TaxTMI 
TaxTMI 
2012 (12) TMI 653
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....p; Interest from: Interest From Customers on belated payments 23,10,475 Interest received from employees towards housing loans 89,752 Interest received on Income Tax Refund 51,062 Interest received from banks 82,009 Provisions written back 3,18.210 Total 28.51.508 3. That the Ld. CIT (A) has erred in law and on the facts while reducing profits of business for calculating deduction u/s 80HHC by 90% of the following amounts/ - Particulars Amount (in Rs.) Interest from: Interest From Customers on belated payments 23,10,475 Interest received from employees towards housing loans 89,752 Interest received on Income Tax Refund 51,062 Total 24.51.289 4. (a) That the Ld. CIT (A) is erred in law and on facts while treating ground number 6 as general in nature (b) That the Ld. CIT (A) is erred in law and on facts while not considering the submissions of assessee on ground no. 6 of grounds of appeal (c) That the Ld. CIT (A) is erred in law and on facts while reducing the deduction u/s 80HHC by applying the method of calculating deduction u/s 80HHC(3)(c)(i) other than as specified u....
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.... by the assessee is against computation of exempt ion available u/s 10B of the IT Act. 5. The brief facts of the case are that the assessee was engaged in the manufacturing of yarn. During the year under consideration, the assessee was carrying on its manufacturing unit at Baddi and the said unit was 100% export oriented unit. The assessee had claimed exemption u/s 10B of the Act from the profits of the manufacturing business carried on at Baddi unit. The assessee had also claimed deduction u/s 80HHC of the Act on trading export and manufacturing export. During the course of assessment proceedings, the assessee furnished revised form No. 56G for claiming deduction u/s 10B of the Act. The error in the earlier form No. 56G filed by the assessee, as pointed out by the auditor was that , by an error, he had reduced the export turnover of trading goods twice from the export turnover of the undertaking and hence, the revised form No. 56G claiming deduction u/s 10B of the Act . In addition, the assessee had shown other income totaling Rs.31,01,716/- on which it had claimed deduction u/s 10B of the Act. The ground No. 2 raised by the assessee is in respect of the aforesaid claim of exem....
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....ds exported by it and hence was connected to its sale and was derived from export of articles or things by the said undertaking. We find merit in the claim of the assessee in this regard. However, the factum of the nature of interest income received by the assessee totaling Rs.23.10.475/- needs verification by the AO. In case said interest is received/receivable by the assessee from its customers on the delayed payments, relatable to the export sales made by the assessee, then such interest is to be included as part of the eligible profits, for computing the exemption u/s 10B of the Act . However, where such interest due from the parties is not so relatable to the export sales made by the undertaking, then the assessee is not entitled to the benefit of exemption u/s 10B of the Act on such 'other incomes'. The AO shall compute the exemption u/s 10B of the Act in accordance with our guidelines and after affording reasonable opportunity of hearing to the assessee. 9. The second element of other income is interest received from employees on housing loans amounting to Rs.89,752/-. The Ld. AR for the assessee placed reliance on Joyco India P. Ltd.V ITO (2009) 122 TTJ 940 (Del). ....
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.... expenses, which is portrayed by the "Provision no longer required written back" deserves to be considered to compute profits of the industrial undertaking eligible for deduction u/s 80IA of the Act. Thus, on this aspect the assessee succeeds." 13. Ground No. 2 raised by the assessee, thus, is partly allowed. 14. The issue in Ground No.3 is not pressed and the same is dismissed. 15. The issue raised by the assessee vide Ground No.4 in respect of computation of deduction u/s 80HHC of the Act by applying the method of calculating the deduction u/s 80HHC(3)(c)( i) of the Act was challenged by the assessee before us. The Ld.AR for the assessee fairly pointed out that the issue is presently covered against the assessee both by the ratio laid down by the Chandigarh Bench of Tribunal in the case of sister concern of the assessee in Mahavir Spinning Mills Ltd. reported in 110 ITD 211 (Chd), against which appeal is pending before Hon'ble Punjab & Haryana High Court. The issue otherwise stands covered against the assessee by the Hon'ble Madras High Court in M/s. Ambatture Clothing Ltd. In view of the admission of the ld. AR for the assessee, the issue being covered against the asses....
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.... the domestic and export of traded items dealt in by the assessee. The assessee is preparing a consolidated statements of Profit & Loss Account and consequently, where the assessee is engaged in both manufacturing and sale of its manufactured goods and also trading and export of other goods not manufactured by it, the provisions of Section 80HHC(3) are attracted in order to compute the deduction under the said Section. Consequently, there is a need to work out the cost of trading goods, which in turn are exported by the assessee. Admittedly, the items of expenditure which are purely relatable to the manufacturing activities, carried on by the assessee, are to be excluded from the list of expenses being attributable to such manufacturing activities. However, the balance expenditure is to be attributed both to the manufacturing activity and trading activity, in order to compute the deduction available to the assessee. The first item of expenditure to be considered is the personnel expenses. The assessee had attributed 33,56,010/ - being common expenses both for manufacturing and trading activities. The AO adopted said personnel expenses at Rs.1,18,88,142/-. As per the assessee, th....
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....turing activities, need to be considered for computing the indirect cost of trading goods. The AO is, thus directed to recomputed Personnel Expenses after affording reasonable opportunity of hearing to assessee. 22. Next item of expenditure is depreciation of Rs. 5.7 crores. In line with our observation in the paras herein above, where such depreciation is on the plant installed at the manufacturing unit and being involved in the manufacturing process and such depreciation on assets used in manufacturing activities are to be excluded from the cost of expenditure which is attributable to trading goods. However, the depreciation on assets installed in the office of the assessee which is common for both manufacturing and trading activities are to be included as part of indirect cost for trading goods. Accordingly, AO shall re-compute the depreciation and assets attributable to the indirect cost of trading goods. 23. Next item of expenditure is selling expenses and only such selling expenses which are common for manufacturing and trading activities, are to be so included and that part of the selling expenses, which is exclusively attributable to the manufactured goods, are not to....