TaxTMI 
TaxTMI 
2009 (12) TMI 984
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....o have upheld the action of the Learned Assessing Officer that the income generated is from DEPB licence and not from industrial undertaking and as such the same cannot be part of the profit of the industrial undertaking." 3. The Learned Commissioner of Income Tax(Appeals) has decided the issue as under:- "5.2 I have considered the submissions of the appellant. My findings, in respect of each item of income included in the other income are as under: (i) DEPB Licence Rs. 13,31,972/-: In the Assessment Year 2001-02, it was held by the CIT(A) that this income is not part of profit of the industrial undertaking. However, recently the Hon'ble Gujarat High Court in the case of CIT V. India Gelatine & Chemicals Ltd., held that the duty draw back is given specifically to reduce the cost of manufacturing the goods and to reduce the burden of custom duties and excise duties, and therefore, any receipts by way of reimbursement of such duties are inextricably linked with cost of production and therefore, duty drawback was income derived from the industrial undertaking for the purpose of section 80J of the Act. The scheme of DEPB licence is similar to drawback.....
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.... the said receipt is not received from the industrial undertaking, the deduction under section 80IB is not eligible on the same. 7. On appeal, Learned Commissioner of Income Tax(Appeals) held that the services charges may be considered for deduction under section 80IB if the assessee is able to show that the sales were "after sale service" condition or the receipts arose in the course of manufacturing. He relied on the decision of the case of Mira Industries 87 ITD 475. 8. The Learned Departmental Representative supported the order of the Learned Assessing Officer. 9. The Learned Authorised Representative of the Assessee argued and submitted that in case the receipts from service charges are more than the expenditure incurred for earning the receipts than the net amount of receipts from service charges should be deducted from the business profits for computing deduction under section 80IB otherwise, no deduction should be made from the business profits. 10. We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. In the instant case the Learned Commissioner of Income Tax(Appeals) in respect of service cha....
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....sion of the ITAT, Ahmedabad in the case of Gujarat Flurochemicals (ITA No.231/Ahd/2000 dated 24.08.2000) and Gujarat Alkalis & Chemicals Ltd. (ITA No.1188/Ahd/2000 dated 13.12.2001)." 12. We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. Both the parties agreed that the issue stands covered against the revenue by the decision of Hon'ble Supreme Court in the case of CIT Vs. Laxmi Machine Works (2007) 290 ITR 667 (SC) wherein it was held that Excise duty and sales-tax are not includible in "total turnover" in the formula contained in s. 80HHC (3). Respectfully following the decision of the Hon'ble Supreme Court, we dismiss these grounds of appeal of the revenue. 13. Grounds no.7 and 8 of the appeal of the Revenue reads as under: "7. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in holding that interest income of Rs. 66,13,587/- is not to be included in the turn over for the purpose of calculation of deduction under section 80HHC of the Act. 8. The Ld.CIT(A) ought to have upheld the finding of the AO that since the assessee itself had accounted for the inte....
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.... confirmed and the ground of appeal of the Revenue is dismissed. ITA No.1040/Ahd/2006 17 Ground no.1 of the appeal of the assessee reads as under: 1.1 The Commissioner of Income Tax (Appeals)-III, Baroda, [hereinafter referred to as 'the CIT(A)'] has erred in law and in facts of the case in upholding the Assistant Commissioner of Income tax, Circle 4, Baroda ["hereinafter referred to as the AO"] action in excluding the 'other income' of Rs. 47,58,885 (details given below), while arriving at the profit eligible for deduction under section 80IB of the Act on the ground that the same was not derived from 80IB unit. Sr. No. Nature of income Amount (Rs.) 1 Income from sale of wooden scrap and drum 10,088 2 Documentation charges collected from customers 127,432 3 Insurance charges incurred and then collected from customers on local sales 11,124 4 Octroi Sales 3,000 5 Interest income 46,07,241 Total 47,58,885 1.2 The CIT(A) has failed to appreciate and ought to have held that the other income of Rs. 47,58,885 has been derived from the 80IB unit and hence the said income should be ....
