TaxTMI 
TaxTMI 
TaxTMI 
2010 (1) TMI 899
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...., the same have to be dismissed as infructuous. 3. The learned DR has no objection to the above submission of the learned counsel for the assessee. Accordingly, I.T.A. No. 6221/Mum/2008 is dismissed as infructuous. I.T.A. No. 6218/Mum/08 and I.T.A. No. 6309/Mum/08 (Cross appeals for A.Y. 2003-04) 4. Grounds of appeal Nos. 1 to 3 by the assessee and grounds of appeal No. 1 by the Revenue read as under: Assessee's grounds of appeal: 1. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (A) erred in not allowing set off of interest income received from LIC gratuity fund amounting to Rs.11,58,811/- against interest expenditure for the purpose of computing deduction u/s. 80HHC. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (A) erred in not allowing set off of interest income received from trade deposit amounting to Rs.2,35,56,164/- against interest expenditure for the purpose of computing deduction u/s. 80HHC. 3. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (A) erred in not allowing set off of interest income received from sundry debtors on over-due debt....
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....ng FDs the assessee had negative bank balance. The assessee had also given certain advances to the employees and also made certain security deposits which were made out of borrowed funds from the bank. Further the assessee had received certain interest from its debtors on account of overdue interest on outstanding bills. It was accordingly submitted that there being direct nexus between the interest income and interest expenditure the same should be netted off and therefore, 90% of the interest income could not be reduced from the profits of the business. The decision of the Special Bench of the Tribunal in the case of Lalsons Enterprises reported in 89 ITD 25 and the decision of the Tribunal in the case of Pink Star vs. DCIT reported in 66 TTJ 885 and the decision of the Hon'ble Mumbai High Court in the case of CIT vs. Nagpur Engineering Co. reported in 245 ITR 806 were cited. Further the decision of the Tribunal in assessee's own case for the A.Y. 2002-03 was also cited wherein it has been held that 90% of interest receipt listed at S. No. a, b, d and e at para 4.2 above were not to be reduced from the profit of the business for the purpose of computing deduction u/s. 80HHC. Vari....
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.... A.Y. 2002-03 and submitted that the ground raised by the Revenue on this issue should be dismissed. 4.6 The learned DR, on the other hand, relied on the decision in the case of Rani Paliwal reported in 268 ITR 220 (PandH), CIT vs. P. Chinna Reddy reported in 282 ITR 389, General Finance Industries reported in 207 CTR 187 and the decision reported in 162 Taxman 123, 65 TTJ 826 and 245 ITR 548 and submitted that netting is not permissible in view of the ratio laid down in the above decisions. 4.7 The learned counsel for the assessee in his rejoinder submitted that as regards grounds of appeal Nos. 1 and 2 by the assessee the same may be restored to the file of the Assessing Officer with a direction to give an opportunity to the assessee to establish the nexus and if the nexus is proved then following the decision of the Special Bench of the Tribunal in the case of Lalsons Enterprises (supra) netting should be allowed. 4.8 We have considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions relied on by both the sides. In our opin....
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.... and distribution charges should not be reduced from the profits of the business for the purpose of computing deduction u/s. 80HHC. 5.2 However, the CIT(A) held that the Hon'ble Supreme Court in the case of CIT vs. K. Ravindranathan Nair has laid down an important ratio that processing charges or job charges (like marketing fee, manufacturing and distribution charges) or any similar income having no nexus with the export turnover could be considered as a component of gross total income being profit of business and 90% of such receipts is to be deducted from the gross total income in terms of clause (baa) to arrive at the business profit and the same has to be included in total turnover in the formula laid down u/s. 80HHC(3) of the Act. He accordingly held that the Assessing Officer has rightly reduced 90% of other charges received by the assessee from the profits of the business for computation of deduction u/s.80HHC of the Act. Aggrieved with such order of the CIT(A), the assessee is in appeal before us. 5.3 The learned counsel for the assessee referring to the decision of the Tribunal in assessee's own case for the A.Y. 2002-03 vide I.T.A. No. 2646/Mum/06 and I.T.A. No. 2983/Mu....
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.... should not be reduced from the profits of business for the purpose of computing deduction u/s. 80HHC of the Act. Aggrieved with such order of the CIT(A), the Revenue is in appeal before us. 6.3 The learned DR referring to the decision of the Madras High Court in the case of CIT vs. Ashok Leyland Ltd., reported in 297 ITR 107 submitted that scrap sales is not a part of the turnover. Similarly 90% of the insurance claim and sundry balances written off has to be reduced from the profits of the business in view of the decision of the Hon'ble Supreme Court in the case of K. Ravindranathan Nair (supra). 6.4 The learned counsel for the assessee, on the other hand, submitted that the issue stands decided in favour of the assessee by the decision of the Tribunal in assessee's own case in the immediately preceding assessment year. 6.5 We have considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Hon'ble Madras High Court in the case of Ashok Leyland Ltd. (supra) has clearly held that scrap sales is not....
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....ed from credit society amounting to Rs.14,438/- against interest expenditure for the purpose of computing deduction u/s. 80HHC. 8.1 The learned counsel for the assessee submitted that the issue needs to go back to the file of the Assessing Officer for fresh adjudication since there is no discussion by the Assessing Officer on this issue as well as by the CIT(A). 8.2 The learned DR, on the other hand, submitted that this issue has to be decided against the assessee and there is no necessity to restore the matter to the file of the Assessing Officer. 8.3 After hearing both the sides, we are of the considered opinion that this issue also should go back to the file of the Assessing Officer in the light of the decision of the Special Bench of the Tribunal in the case of Topman Exports Pvt. Ltd. (supra) which was neither confronted to the parties at the time of hearing of the appeal nor cited by either of the parties. We, therefore, restore the matter back to the file of the Assessing Officer for fresh adjudication of the issue in the light of the decision of the Special Bench cited above and in accordance with law after giving due opportunity of being heard to the assessee. We hold a....
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....onduct the business of PTC. It was further informed that Mr. Khan was introduced to them through a broker and they do not have any communication link with Mr. Khan. The Assessing Officer confronted the above to the assessee. It was submitted that the purchases are made from the above parties during the financial year 2003-04 and 2004-05. However, the party has left the place of working and is not traceable at present. The relevant portion of the bank statement was produced before the Assessing Officer to prove that the payments were made by account payee cheques. However, the Assessing Officer held that mere payment through account payee cheques is not enough to prove the genuineness of purchases. He observed that the assessee has initially admitted bogus purchases from this party. However, he retracted his stand later on contending that the purchases are genuine. No other corroborative evidence was produced before him to prove the genuineness of the purchases. Therefore, holding the purchases being unverifiable he disallowed the amount and added back to the total income of the assessee. He accordingly disallowed the purchase amount of Rs.10,35,000/- from the above party and added ....