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4. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 15,092/-, being 2% of Rs. 7,54,587/- on account of alleged commission paid for obtaining the accommodation entry.

5. The Ld. CIT(A) has erred on facts and in law in not accepting the contention of assessee to recomputed the deduction u/s 10AA after considering the trading addition of Rs. 2,03,739/- ignoring the CBDT Circular No. 37/2016 dt. 02/11/2016."

2. Briefly stated, the facts of the case are that the assessee firm is engaged in the business of manufacturing and export of gold, silver and base material jewellery plain & studded with precious & semi precious stones. It has set up its manufacturing and export unit/factory in Special Economic Zone at Sitapura Industrial Area, Jaipur and has started commercial production from 21.04.2008 and has claimed deduction u/s 10AA of the Act. The assessee originally filed its return of income on 20.09.2013 at 90,220/- after claiming deduction u/s 10AA at Rs. 7,21,35,825/-. The assessment was completed u/s 143(3) on 27.01.2016 wherein the returned income was accepted by the Assessing Officer. Subsequently, basis the information obtained from Investigation wing, Mumbai that the assessee has obtained bogus entries in the form of bogus purchases amounting to Rs. 7,54,587/- from M/s Arihant Exports, Surat, notice u/s 148 was issued on 28.02.2017. In response to such notice, the assessee filed its return of income on 10.03.2017 declaring the income at Rs 90,220/- after claiming deduction u/s 10AA at Rs. 7,21,35,825/-. The reassessment order u/s 143(3) read with 147 was passed by the Assessing Officer on 13.12.2017 wherein the assessee was found eligible for deduction u/s 10AA to the extent of Rs. 7,21,35,825/- as originally M/s Amrapali Exports, Jaipur Vs. DCIT, Jaipur assessed u/s 143(3) of the Act. However, books of accounts were rejected u/s 145(3) and a sum of Rs. 1,88,647/- was added back to the total income of the assessee, being unexplained expenditure for the reason that the assessee was found indulging in obtaining accommodation entry of purchase of goods from bogus concern which was operated by Shri Rajendra Jain without any physical deliveries and such purchases amounting to Rs 7,54,587/- were treated as non genuine and 25% of such purchases were brought to tax as unexplained expenditure besides addition of Rs. 15,092/-, being 2% of Rs. 7,54,587/- on account of alleged commission paid for obtaining the accommodation entry. On appeal, the said findings have been sustained by the ld. CIT(A) and against the said finding, the assessee is now in appeal before us.

4. Accordingly, henceforth, appeals may not be filed on this ground by officers of the Department and appeals already filed in Courts/Tribunals may be withdrawn/not pressed upon. The above may be brought to the notice of all concerned."

10. Though the aforesaid circular has been issued by the CBDT in the context of Chapter VI-A of the Act, the deduction u/s 10AA is equally profit- link deduction though the fall under Chapter III of the Act and the legal position which has been accepted by the CBDT in the aforesaid circular will equally applies to the deductions claimed section 10AA of the M/s Amrapali Exports, Jaipur Vs. DCIT, Jaipur Act. In the said circular, the CBDT has accepted the judgment of the various High Courts wherein it has been held that if the expenditure disallowed is related to business activity against which deduction has been claimed, the deduction needs to be allowed on enhanced profit worked out taking into consideration the disallowances so made by the Assessing officer.

12. In the instant case, it is not in dispute that the assessee is eligible for claim of deduction u/s 10AA of the Act. It is also not in dispute that the assessee has only one business undertaking which is engaged in the business of manufacturing and export of gold, silver and base material jewellery plain & studded with precious & semi precious stones situated at Sitapura Industrial Area, Jaipur and the total turnover of the business is equivalent to the total turnover of the undertaking as well as the export turnover. The expenditure to the extent of 25% of purchases where are held as non-genuine and disallowed by the Assessing officer relates to the same business activity of manufacture and export in respect of which assessee is held eligible for deduction under section 10AA of the Act. The deduction under section 10AA therefore needs to be allowed on the enhanced profits after taking into consideration the disallowance of Rs 2,80,500 in light of accepted legal position by the CBDT and following the consistent position taken by the Co-ordinate Benches. The Assessing M/s Amrapali Exports, Jaipur Vs. DCIT, Jaipur Officer is therefore directed to recompute the deduction u/s 10AA taking into consideration the addition of Rs. 2,80,500/. In the result, the Ground No. 5 of the assessee's appeal is allowed."

4. Per contra, the ld. DR submitted that the addition have been made u/s 69C which is a deeming provision and the same cannot be considered for benefit u/s 10AA which is restricted to the profit and gains derived from export. It was further submitted that the Circular No. 37/2016 dated 21.01.2016 referred by the AR is in the context of deduction on enhanced profits under chapter VIA whereas in the present case, the assessee has claimed deduction u/s 10AA which falls under chapter II of the Act.