TaxTMI 
TaxTMI 
2011 (2) TMI 1283
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....dividend income. For this, the assessee has raised the following ground No. 1 in assessment year 2003-04 and identical ground is raised in assessment year 2004-05. For the sake of convenience, we are reproducing the ground for assessment year 2003-04. "1. The learned CIT(A) has erred in law and on facts in confirming the action of Assessing Officer in not granting exemption under section 10(33) of the Act on the dividend income of Rs. 27,918." 3. At the outset ld. counsel for the assessee fairly stated that he has instruction from the assessee not to press this issue due to smallness of amount. Accordingly, the same is dismissed as not pressed. 4. The second common issue in these appeals of assessee is against the order of CIT(A) in confirming the action of the Assessing Officer in disallowing the expenses by invoking the provisions of section 14A of the Act. For this, assessee has raised the following ground No. 2 in assessment year 2003-04 and identical ground is raised in assessment year 2004-05. For the sake of convenience, we are reproducing the ground for assessment year 2003-04 :- "1. The learned CIT(A) has erred in law and on facts in confirming the action of Assessing ....
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....s Tribunal in the case of the assessee's associate concern, i.e., Schutz Dishman Biotech (P.) Ltd. [ITA No. 3590/Ahd/2007, for A.Y. 2004-05]. In both those decisions, the matter has been set aside to the file of Assessing Officer to re-examine and re-adjudicate the claim as per law. 8. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that this issue has been decided by this Tribunal in assessee's sister concern Schutz Dishman Biotech (P.) Ltd. (supra), respectfully following this decision, we restore the issue to the file of Assessing Officer to decide the same as per the above decision. Accordingly, this common issue of both the appeal of assessee is allowed for statistical purposes. 9. The next common issue in this appeal of assessee is against the order of CIT(A) in confirming the levy of interest under section 234ABC of the Act. For this, assessee has raised the following ground No. 8 for the assessment year 2002-03 and identical ground No. 9 is raised in assessment year 2004-05. For the sake of convenience, we are reproducing the ground for assessment year 2003-04 :- "8. Ld. CIT(A) has erred in law in confirming the levy ....
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....he suppliers on behalf of the assessee :- Sr. No. Name of the party Amount (Rs) 1. Janki Shah 7,00,000 2. Piyush G. Shah 5,50,000 3. Piyush G. Shah (HUF) 2,50,000 Total 15,00,000 We find that the assessee has admitted this addition, accordingly same is confirmed. This issue of the assessee's appeal is dismissed. Now coming to Revenue's appeals in ITA No. 587/Ahd/2007 and 3213/Ahd/2007 for assessment year 2003-04 and 2004-05 Since the issues and facts are exactly common except amount, we will take up the issue from assessment year 2003-04 in ITA No. 587/Ahd/2007 and decide the issues for both the years. Both, the ld. counsel for assessee as well as ld. CIT-DR agreed for the same. 15. The first common issue in these appeals of the revenue is against the order of CIT(A) in deleting the disallowance made by the Assessing Officer in respect to ISO certification expenses. For this, revenue has raised the following ground No. 1 in ITA No. 587/Ahd/2007 :- "1. The CIT(A) erred in law and on facts in directing :- (i)To allow ISO Certification expenses of Rs. 66,1213 as revenue expenses." In ITA No. 3213/Ahd/2007 following is ground No. 1 :- "1. The CIT(A) erred ....
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....l as contained in paragraph No. 10, read as under :- 10. We have heard both the parties and perused the record and also the decision cited by the learned AR of the assessee. In the case of ACIT v. Upper India Steel Mfg. & Engg. Co. ( 150 Taxman 51 ), the expenditure incurred by the assessee-company for issue of ISO-9002 certificate was disallowed by the Assessing Officer holding that the amount was in nature of capital expenditure. On appeal, the Commissioner (Appeals) deleted the impugned addition made by the Assessing Officer holding that the amount had been incurred by the assessee for the purposes of facilitating its business thereby making it more efficient and profitable because procurement of such certificate not only ensured certified level of the quality of the product but also boosted the sales of the assessee. On appeal the Tribunal upheld the order of the CIT(A). Facts in the instant case being similar, respectfully following the said decision of the ITAT, Chandigarh referred to above, we uphold the order of the CIT(A) and dismiss the appeal of the revenue on this ground. 6. After careful consideration of the rival submissions, facts and circumstances of the case, dec....
