Act it be held that any addition made to the computation to the total income needs to be allocated over Mahad EOU Pirangut EOU units, which are eligible for exemption / deduction u/s 10B of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Gujarat High Court in CIT Vs. Torrent Pharmaceuticals Ltd. (2013) 87 DTR (Guj) 54 that foreign registration charges are to be allowed as revenue expenditure. 7. The Revenue placed reliance on the orders of authorities below. 8. We find that similar issue arose before the Tribunal in assessee s own case in assessment year 2009-10 and vide para 10 the grounds of appeal raised by Revenue in respect of legal and professional charges paid to SRG Consultancy Pte Ltd. were adjudicated. The said issue of payment to SRG Consultancy Pte Ltd. has been allowed by CIT(A) in the instant assessment year and the Revenue is not in appeal. 9. Now, coming to second disallowance of payment to LSR Associates and Bhate Ponkashe. Before going into merits of the issue, the learned Authorized Representative for the assessee pointed out that the issue becomes academic as the assessee is entitled to claim deduction under section 10B of the Act on enhanced profits i.e. after any disallowances. In this regard, he placed reliance on the decision of Mumbai Bench of Tribunal in Krupa Trading Company Vs. Addl.CIT (2017) 77 taxmann.com 177 (Mumbai-Trib.). We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of deduction under section 10B of the Act on interest received from MIDC and MSEB and the same ground has already been decided in assessment year 2010-11 and accordingly, we direct the Assessing Officer to allow 10B deduction after including the interest on MIDC and MSEB as profits of business. 15. The last issue raised by way of ground of appeal No.4 is against invoking of provisions of section 10B(7) r.w.s. 80IA(7) of the Act, under which the deduction claimed under section 10B of the Act has been reduced by ₹ 1,68,16,143/-. 16. Brief facts relating to the issue are that the assessee was engaged in manufacture and processing of chemicals and had two Export Oriented Units i.e. EOU Unit at Mahad, Dist. Pune and EOU unit at Pirangut, Pune. The unit at Pirangut was claiming exemption under section 10B of the Act from assessment year 2005-06 and EOU at Mahad was claiming deduction from assessment year 2007-08. The learned Authorized Representative for the assessee has filed a Note Sheet and has also pointed out that both the units were independent units and separate set of books were maintained. It is also pointed out that expenditure dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id and Maleic Anhydride and hence, margins of profits were lower. It was also pointed out that there is no transfer of any raw material from Mahad EOU unit and Pirangut EOU unit to Pirangut DTA unit and hence, provisions of section 10B(7) r.w.s. 80IA(8) of the Act were not attracted. Further, separate stock records were maintained at each division separately and finished products which were transferred from Mahad EOU unit to Pirangut DTA unit were at cost plus 10% as per Excise rules. It was stressed that none of the goods or services contemplated under section 80IA(7) r.w.s. 10B(7) of the Act were transferred at less than market value, hence provisions of said section were not attracted. The Assessing Officer did not accept explanation of assessee and also observed that assessee was not maintaining separate set of books of account for three units. Therefore, accuracy of claim of expenditure was doubted. The Assessing Officer compared employees cost of each of the units and observed that where percentage of sales of Pirangut DTA unit was 6.4%, employees cost was 16.2%. He thus, observed that aspect of cost appropriation was not justifiable. Second point which was noted by Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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