TaxTMI 
TaxTMI 
2010 (11) TMI 576
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....ors, tools, spares and accessories there of. The assessee was entitled to claim deduction u/s. 80 HHC of the Income Tax Act, 1961(the Act) in respect of its Nashik Tool Division/Nashik EOU Division. The assessee included Sales Tax and Excise Duty while computing the turn over for the purpose of allowing deduction under section 80 HHC of the Act. 4. On appeal by the assessee the CIT(A) directed the Assessing Officer to exclude the Sales Tax and Excise Duty from the turnover by following the decision of the Hon'ble Bombay High Court in the case of CIT vs. Sudarshan Chemical Industries Ltd., 245 ITR 769(Bom). 5. Before us it is not in dispute that the decision of the CIT(A) has to be upheld in view of the decision of the Hon'ble Supreme Court in the case of Laxmi Machine Works, 290 ITR 667(SC), wherein it was held that turnover both total turnover as well as export turnover should not include Sales Tax and Excise Duty for the purpose of computation of deduction under section 80 HHC of the Act. In view of the above Ground No.1 raised by the revenue is dismissed. 6. Ground No.2 and 3 raised by the revenue reads as follows: "2. On the facts and cir....
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....d that factually it has to be verified as to whether fluctuation gain relates to the period between date of invoice and date of realization. According to him the Assessing Officer has not given any finding on this aspect. 11. The ld. Counsel for the assessee on the other hand submitted that the claim of the assessee was duly supported by audited books of accounts. It was his contention that even the Assessing Officer did not raise this issue in the order of assessment and the revenue cannot at this stage make a request for remand of an issue on which the Assessing Officer has not raised any doubts. 12. As far as the miscellaneous receipts are concerned the ld. D.R submitted that there is no finding by the Assessing Officer regarding the exact nature of scrap generated. In this regard he relied on the decision of the Hon'ble Madras High Court in the case of CIT vs. Lucas TVS Ltd., 308 ITR 377, wherein it was held that source of scrap generated was important to decide whether the sale proceedings should be included in the total turnover for the purpose of claiming deduction under section 80 HHC of the Act. It was submitted by him that the issue has to be remanded ....
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....nsideration and this Tribunal had held that scrap was generated in the course of basic operation carried on by the assessee and, therefore, relating to the total turnover. In these circumstances we are of the view that the sale of scrap has nexus with the business of the assessee and, therefore, the realization from sale of scrap has to be taken as part of the profits of the business of the assessee. As far as the other miscellaneous receipts are concerned the receipts from sale of literature, directors sitting fees and training income have nexus with the profits of the business and, therefore, have to be considered as part of the profits of the business. 16. In the result, Ground No.2 and 3 raised by the revenue are dismissed. 17. Ground No.4 reads as follows: "4. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.48,00,000/- on account of advances written off without appreciating the fact that loss has not incurred in the normal course of business." 18. The assessee has debited a sum of Rs.48.00 lacs being advances written off under the head miscellaneous expenses. The assessee exp....
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....201 of the assessee's paper book we find that assessee has during the period from April, 1999 to October,1999 made Inter Corporate Deposits totaling Rs.4,08,23,117/-. The ICDs were made in about 15 companies. The interest earned on ICDS has been regularly offered to tax as business income. In this regard we have seen the assessment orders in assessee's case for A.Y 1999-2000 and 1998-99, wherein the interest income has been offered as business income and taxed accordingly. In view of the above we are of the view that the findings of the CIT(A) that assessee was engaged in the business of making ICDs has to be upheld. It is further seen that the company M/s. Vitara Chemicals Ltd. became a sick company. The assessee filed a criminal complaint u/s. 138 of the Negotiable Instrument Act against M/s. Vitara Chemicals Ltd. but the same did not bare any result. M/s. Vitara Chemicals was declared as sick company under the Sick Industries Special Provisions Act. In the above circumstances, we are of the view that the claim of the assessee that it had incurred a business loss to the extent of Rs.48.00 lacs u/s. 28 of the Act has to be accepted. Even otherwise as laid down by the Hon'ble Delhi....
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....tus of the assessee and, therefore, revenue expenditure. With regard to the sum of Rs.1,53,760/- the assessee produced relevant invoices before the CIT(A) and on verification of the same the CIT(A) directed the AO to allow the deduction as claimed by the assessee. thus the entire expenses of computer software of Rs.4,68,285/- was directed to be allowed. Aggrieved by the order of the CIT(A) the revenue has raised ground No.5 and 6 before the Tribunal. 25. We have heard the rival submissions. The details of the software expenses are available at page 206 of the assessee's paper book and the same is as follows: "Software Expenses 1999-200. Cybernet Network Pvt. Ltd. Setup of Postmaster Licence for 10 users 12800 - 55760 PC SOFT Pune Erp. FA Export Module 87000 10000 Royal computer services Software animation develop. Charges 11500 Ashwini Systems Guages and Instrument software 22500 Images Adobe Software 5615 Multimedia HRD pvt. Ltd. Group creativity and Innovation 27109 PC SOFT, Pune Erp for - JV GL Code 25000 PC SOFT, Pune Erp customization charges ....