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....the assessee made capital gain in the sum of Rs. 33,20,000 and this really shows that the investment is a part of business activities of the assessee. Further these group concerns are also in the same line of business and therefore by making investments in share capital of these companies, the assessee ensures smooth business relations, timely supply of materials and proper execution of the job work at a great comfort level. The investment in the shares was therefore for the purpose of the business. Accordingly, it was submitted before the CIT(A) that the assessee must get the interest expenditure either under section 36(1)(iii) of the Act or under section 57(iii) of the Act. 19. Before us also it was stated that the Assessing Officer has failed to establish the nexus between the amount borrowed and allegedly invested as share application money in the group concerns. There is not a whisper much less discussion in the body of the assessment order on establishing nexus between the amount borrowed and amount lent. Nowhere in the entire assessment order, the Assessing Officer has mentioned that the very same amounts which were borrowed during the year, have been lent to these entities....
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....ii)To allow interest expenses on security deposit of Rs. 2,53,310." In ITA No. 3213/Ahd./2007 for assessment year 2004-05, the ground reads as under :- "3. The CIT(A) erred in law and on facts in directing to allow interest expenses of Rs. 2,53,210 on security deposits." 22. The brief facts leading to the above issue are that assessee has given security deposit of Rs. 15,83,932 to Smt. Aditi J. Vyas and Rs. 5,26,154 to Shri J.R. Vyas towards rented premises used as office of the assessee. The Assessing Officer stated that, since these persons are directors of the assessee, there is no need to place security deposit and therefore he disallowed Rs. 2,53,210 out of interest expenditure on the ground that interest bearing funds have been diverted for non-business purposes. The assessee before the ld. CIT(A) stated that admittedly the assessee has been using the said office premises for its business purposes and therefore the said amount has been given as security deposit. If that be so, it cannot be said that moneys have been used for non-business purposes. In any case the assessee has not diverted the interest bearing funds for the purpose of making investments in the group concern....
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....of quantity as well as valuation running into Rs. 9,41,43,486 and therefore he added the same as unexplained investments in the hands of the assessee. The assessee before the CIT(A) stated that there is no difference in the stock as appearing in the books of accounts and as submitted to the Banks for obtaining various credit facilities as alleged by Assessing Officer or for the reasons as alleged are not at all. As a matter of fact on an overall basis the position of stock as on 25-3-2003 was as follows :- Stock in Rs. in quantity Stock as per bank account 38,39,52,610 1590.69 M.T. Stock as per books of accounts 40,34,08,263 1595.93 M.T. Thus on overall basis books of accounts show more stock both in terms of value as well as quantity. Even this difference is mainly on account of different methods of valuation being followed for the purpose of furnishing the statement to the Bank and for the purpose of recording the inventories in the books of accounts. A detailed statement as on 25-3-2003 explaining the said difference both in terms of quantity as well as valuation was also submitted to the CIT(A) which is placed in assessee's Paper Book Page Nos. 408 to 410. 26. The as....
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.... the figure of stock both in terms of quantity as well as value, is higher in the books of accounts as compared to the statement given to the bank. Even otherwise, we find that issue is squarely covered in favour of the assessee and against the revenue in ITA No. 3830/Ahd/2003 for assessment year 2000-01 in assessee's own case by this Tribunal vide para-35 to 37 as under :- "35. After careful consideration of the rival submissions, facts and circumstances of the case and the reasons stated by the assessee and the CIT (Appeals), we are of the opinion that so far as Assessing Officer's allegation of difference in stock (quantity-wise) shown to the bank and as per books of account is concerned, do not survive because admittedly, he failed to take note of closing stock of work-in-progress which was duly recorded in the books of account and appears in balance-sheet and the Schedule-G to it. 35.1 Further, the ld. DR has also not pointed out any infirmity in the findings of the CIT (Appeals) should have allowed opportunity to the Assessing Officer, in our opinion, is nothing but plea for the sake of lingering on the litigation for no fault of the assessee. Admittedly, it was mistake on ....
