SHRENUJ DIAJEWELS LIMITED,MUMBAI vs. DCIT 5(3), MUMBAI

This appeal by the assessee is preferred against the order of the Ld. CIT(A)-9, Mumbai dated 2.09.2013 pertaining to Assessment year 2009-10-.

The only grievance of the assessee is that the Ld. CIT(A) erred in denying deduction u/s. 10A in respect of the following items of income:

Briefly stated the facts of the case are that while scrutinizing the return of income, the Assessing Officer noticed that the assessee has claimed deduction u/s. 10A of the Act to the tune of Rs. 6,86,76,009/-. The AO found that the assessee has credited miscellaneous income of Rs. 3,37,474/- under the head other income. The AO was of the firm belief that the items of miscellaneous income are not derived from export or articles and therefore not eligible for deduction u/s. 10A of the Act. The AO excluded Rs. 3,37,474/- from the working of deduction u/s. 10A of the Act.

Aggrieved, assessee carried the matter before the Ld. CIT(A) but without any success.

Before us, the Ld. Counsel for the assessee stated that sundry creditors are out of the credit balances pertaining to the period in which Sec. 10A deductions have been claimed, same is the case with the reversal of salary. It is the say of the Ld. Counsel that the discounts have been received on transactions pertaining to the export business of the assessee and in so far as the sale proceeds of residual gold dust is concerned, the same may not be said to be derived from the export business but certainly forms part of the total turnover of the assessee.

Per contra, the Ld. Departmental Representative strongly supported the findings of the Revenue authorities.

We have carefully perused the orders of the authorities below. We find force in the contention of the Ld. Counsel. In our considered opinion, the issues relating to the write back of sundry creditors, reversal of salary and discount received need to be verified by the AO to see that these entries pertain to the period of the claim of deduction u/s. 10A. Subject to this verification and after satisfying himself, the AO is directed to allow the claim of deduction u/s. 10A in respect of these three items.

In so far as the sale proceeds of residual gold dust is concerned, in our considered opinion, the sale may not form part of the export turnover but is certainly a part of the total turnover and because of which it is certainly a part of the formula for computing the deduction u/s. 10A of the Act. The AO is directed accordingly.

In the result, the appeal filed by the assessee is allowed in part for statistical purpose.