TaxTMI 
TaxTMI 
2010 (5) TMI 851
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....vely for the business purpose and are in the nature of penalty. This issue has been decided in favour of the appellant by the order of CIT(A) for A.Y. 2000-01 and A.Y. 2003-04 and by the Hon'ble I.T.A.T., Ahmedabad for A.Y. 1997-98 in ITA No.612/Ahd/2001. Respectfully following the above decisions of the Hon'ble ITAT, the disallowance made by the AO is hereby deleted. 4. At the time of hearing, both the parties agreed that this issue is covered with the decision of Ahmedabad "D" Bench, in the case of Mazda Controls Ltd. in ITA No.612/Ahd/2001 for Assessment Year 1997-98, wherein it was held as under: "3. The next dispute is with regard to liquidated damages of Rs. 7,25,980/-. The assessee company claimed three amounts - (i) Rs. 3,36,333 being the amount deducted by companies on account of delayed delivery from various invoices; (ii) Rs,3,45,905/- being the amount deducted by various companies as penalty and other demurrage charges; and (iii) Rs. 43,743 being other sundry damages on various occasions deducted by clients from their sales bills. The Assessing Officer disallowed the three payments aggregating to Rs. 7,25,980/- by stating that they are in the nature ....
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....n the business. 5. We have heard the parties and considered their rival submissions. The amounts were deducted because of the delay in terms of the purchase order and it is also stated by the assessee that delay in delivery has occurred due to delay in drawings approvals by the customers, delay in inspection and performance test of the equipments by the customer or their authorized inspectors which was a normal feature in the business of the assessee. The decision relied upon by the assessee in the case of Sardar Prit Inder Singh Vs. CIT 160 ITR 493 fully supports the claim of the assessee wherein it was held that the amounts paid as damages towards late delivery of good is allowable as business expenditure. The order of the CIT(A), in our opinion, is just and proper and does not call for any interference." 5. Fact being identical and in absence of any distinguishing features pointed out by the Learned Departmental Representative respectfully following the above quoted decision of the Tribunal, we dismiss this ground of appeal of the revenue. 6. Ground no.2 of the appeal reads as under:- "2. The Ld. CIT(A) erred in law and on the facts of the case in directing the A.O n....
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..... The Learned Commissioner of Income Tax(Appeals) held as under:- "4. The third ground is against reduction of other income from business profit for the purpose of calculation of deduction u/s 80HHC. These incomes are: (a) Interest income : Rs. 3,94,774/- (b) GST set off : Rs. 12,98,202/- (c) Write off payment received. : Rs. 1,15,767/- (d) Technical drawings. : Rs. 28,00,156/- The issues relating to interest income and GST set off were decided ....
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....ceived from customers and therefore, was the business income of the assessee and hence, should not be excluded from the business profit for the purposes of computing deduction under section 80HHC of the Act. These submissions were not controverted by the Learned Departmental Representative. 13. We find that Ahmedabad "D" Bench of the Tribunal, in the case of Mazda Controls Ltd. in ITA No.612/Ahd/2001 for Assessment Year 1997- 98 held as under: "7. The next dispute is with regard to the direction to consider the following items for deduction u/s.80HHC:- 1) Interest income Rs,2,95,907/- 2) Packing and forwarding income Rs. 8,75,570/- 3) Labour charges income Rs. 104188/ 4) Insurance c....
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....92,202/- and write off of payment received of Rs. 1,15,767/- while computing deduction under section 80HHC. With regard to the exclusion of interest income from business profits for computing deduction under section 80HHC, we find force in the submission of the Learned Authorised Representative of the assessee that if borrowed funds are used for earning interest income and interest is paid on borrowed funds then set off of interest expenditure should be allowed against interest income and the net interest income should alone we reduced from the business profit for computing deduction under section 80HHC of the Act. We therefore, set aside the orders of the lower authorities and restore the matter back to the file of the Learned Assessing Officer for proper verification and then to decide the issue as per law in line with the discussion made hereinabove after allowing proper opportunity of hearing to the assessee. Thus, this part of ground of appeal is allowed for statistical purposes. 15. With regard to the income of Rs. 28,00,156/- from technical drawings, we find that in the instant case, the claim of the revenue is that the Learned Commissioner of Income Tax(Appeals) was not ....