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....sessee and against the revenue. Accordingly, we uphold the order of CIT(A) and this common issue of revenue's appeals is dismissed. 27. The next common issue in these appeals of the revenue is against the order of CIT(A) in deleting the disallowance made under section 14A of the Act by Assessing Officer. For this, the revenue in ITA No. 587/Ahd/2007 for assessment year 2003-04, reads as under :- "5. The CIT(A) erred in law and on facts in directing- (v)To delete the disallowance made under section 14A of Rs. 10,34,489." In ITA No. 3213/Ahd./2007 for assessment year 2004-05, the ground reads as under :- "4. The CIT(A) erred in law and on facts in directing to delete the disallowance made under section14A amounting to Rs. 18,36,545." 28. The brief facts leading to the above common issue in the Assessing Officer applied the provisions of section 14A of the Act in disallowing an amount of 10,36,682 as against the exempted dividend income under section 10(33) of the Act amounting to Rs. 94,199. The assessee during the year under consideration earned dividend income of Rs. 1,22,117 which was claimed as exempt under section 10(33) of the Act. The Assessing Officer restricted such cl....
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....s), which are confirmed." In view of the above facts and circumstances, we are of the view that in the present case that the Assessing Officer is unable to prove the nexus and the CIT(A) has rightly deleted the disallowance. As the issue is squarely covered in favour of assessee and against the revenue by the Tribunal's decision in assessee's own case, respectfully following the same, we allow the claim of assessee and uphold the order of CIT(A). This common issue of revenue's appeals is dismissed. 30. The next common issue in these appeals of the revenue is against the order of CIT(A) in deleting the addition made by Assessing Officer in respect of difference in arm's length price charged on international transactions. For this, the revenue in ITA No. 587/Ahd/2007 for assessment year 2003-04, reads as under :- "1. The CIT(A) erred in law and on facts in directing- (iv)To delete the addition of Rs. 3,06,48,478 made as per TPO's order in respect of difference in Arms Length Price charged on international transactions." In ITA No. 3213/Ahd./2007 for assessment year 2004-05, the ground reads as under :- "6. The CIT(A) erred in law and on facts in directing to delete the addition....
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....e of the appellant, it has been categorically demonstrated that its PBIT of 21.28 per cent is very much comparable with other similarly placed assessees. Once overall PBIT is comparable, the question of comparing each individual transaction does not arise. lTPO contended that this method is most appropriate only when the assessee provides the information regarding gross profit mark up to costs with regard to exports to related and unrelated entities. The assessee most respectfully submits that it has provided the information regarding gross mark up of the assessee as a whole which includes the export as well as domestic sales both to related and unrelated entities. If the total PBIT of the assessee as a whole is comparable with PBIT of similarly placed assessees, there is no reason and/or ground to take a view that the assessee has passed on or parted with some profit in favour of its AE i.e., DEL. In any case, the assessee most respectfully submits that it has the details of gross profit mark up with respect to exports and domestic sales with respect to related and unrelated entities. A detailed chart showing the comparison of PBIT of DEL & others for the year under consideration....
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....ormation is available, this ground for rejecting the TNMM goes away and therefore the method adopted by the assessee may kindly be accepted. 33. The assessee stated that the OECD guidelines sought to be relied upon by TPO in fact helps the case of the assessee inasmuch as that it has been very specifically stated in the said guidelines that if the net margins from uncontrolled transactions vis-a-vis controlled transactions can be compared, then TNMM is the best method to find out the Arm's Length Price. As stated earlier the same information is very much available and placed on record. If that be so, there is no reason to reject the TNMM method followed by the appellant and substitute the same with Comparable Uncontrolled Price Method (CUP Method). In any case the assessee stated that the said CUP method is not at all suitable for the purpose of finding out Arm's Length Price in the hands of the assessee. As stated earlier for the purpose of rejecting the method adopted by the assessee and to substitute the same with another method, it has to be conclusively established by TPO that the method adopted by the assessee is patently erroneous and the same can never truly and fairly sta....
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....ial support, marketing support, technical support, geographical presence, ready set up, recognition, assets employed and currency fluctuations. The assessee further stated that as prescribed under the said CUP method, adjustments on account of differences between the international transactions and comparable uncontrolled transactions or between the enterprises entering into such transactions which could materially affect the prices in the open market is very difficult to quantify. In fact, TPO has not made an attempt to make any adjustment on account of the factors viz., financial support, marketing efforts, storage of goods for ready delivery and all other relevant and material factors. In fact, it is very difficult to actually quantify these factors in the price adjustments and therefore the CUP method as adopted by TPO is not appropriate method for the purpose of finding out Arm's Length Price. It was stated that the action of rejection of TNMM method of ALP and adoption of CUP method of ALP itself is illegal and without jurisdiction as held by ITAT in the case of the associate concern viz., Schutz Dishman Biotech (P.) Ltd. assessment year 2002-03 in ITA No. 554/Ahd/2006 and als....
