TaxTMI 
TaxTMI 
2006 (5) TMI 122
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....Appeal No. 637/Chd/2005, ground Nos. 2 and 6 are as under: "1. That the learned CIT(A)-I has erred in law and facts in directing not to reduce 90 per cent of the exchange fluctuation pertaining to the earlier years from the profit and gains of business and profession, by ignoring the fact that the same fell under the category of 'any other receipts or charges' and was required to be reduced in accordance with the Expln. (baa) below s. 80HHC(4B) of the IT Act. 6. That the learned CIT(A) has erred in law and facts in allowing deduction under s. 80HHC even if there is no profit under cl. (a), (b) or (c) of sub-s. 3 of s. 80HHC, on export of trading and manufacturing activities." 4. In Appeal No. 638/Chd/2005, ground Nos. 2 and 5 read as under: "2. That the learned CIT(A) has erred in law and facts in directing not to reduce 90 per cent of the sale of DEPB from the profit and gains of business and profession, by ignoring that the same is not an export incentive covered under cl. (iiib) of s. 28 of IT Act but falls under the category of 'any other receipt or charges'. 5. That the learned CIT(A) has erred ill law and facts in allowin....
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....) (profit on sale of import licences), s. 28(iiib) (cash assistance) and s. 28(iiic) (duty drawback). 4. Therefore, the present item viz. the premium on sale of export quotas statutorily receive the same treatment as profit on sale of import licences, cash assistance and duty drawback.' The AO shall also take into consideration the view of the Ministry quoted above in deciding the issue afresh." 6. In Appeal No. 637/Chd/2005, ground No. 1 reads as under: "1. That the learned CIT(A)-I has erred in law and facts in directing not to reduce 90 per cent of the exchange fluctuation pertaining to the earlier years from the profit and gains of business and profession, by ignoring the fact that the same fell under the category of 'any other receipts or charges' and was required to be reduced in accordance with the Expln. (baa) below s. 80HHC(4B) of IT Act." 7. In Appeal No. 638/Chd/2005 ground No. 1 reads as under: "1. That the learned CIT(A)-I has erred in law and facts in directing not to reduce 90 per cent of the exchange fluctuation pertaining to the earlier years from the profit and gains of business and profession, by ignoring the ....
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....relating to this common issue are that the assessee had received DEPB relating to exports of the current year. In the subsequent year, the DEPB licences have been sold by the assessee. However, in the year under appeal, the assessee has reflected the sale proceeds of the DEPB as income and claimed deduction under s. 80HHC in respect of the same. The AO has pointed out that the DEPB licences have been sold in the subsequent year and, therefore, the same have wrongly been reflected by the assessee in the year under appeal in order to claim deduction under s. 80HHC. 15. The learned counsel for the assessee invited our attention to the Accounting Standard (AS)-12 to support the contention that the assessee is entitled to reflect the appropriate amount in respect of such earned benefits, estimated on a prudent basis. It was contended that the assessee on the basis of actual sale made in the subsequent year had shown the sale proceeds on accrual basis in the year under appeal and, therefore, the CIT(A) was justified in directing the deduction under s. 80HHC with reference to such receipts also. It was further contended that in any case the issue as to whether the assessee is entitled ....
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....he purpose of calculating the deduction under s. 80HHC by ignoring the facts that scrap sales is a part of total turnover." 20. The learned Departmental Representative relied upon the orders of the Tribunal Chandigarh Bench in the case of Asstt. CIT vs. Nahar Spinning Mill Ltd. in ITA No. 750/Chd/2002, ITA Nos. 523 & 394/Chd/2003 and also in the case of Highway Cycles in ITA Nos. 468 & 644/Chd/1996 to support the plea that whereas the sale of scrap may be excluded from the turnover, the same may also be excluded from the profits of the business. 21. The learned counsel for the assessee fairly conceded that he has no objection for excluding the scrap sales from the turnover as well as from the profits of business for the purpose of deduction under s. 80HHC. We direct the AO to recalculate the deduction under s. 80HHC accordingly. 22. There is no other ground of appeal in appeal No. 638/Chd/2005. In Appeal No. 637/Chd/2005, the only other ground surviving for our consideration is ground No. 5 which reads as under: "That the learned CIT(A) has erred in law and facts in allowing deduction under s. 80HHC even if there is no profit under cl. (a), (b) or (c) of sub-s. 14....