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of <h1>Tribunal rules in favor of assessee on tax issues; emphasizes computation based on export profits.</h1> <h3>Deputy Commissioner Of Income-Tax. Versus Govind Rubber (P.) Ltd.</h3> Deputy Commissioner Of Income-Tax. Versus Govind Rubber (P.) Ltd. - ITD 089, 457, TTJ 082, [2004] 1 SOT 481 (MUM.) Issues Involved:1. Deletion of addition to the value of closing stock on account of unutilized MODVAT credit.2. Exclusion of the amount withdrawn from revaluation reserve from book profit.3. Deduction of book profits attributable to exports under section 115J.Summary:Issue 1: Deletion of Addition to Closing Stock on Account of Unutilized MODVAT CreditThe department contested the deletion of Rs. 2,25,376 added to the closing stock value due to unutilized MODVAT credit. The Tribunal referenced the jurisdictional High Court decision in CIT v. Indo Nippon Chemical Co. Ltd. [2000] 245 ITR 3841 (Bom.), which favored the assessee. Consequently, this issue was decided in favor of the assessee.Issue 2: Exclusion of Amount Withdrawn from Revaluation Reserve from Book ProfitThe department argued against the exclusion of Rs. 1,65,325 withdrawn from the revaluation reserve and credited to the profit and loss account from book profits. The Tribunal cited the Supreme Court decision in Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273, which supported the assessee's position. Thus, this issue was also decided in favor of the assessee.Issue 3: Deduction of Book Profits Attributable to Exports under Section 115JThe department challenged the CIT(A)'s decision to deduct Rs. 79,913 from book profits attributable to exports under section 115J. The Assessing Officer argued that since the total income was nil, no deduction under section 80HHC should be allowed. The Tribunal examined the provisions of section 115J and the related Explanation (iii), concluding that the deduction of book profits attributable to exports should be allowed even if the total income is nil. The Tribunal emphasized that section 115J is a self-contained code, and the computation of book profits should be based on book profits attributable to export business, not on the taxable income computed under normal provisions. The Tribunal upheld the CIT(A)'s decision, allowing the deduction of Rs. 79,913 from book profits.Conclusion:The appeal by the department was dismissed, with all issues decided in favor of the assessee.
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