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....ses sales price charged to one AE is substantially higher than sales price charged to other AE. Under the circumstances, lower sales price charged are at arm's length does not come out from the method employed by the assessee for comparison of these international transactions. The assessee has itself stated that for certain transactions internal unrelated price are available. However, for reasons best known to it, they have not carried out any comparison using internal data for comparison purpose. Similarly, no efforts were made by the assessee for obtaining external data which are available in public domain like; Exim key data, IBIS data etc., where unit export price for export of these chemicals/pharmaceuticals to various countries in the world from Indian port are available related to Indian manufacturers/business. It is clear from the above that the assessee has not chosen correct method for comparison of its transactions. The ITAT Mumbai 'L' Bench in the case of UCB India (P.) Ltd. v. ACIT 121 ITD 131 (Mum.) [2009-T11-02-ZTADT-MUM-TP] has held that section 92C read with Rule 10B(1)(e) deals with Transactional Net Margin Method (TNMM) and it refers to only net profit margin re....
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....issible adjustment. Hw, he has not explained the same any further and has not given any reasons why they are not comparable. (iii)The assessee has failed to submit details even for the application of TNM method when Assessing Officer asked him to provide product-wise margin where he stated that "we are not working out product-wise cost of production." Under the circumstances, we regret that gross profit mark up on sale separately for exports to Dishman Europe (UK), Dishman (USA) & the exports to unrelated parties, as required cannot be furnished" (page 5 first line of TPO order annexed Annexure-A) Above assertion of the assessee clearly goes against as for the selection of most appropriate method it has been provided din Rule 10C(2)(e) that availability, coverage and reliability of data necessary for application of method is one of the foremost requirement. The assessee has failed to provide any data in this regard to apply TNM method. ? Non-comparable data set Assessee has used only one qualitative filter while carrying out search on PROERS data base as it has taken all organic chemical companies as comparable companies. The assessee has failed to compare functions performed b....
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....)For sales in domestic market import duty component if imported by the purchaser. (d)In our case AE is sour WOS and as per the arrangement EE's scope of services as to marketing, payment and also the overall risk assumed by AE is also required to be taken into consideration while comparing the price at which the product is supplied to AE with that of price of the product supplied to others as well as the price at which the third party sales its product to others. (e)Over and above the factors such as average prevailing international market price, the scope of services rendered by WOS, the volume of business of a particular product the quality of product required by the end customer, the area of the market capture and to be developed by the WOS coupled with the size of the market. (f)Various functional differences arising on account of assuming risk, financial support, marketing support, technical support, marketing support, technical support, geographical presence, ready set up, recognition asset employed and current fluctuations, are also required to be considered while comparing the price. The above differences and reasons will also affect comparison for transactional net mar....
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....each international transaction or on each product which are part of international transaction and it was stated by the assessee categorically that assessee is not maintaining such data. The ITAT Mumbai 'L' Bench in the case of UCB India Pvt. Ltd. v. ACIT 121 ITD 131 (Mum.) [2009-T11-02-ITAT-MUM-TP] has held that section 92C read with Rule 10B(1)(e) deals with Transactional Net Method (TNMM) and it refers to only net profit margin realized by an enterprise from an international transaction or a clause of such transaction, but not operational a margins of enterprise as whole. Similar view was also taken by the ITAT Mumbai Bench in the case of DCIT v. M/s. Starlite, Serdia Pharmaceuticals India Pvt. Ltd. v. ACIT and in the case of ACIT 16(3), Mumbai v. Tej Diam to the effect that TNMM requires comparison of net profit margins realized by an enterprise from an international a transactions and not comparison of operating margins of enterprises. The Tribunal observed TNMM refers to only net profit margin realized by an enterprise from an international transaction or a class of such transactions, but no operational margins of the enterprise as a whole. (iii)CIT(A) has not given any reaso....
