TaxTMI 
TaxTMI 
2010 (12) TMI 740
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....grounds which were not the basis for making the additions in the assessment order and which are far from the facts and evidences on records and based on conjectures and surmises. Thus, this action of ld. CIT(A) has resulted into assessing an altogether new source of income in the hands of the appellant which is not permissible under the law and therefore deserves to be quashed. 2. The ld.CIT(A) has erred in law and on facts in recalculating deduction u/s.80HHC of the Act while quantifying book profits u/s.115JB of the Act. Ld. CIT(A) further erred in law in reducing net profits as per P and L A/c. by profits eligible for deduction u/s.80HHC actually computed u/s.80HHC(3)(a/b/c) as against the same having been computed with reference to book profits in them manner specified u/s.80HHC(3) of the Act. 3. The ld.CIT(A) has erred in law and on facts in denying deduction u/s.80B of the Act while quantifying book profits u/s.115JB of the Act. Ld. CIT(A) further erred in law in reducing net profits as per P and L a/c. by income eligible for deduction u/s.10B actually computed after set off of unabsorbed brought forward depreciation of prior years as against the same havi....
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.... Income-tax, 62 ITR 621 (Guj); iv) Commissioner of Income-tax vs Rai Bahadur Hardutroy Motilal Chamaria, 66 ITR 443 (SC); v) Commissioner of Income-tax vs Union Tyres, 240 ITR 556 (Del) vi) Commissioner of Income-tax vs Sardari Lal and Co., 251 ITR 864 (Del) (FB) 6. With regard to the directions of the CIT(A) that while computing the book profit, no deduction is to be allowed under Section 80HHC because the total income was determined at NIL, it is submitted that this issue is now covered in favour of the assessee by the decision of the Hon'ble Apex Court in the case of Ajanta Pharma Ltd. vs Commissioner of Income-tax, 327 ITR 305 and the Special Bench of the ITAT in the case of DCIT s. Syncome Formulations (I) Ltd., 106 ITD 193. With regard to the deduction under Section 10B while computing the book profit, it is stated by the learned counsel that the AO himself has allowed deduction under Section 10B while computing the total income of the assessee and the learned CIT(A) has not disturbed the same. Moreover, the above decision of the Hon'ble Apex Court as well as the Special Bench of the ITAT delivered with reference to the Section 80HHC wi....
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.... that the sum of Rs.2,30,000 added by the Appellate Assistant Commissioner related to new sources of income not considered by the Income-tax Officer, the Appellate Assistant Commissioner could not be held to have exceeded his jurisdiction in making the addition of Rs.2,30,000 on the basis of the other 10 items of hundis which had not been explained by the respondent firm." Let us examine the facts of the assessee's case to ascertain whether the CIT(A) has considered the new source of income. The AO has computed the book profit under Section 115JB as under: "In the return of income, the assessee has computed book profit u/s.115JB of the Act as under: Profit as per Profit and Loss Account Rs.13,49,10,243/- Less : Exempt u/s. 10B Rs.7,14,83,911/- Rs.6,34,26,332/- Less : Deduction u/s.80HHC 1,63,10,271/- Book profit Rs.4,71,16,061/- In this connection, the assessee was asked to show cause as to why deduction u/s.80HHC in the above said working should not be taken at Rs.Nil since as discussed earlier the deduction u/s.80HHC for statutory profits under the I.T.Act, 1961 have been computed at Rs.Nil. It was submitted by th....
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....reversing the decision of the High Court and restoring that of the Appellate Tribunal, (i) that section 115JA was a self-contained code and applied notwithstanding any provision in the Act. Section 115JB is the successor section to section 115JA. Section 115JB continues to remain a self-contained code. (ii) That all assessable entities were not eligible for deduction under section 80HHC(1B). Similarly, only eligible goods were entitled to such special deduction under section 80HHC(1). Section 80HHC(3) was geared to the exports, whereas the levy under section 115JB was on the deemed income. The idea was to exclude "export profits" from the computation of book profits under section 115JB. (iii) That if the dichotomy between "eligibility" of profits and "deductibility" of profits was not kept in mind section 115JB would cease to be a self-contained code. (iv) That, therefore, the Appellate Tribunal was right in holding that that 100 per cent. of the export profits earned by the assessee as computed under section 80HHC(3) was eligible for reduction under clause (iv) of the Explanation to section 115JB." The Special Bench of the ITAT in the case o....