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....re to the AO for fresh consideration. 28. In the result, the appeal filed by the revenue is partly allowed for statistical purposes. ITA No. 4335/Mum/2004 - Assessee's Appeal: 29. Ground No.1 raised by the Assessee reads as follows: "The learned Commissioner of Income-tax (Appeals) erred in law and on facts in rejecting the claim of the appellant for deduction under section 80I of the Act following his earlier order for A.Y 1998-99." 30. We have already seen that the assessee is engaged in the business of manufacture and trading of machine tools. The assessee claimed deduction under section 80 HHC as well as 80 I/80IA of the Act in respect of the profits of the Nashik Unit. According to the assessee on the same profits deduction can be claimed both under section 80 HHC as well as 80I/80IA of the Act. In fact the assessee pointed out that the assessee has been claiming deduction under section 80 I since the assessment year 1991-92 and the assessment year 2000-01 was the last of the 10 years for which the deduction under section 80I is claimed for the Nashik Unit. The AO however, held that similar issue had come up for consideration i....
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....lowed under this section, the deduction to the extent of such profits shall not be allowed under any other provisions of this chapter. Since this new sub-section i.e. (9A) which has been introduced w.e.f. 1/4/99 is only clarificatory in nature, the assessee would not be entitled to deduction of 125% as claimed but would be eligible for deduction @ 25% u/s. 80I and @ 75% u/s. 80HHC. Supreme Court has also clarified in the case of Escorts India, 199 ITR 43 that "there is fundamentally, though unwritten, axiom that no legislature could be at all intended a double deduction in regard to the same business outing, and it is intended, it would be clearly expressed. The Supreme Court also held that it is not possible to get double deduction in respect of the same amount. Hence, the assessee would be entitled to deduction u/s. 80 HHC and 80I amounting to 100% only in view of sub-section (9A) of 80IA which is clarificatory in nature. The AO is directed to work out the deduction accordingly." 33. The ld. counsel for the assessee submitted before us that section 80 IA (9A) was introduced by the Finance Act, 1998 w.e.f. 1/4/99 and it provides as follows:- "9A. Where any amou....
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....accordance with and subject to the provisions of section 80 IA". Upto assessment year 1998-99 there was no condition regarding allowing deduction both under section 80IA as well as 80 HHC of the Act. From A.Y 1999-2000 however, this provision came into effect. The decision relied upon by the ld. counsel for the assessee relates to assessment years prior to 1999-2000 and, are therefore, not relevant for deciding the present dispute. However, the decision of the ITAT Bangalore Bench in the case of Mittal Clothing Co.(supra) relates to A.Y 2001-02. In that case we however, find that the deduction under two section of Chapter VIA did not exceed more than 100% of profits of the undertaking. In the present case, however, the facts are different. As pointed out in the order of the CIT(A) for A.Y 1998-99, the deductions exceeded 100% of the profits of the undertaking. We are of the view that in the light of the law as it existed in A.Y 2000-01 the restrictions imposed by the provisions of sub-section (9A) cannot be over looked. In this view of the matter we uphold the order of the CIT(A) and dismiss Ground No.1 raised by the assessee. 36. Ground No.2 raised by the assessee reads ....
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....income which is independent of exports business, even if it falls under the head "Profits and gains of business or profession" will not per se become eligible for deduction under section 80HHC. To cite an example, a person engaged in the financing business also carries out export business. Both the activities form part of his composite business and income from both of them is includible under the head "Profits and gains of business or profession". In such a situation the income from the financing business, even if falling under the head "Profits and gains of business or profession", cannot, by any stretch of imagination, be considered as profits eligible for deduction u/s 80HHC on the sole ground that it also falls under Chapter IV-D of the Act. Since in our above supposition, it is a composite business and the common expenses may have been incurred, 90% of such finance charges will be reduced from the total income under the head "Profits and gains of business or profession" which also includes income from financing business. The reduction by 90% of such income is to ensure that the common expenses incurred for earning the independent stream of income, presuming to be at 10% of the....
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....p; "Please note that the company has changed its accounting policy for valuation for inventories w.e.f. A.Y. 2000-01 and has concluded the excise duty liability on closing stock of Rs.39,26,699/- in the valuation." The Assessing Officer however, after making a reference to the provisions of section 145A of the Act gave a finding that the assessee follows exclusive method of valuation and made an addition of a sum of Rs.39,26,699/- to the total income of the assessee in view of the provisions of section 145 of the Act. The assessee had filed an application dated 29/9/2003 before the Assessing Officer u/s. 154 of the Act praying that this addition should be deleted. The assessee pointed out that the Assessing Officer in para 5.6 of his order has given the following finding. "5.6 After the above adjustments in the valuation of inventories are made u/s. 145A, it is possible for the assessee to claim separate deduction for the following amounts u/s. 43B: i) Excise duty paid on inputs and appearing to the debit of Modvat Credit Receivable A/c. This represents excise duty actually paid during the year and is eligible for deduction u/s. 43B. ii) E....
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....eads as follows: "The learned Commissioner of Income-tax (Appeals) has erred in law and on the facts in upholding the Assessing Officer's stand in not allowing a sum of Rs.8,94,369/- incurred by your appellant as agency commission paid to various business agents in consideration of the services rendered by such business agents." 44. It is not in dispute before us that similar issue had come up for consideration in assessee's own case for A.Y 1986-87,88-89,91-92,92-93,93-94 and 95-96 in ITA Nos. 5141 and 5142/Bom/94, ITA Nos. 7280 to 7282/Bom/95, 1978/Bom/97, 3315/Bom/99 and 152/Bom/2003 and this Tribunal has held that commission expenses claimed by the assessee are to be allowed as a deduction. It is also not disputed before us that the facts and circumstances are identical to the facts and circumstances prevailing in the assessment years already decided by the Tribunal. In view of the above Ground No.4 raised by the assessee is allowed. 45. Ground No.5 raised by the assessee reads as follows: "The learned Commissioner of Income-tax (Appeals) ought to have allowed excise duty written off/provisions amounting to Rs.64,96,948/- during the year ....