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....l relations made or imposed between the associated enterprises, and the arm's length conditions can be established by directly substituting the price in a comparable uncontrolled transaction for the price of the controlled transaction. As a result, where taking into account the criteria established in paragraph 23.2 a traditional transaction method and a tradition profit method can be applied in a equally reliable manner, the traditional transaction method is to be preferred over traditional profit method. Moreover, where taking into account the criteria established in paragraph 2.2 he comparable uncontrolled price method (CUP) and another transfer pricing method can be applied in a equally reliable manner, the CUP method is to be preferred..." In view of above and considering data available in this case for transfer pricing analysis, it can be said that order of the CIT(A) is not correct and does not give cogent reasons for accepting TNMM as most appropriate method. Earlier order and similar orders of Tribunal or CIT(A) cannot be applied to the present fact matrix as transfer pricing analysis is an exercise based on peculiar facts and data of each case for each individual year. I....
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....us countries in the world from Indian Port are available related to Indian manufacturers/businesses. It is clear from the above that the assessee has not chosen correct method for comparison of its transactions. The Hon. ITAT Muffibai 'L' Bench in the case of UCB India Pvt. Ltd. v. ALIT 121 ITD 131 (Mum.) [2009-T11-02-ZTAT-MUM-TP] has held that section 92C read with Rule 10B(1)(e) deals with Transactional Net Margin Method (TNMM) and it refers to only net profit margin realized by an enterprise from an international transaction or a clause of such transaction, but not operational margins of enterprise as whole. Similar view was also taken by the Hon. ITAT Mumbai in the cases of DCIT v. M/s. Starlite, Serdia Pharmaceuticals India Private Limited v. ACIT, and in Addl. CIT 16(3), Mumbai v. Tej Diam to the effect that TNMM requires comparison of net profit margins realised by an enterprise from an international transaction(s) and not comparison of operating margins of enterprises. The tribunal observed TNMM refers to only net profit margin realized by an enterprise from an international transaction or a class of such transactions, but no operational margins of the enterprise as a whol....
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....plained the same any further and has not given any reason why they are riot comparable. The assessee has failed to submit details even for the application of TNM method when Assessing Officer asked him to provide product-wise margin where he stated that "we are not working out product-wise cost of production. Under the circumstances, we regret that gross profit mark up on sales separately for exports to Dishman Europe (UK), Dishman (USA) & the exports to unrelated parties, as required cannot : furnished." (page 5 first line of TPO order annexed as Annexure-A). Above assertion of the assessee clearly goes against as for the selection of most appropriate method. it has been provided in rule 10C(2)(c) that availability, coverage and reliability of data, necessary for application of method is one of the foremost requirement. The assessee has failed to provide any data in this regard to apply TNM method." It is submitted that this issue is no more rest integra in as much as in the case of Schutz Dishman Biotech (P.) Ltd. case (supra). The said issue was raised and answered against the Department by the Hon'ble Tribunal (Ref. pga. 22 to 24, paras (iv)( a)(b)( c)(e). The said view has ....
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....The said view has further been reiterated in ITA No. 3590 and 3751/Ahd/2007. "(D)Wrong and irrelevant reasons given for non-application of CUP. The assessee has given following reasons due to which internal/external CUP as per it cannot be applied : (a)Our cost of manufacturing and gross and net margin earned by us. (b)Large quantity of goods sold to single party i.e., to WOS (wholly owned subsidiaries) v. small quantity of goods sold to various parties, as in former case one is having certainty of business whereby the cost of manufacture of products can be less. Also cost of packaging and transportation also needs to be considered. (c)For sales in domestic market import duty component if imported by the purchaser. (d)In our case AE is our WOS and as per the arrangement AE's scope is supplied to AE with that of price of the product supplied to others as well as the price at which the third party sales its of services as to marketing, payment and also the overall risk assumed by AE is also required to be taken into consideration while comparing the price at which the product to others. (e)Over and above the factors such as average prevailing international market price, the sc....
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....7. In any case, even in case of associate concern viz., Schutz Dishman Biotech (P.) Ltd. (supra) this Tribunal has upheld the very same reason given by the assessee for non-application of CUP method of ALP. It is submitted that if the same reasons have weight with the Tribunal while deciding the appeal in the case of Schutz Dishman Biotech (P.) Ltd. (supra), it is submitted that the same consideration may kindly be applied and the contention of the assessee may kindly be upheld. "(E)Defects in CIT(A)"s order (i)CIT(A) in his order in para 16.3 on page 24 has stated that assessee has right to choose the best applicable method for the purpose of calculation of arm's length price,, However, in ITA No. 2469/Mumbai/06 in the case Serdia Pharmaceutical India Pvt. Ltd. v. ACIT it has been field at para No. 51 that selection of method of determining the arm's length price is not on the unfettered discretion of the tax payer (Annexure-C). CIT(A) erred in admitting fresh evidence regarding consolidated PBIT with respect to transaction with AEs during appellate proceedings as same were not produced before the TPO by the assessee. However, these consolidated PBIT are not relevant for the pu....