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....he Income Tax Act. Admittedly, while computing the book profit, brought forward depreciation was not reduced and therefore for the purpose of computing the deduction under Section 80HHC for the purpose of section 115JB, brought forward depreciation is not required to be reduced. However, we find that the CIT(A) also pointed out the mistake committed by the assessee in computing the deduction under Section 80HHC with reference to the book profit. The assessee has worked out the deduction at Rs.1,63,10,271/- while the correct deduction under Section 80HHC with reference to the book profit works out to Rs.1,01,83,701/-. When this error was pointed out by the CIT(A) to the assessee he admitted his mistake and also filed a revised claim by furnishing the revised form No.10CCAC. The relevant findings of the CIT(A) reads as under: "14.2 At this stage, the appellant was specifically asked as to the working of deduction from the book profit u/s.115JB(3) explanation clause (iv). It was fairly admitted that the working was under the normal computation adding book depreciation and making other adjustments as are required in the normal course and claiming depreciation as per I.T. Rule....
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....under the Act. The book profit has, therefore, to be wholly quarantined from the said total income. For the determination of book profit, thus, any mode and manner of computation of total income under the Act has not to be applied unless specifically provided for. The Explanation to section 115JB provides the manner of computation of book profit. The starting point is the book profit as disclosed in the profit and lass account prepared in accordance with Parts II and III of Schedule VI the Companies Act, 1956. Such profit is subject to adjustments specified in the Explanation to said section. In terms of clause (ii) of the Explanation to section 115JB (2) the amount of income to which provisions, inter all of section 10A/10B apply, if such amount is credited in profit and loss account, it is to be reduced from the profit as per profit and loss account The amount of income to which, inter alia, section 10A/10B applies, if such amount is credited in the profit and loss account it would only refer to such amount as is appearing in the books of account. A careful perusal of clause (ii) of the Explanation to section 115JB(2) reveals that, though the said clause speaks about th....
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....en Off Rs.11,69,347/- Total Rs.96,18,561/- 8. The ld.CIT(A) has erred in law and on facts in confirming the action of ld. AO in disallowing claim of deduction u/s.10B of the Act in respect of income on account of Misc. balance written off in the sum of Rs.11,69,347/-" 16. At the time of hearing before us, it is submitted by the learned counsel that the tax effect arising from these grounds are either NIL or negligible. Therefore, the assessee does not want this ground to be pressed in the year under consideration. However, the assessee will be at liberty to take up the identical issue, if so advised, in other years. However, so far the year under consideration is concerned, these grounds of the appeal are not pressed. We therefore reject the same as not pressed. 17. Ground No.9 of the assessee's appeal reads as under: "9. The ld.CIT(A) has erred in law and on facts in confirming the action of ld.AO in disallowing claim of deduction u/s.35D of the Act amounting to Rs.8,57,760/-." 18. At the time of hearing before us, it is submitted by the learned counsel that this issue of allowance of deduction under Section 35D arose for the fir....
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.... (Guj) 283 ITR 402. The learned DR, on the other hand, relied upon the orders of the AO. 26. We have carefully considered the arguments of both the sides and perused the material placed before us. We find that the issue under consideration is squarely covered in favour of the assessee by the decision of the Hon'ble jurisdictional High Court in the case of Amba Impex (supra) wherein Their Lordships at page no.147 of 282 ITR held as under: "Under sub-section (2) of section 80HHC of the Act, sale proceeds of goods or merchandise exported out of India and received in convertible foreign exchange become entitled to the deduction subject to fulfilment of other requisite conditions. Clause (a) of subsection (2) of section 80HHC of the Act provides that such sale proceeds have to be received in convertible foreign exchange within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf. Thus, a plain reading of the provision makes it clear that once the competent authority has extended the time, in a case where it is necessary, or, where the sale proceeds have been received within a perio....