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TMI Blog2022 (7) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted facts the Ld. CIT(A) has upheld the order of Ld. AO. Tribunal is of the considered opinion that there can be no assumption of an arrangement as an admitted fact. It is a matter of fact and initial burden is on the Revenue to indicate from some reliable evidence that the course of business has been arranged so as to inflate profits with intent to abuse tax concession u/s. 10A of the Act. Section 80IA(10) of the Act concluding phrase makes it mandatory that the Assessing officer on his part has to do some exercise of ascertaining what amount of profits may have been actually derived from the alleged arrangement. However, here is a case where based on assessee's own Report in Form 3CEB, whatever amount of Rs. 70,38,693/- wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of Section 10A - As observed that Ld. CIT(A) order has observed that the assessee has failed to establish by evidence that the interest income has been earned out of funds which are part of total export proceeds received in convertible foreign exchange. The Bench is of considered opinion that when there is no dispute to the fact that assessee is a hundred percent export oriented unit registered as special economic zone unit then the entire turnover from international transactions must have been in convertible foreign exchange only. The incidental activity of parking surplus funds with any institution earning interest is an integral part of the export business activity and such incidental income cannot be delinked from profit and gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income to the extent of Rs. 2,52,931/- was also made and Ld. CIT(A) had sustained the same. 3. Thus, assessee has raised following grounds of appeal : - The grounds of appeal listed below are without prejudice to each other. 1. The order of the learned Commissioner of Income-tax (Appeals) ['CIT(A)'] is erroneous, bad in law, prejudicial to the Appellant and contrary to the facts and circumstances of the case. 2. The learned AO and the learned CIT(A) have erred, on law and facts, by making adjustments under section 10AA(9) read with section 80IA(10) of the Act to the returned income, without establishing that the business between the Appellant and associated enterprise has been so arranged for earning more tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4; It was submitted that the Ld. Tax Authorities below have fallen in error in making the observation that assessee has arranged its business transaction with its associate concern so that more than ordinary profit could be shown to claim higher deduction u/s. 10AA of the Act. It was submitted that the Tax Authorities have fallen in error in observing that when arms length price determined by the auditor of assessee shows the difference of Rs. 17,38,693/- then nothing is left on the part of AO to establish that transaction have been arranged in such manner that they could produce more than ordinary profits. It was submitted that the Ld. Tax Authorities failed to appreciate the fact that mere extraordinary profits cannot lead to the conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use tax concession u/s. 10A of the Act. 6.2. Section 80IA(10) of the Act provides (10) Where it appears to the Assessing Officer that, owing to the close connection between the assessee carrying on the eligible business to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in such eligible business, the Assessing Officer shall, in computing the profits and gains of such eligible business for the purposes of the deduction under this section, take the amount of profits as may be reasonably deemed to have been derived therefrom: The conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the ordinary profits with the intent of abusing tax concession. Quite clearly, in the entire assessment order, there is no whisper of any material or evidence in this regard. Similar are the circumstances here when Ld. CIT(A) has proceeded to uphold the findings of Ld. AO on the basis of alleged admitted fact of arrangement, which had no foundation except the opinions of Ld. Tax Authorities below. Consequently these grounds are sustained. 7. Ground No. 5 6; It was submitted on behalf of the assessee that the Ld. Tax Authorities below have fallen in error in considering the interest on deposits from revenue generated by export sales consideration to be income from other sources and it should have been included as part of eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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