TaxTMI 
TaxTMI 
2008 (8) TMI 400
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.... s. 28(iiid) of the Act and deduction in respect of such profit is governed under third proviso below sub-s. (3) of s. 80HHC of the Act. The assessee is entitled to deduction under s. 80HHC as per third proviso to sub-s. (3) of s. 80HHC only where the assessee proves that the rate of drawback credit attributable to the customs duty was higher than the rate of credit allowable under DEPB scheme. Accordingly, the assessee was asked to justify its claim in respect of third proviso. The assessee submitted that the DEPB credits utilized by the assessee himself is Rs. 5,79,74,883 and the profit on sale of DEPB is Rs. 67,10,929. The total comes to Rs. 6,46,85,812. Ninety per cent thereof was reduced in terms of cl. (baa) of Explanation to s. 80HHC of the Act. Therefore, a sum of Rs. 5,82,17,231 was reduced from the 'profits of business' but in respect of DEPB credit the same being covered under first proviso below sub-s. (3) of s. 80HHC, further deduction is allowable. The third proviso applies only to the sum of Rs. 67,10,929 which is profit on sale of DEPB credits but not in respect of duty received as drawback and is governed under s. 28(iiic). The AO treated both the different....
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....nd, relied upon appellate order. He submitted that whether the provision of sub-s. (iiic) applies or whether provision of sub-s. (iiid) of s. 28 applies, the matter is not clear, therefore, the matter may be restored to the file of AO with appropriate direction. 6. We have carefully considered relevant facts and arguments advanced. The assessee along with the return of income filed report of the chartered accountant for claiming deduction under s. 80HHC. The assessee also filed details being profit on sale of DEPB credit amounting to Rs. 67.10 lacs and also submitted that balance sum is in the nature of duty repaid or repayable as drawback. Thus, amount of DEPB credit utilized by the assessee himself amounting to Rs. 5,79,74,883 falls under sub-s. (iiic) of s. 28 and not under sub-s. (iiid) of s. 28. The AO and learned CIT(A) were not justified in treating the drawback of duty available to the assessee as equivalent to profit on transfer of DEPB scheme. There was no transfer of DEPB scheme credit but the assessee himself having utilized the same, is to be considered as falling under sub-s. (iiie) of s. 28 and not under sub-s. (iiid) of s. 28. Therefore, the assessee, under first....
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....the 'profits of business' as computed under the head 'Profits and gains of business or profession'. Once the amount forms part of 'profits of business', in terms of cl. (baa) of Explanation. 90 per cent of any receipt by way of brokerage, commission, interest, rent charges or any receipt of similar nature included in such profits can be reduced. However, the excess provision written back does not fall in any of the nature of the receipts described above. Therefore, the AO was not justified in reducing 90 per cent of the excess provision written back while computing profits of business for the purpose of computing deduction under s. 80HHC. The AO is directed to include such amount in computing profits of business for the purpose of computing deduction under s. 80HHC. 13. The next ground of appeal is against disallowance of a sum of Rs. 3,868 on account of gifts given. 14. The AO treated the gifts given at the marriage ceremony as personal expenses of the directors and could not be termed as business expenditure. Accordingly, said sum was disallowed. Learned CIT(A) confirmed the same and hence, this ground in this appeal. 15. After considering rival s....
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....ant. 2. Rs. 6,69,600 being consultancy fees for hydro power project. The AO held that both the payments were made in respect of future projects, as such these expenses had no nexus with the business carried on by the assessee. The future projects are yet to take off. Accordingly, the said sum was disallowed. The same was confirmed by learned CIT(A) and hence, this ground before us. 21. Learned counsel for assessee submitted that Rs. 1 lac was paid as tender fee which is a normal revenue expenditure. The expenditure may be either capital or revenue but cannot be considered as non-business expenditure when admittedly the tender was obtained by the assessee and submitted. The assessee also paid professional charges for setting up hydro power project. The project is for the captive consumption in the existing business and hence, to be considered as revenue expenditure. 22. Learned Departmental Representative, Shri Durga Charan Dash, on the other hand, submitted that since the expenses are not related to existing business but in respect of business which is yet to be set up, the same are not allowable while computing the profits of such business. 23. We have conside....