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....shown that in the majority of cases, it is possible to apply traditional transaction methods (Para 3.49 of the OECD Report). There are, however cases where traditional transaction methods cannot be reliably applied alone or exceptionally cannot be applied at all. These would be considered cases of last resort Such cases arise only where there is sufficient data on uncontrolled transactions (possibly because of uncooperative behavior on the part of the taxpayer relative to these Guidelines), or where such data area considered are considered unreliable, or due to the nature of the business situation. In such cases of last resort, practical consideration, may suggest application of a transactional profit method either in conjunction with traditional transaction methods or on ft own. However, even in a case of last resort, it would be inappropriate to automatically apply a transactional profit method without first considering the reliability of that method (Para 3.50 of the OECD Report)." Even the latest guidelines of OECD of 2010 states in para 2.3 that : "Traditional transaction methods are regarded cis the most direct means of establishing whether conditions in the commercial and....
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....0 which is reproduced herein below for ready reference : "OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 22 July 2010 Chapter II : Transfer Pricing Methods Part I : Selection of the transfer pricing method : A. Selection of the most appropriate transfer pricing method to the circumstances of the case. 2.1 Parts II and III of this chapter respectively describe "traditional transaction methods" and "transactional profit methods" that can be used to establish whether the conditions imposed in the commercial or financial relations between associated enterprises are consistent with the arm's length principle. Traditional transaction methods are the comparable uncontrolled price method or CUP method, the resale price method, and the cost plus method. Transactional profit methods are the transactional net margin method and the transactional profit split method. ** ** ** 2.4 There are situations where transactional profit methods are found to be more appropriate than traditional transaction methods. For example, cases where each of the parties makes valuable and unique contributions in relation to the controlled transaction, or where the pa....
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....tity sold to DEL was 1,40,100 kgs. as against 6000 kgs. sold to different non-AE parties. The marginal difference in rates appears reasonable considering the large volume involved 6. Tetra Butyl AMM HY Rs. 21,62,724 The quantity sold to DEL was 58,452 kgs. as against 10,060 kgs. sold to different non-AE parties. Apart from that Assessing Officer has himself accepted a rate of Rs. 550 per kg in respect of Dishman USA and thus when the same item was sold to Europe at a higher rate of Rs. 557 per kg. there was no question of any adjustment. This adjustment is patently incorrect. 7. Tetra Ethyl AMMK BR Rs. 55,20,500 The quantity sold to DEL was 90,500 kgs. as against 5,875 kgs. sold to different non-AE parties. The price adopted by the Assessing Officer is of Rs. 272 per kg., but in cases of USA, the rate of Rs. 243 has been accepted by him. The balance minor variation is on account of large volume of goods and hence rates should have been accepted. It can be seen that apparently incomparable have been compared while applying the CUP method. Either the quantity transacted is too small or insignificant or domestic transactions have been compared with internation....
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....s is dismissed. 38. The next common issue in these appeals of revenue is against the order of CIT(A) in directing to exclude sales tax and excise duty and also turnover of Dishman Business Centre and Adiman Travels from total turnover of the business for working out deduction under section 80HHC of the Act. For this, revenue in ITA No. 587/Ahd/2007 following ground No. 1(vii) :- "(1)The CIT(A) erred in law and on facts in directing- (vii)To exclude Sales Tax, Excise Duty and also the turnover of Adiman Travels and Dishman Business Centre, from the total turnover of the business, for working out the deduction under section 80HHC of the Income-tax Act." In ITA No. 32/13/Ahd./2007 for the assessment year 3204-05 the following ground No. 7 :- "7. The CIT(A) erred in law and on facts in directing to exclude turnover of Adiman Travels of Rs. 32,97,698 and Dishman center of Rs. 24,25,511 from the total turnover of the business for working out deduction under section 80HHC." 39. We find that this issue is squarely covered by the decision of Honble Apex Court in the case of CIT v. Lakshmi Machine Works [2007] 290 ITR 667, wherein the Hon'ble Apex Court has held as under :- "6. The le....