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....ctivity of the industrial undertaking. The income generated on sale of such empty containers could be set off against the purchase cost, in other words bringing down the purchase price of raw material, or it could be treated as income directly relatable to the activity of industrial undertaking. The net result would be the same either the cost of raw material gets reduced and thus increases profits of manufactured products on sale; or the sale price of containers is directly added to swell the total profits. Therefore, in light of the decision of this High Court in the case of Dy. CIT vs. Harjivandas Juthabhai Zaveri (supra), there is no infirmity in the impugned order of Tribunal." We find that the lower authorities have not verified the nature of receipts of Rs. 10,088/- claimed by the assessee as scrap sale. Therefore, in our considered opinion, it shall be just and fair to remit this part of the ground of appeal back to the file of the AO for verification and thereafter, decided the same afresh after taking into consideration the decision in the case of Dy.CIT Vs. Core Health Care Ltd. (2009) 308 ITR 263 (Supra). 19. Similarly we find that the claim of the assessee is tha....
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....as under:- "3.1 The CIT(A) has erred in law and in facts of the case in upholding the AO's action in reducing the deduction claimed under section 80IB of the Act (on the profits from the manufactured export turnover) from the 'profits of the business' for the purpose of calculating the deduction under section 80HHC of the Act, without considering the fact that both the sections are independent of each other and neither is made subject to the other. 3.2 The appellant submits and prays that considering the intention behind the grant of ^/ deduction under section 80HHC, the AO ought not to have reduced the deduction under section 80-IB of the Act from the 'profits of the business' while computing the deduction under section 80HHC of the Act. 3.3 Without prejudice to the above, if the 'profits of the business' as computed for the deduction - under section 80HHC of the Act have to be reduced by the profits arising to the 80-IB unit, then the 'profits' to be reduced should be restricted to the extent of 'profits arising from export turnover, which amounts to Rs. 19,13,000. In other words, the profits arising from the manu....
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....ellaneous income of Rs. 30,97,076/- and exchange variation of Rs. 10,01,991/- in view of explanation (baa) to section 80HHC of the Act. However, at the same time, the Learned Assessing Officer included the miscellaneous income and exchange variation income in the total turnover. The Assessee submitted that excluding miscellaneous income and exchange variation and including the same in the turnover leads to absurd result considering that there will be disparity between the numerator (profit of the business ) and denominator (total turnover) of the formula. The Learned Commissioner of Income Tax(Appeals) did not accept the explanation of the assessee and held that miscellaneous income have to be treated as a part of business income and therefore are included in the total income also as the arise out of the business activity. He also held that the amount of exchange variation is directly linked to export of goods and therefore, was rightly treated as a part of the total turnover. 27. The Learned Authorised Representative of the Assessee reiterated the submissions made before the Learned Commissioner of Income Tax(Appeals) and the Learned Departmental Representative supported the or....
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.... 10B Unit should not be included in the total turnover for computing deduction under section 80HHC of the Act available to Baroda Unit. The Assessee submitted that manufactured export turnover of Rs. 15,17,95,464/-pertaining to 10B unit should also be included in export turnover and local turnover for computing the deduction under section 80HHC of the Act. However, the Learned Assessing Officer did not accept the claim of the assessee without giving any reason and only added the export turnover of 10B unit of Rs. 15,17,95,464/- to the total turnover for computing the deduction under section 80HHC of the Act. In appeal, the Learned Commissioner of Income Tax(Appeals) observed that the provisions of section 80HHC are explicit on the issue that for the purpose of computing deduction under section 80HHC the export turnover has to be only that export turnover to which section 80HHC applies. The contention of assessee that export turnover should also be included the turnover of the unit to section 10B applies. 31. The Learned Authorised Representative of the Assessee submitted that the issue is covered in favour of the assessee by the decision of Hon'ble Madras High court in the c....
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....fication and after allowing reasonable opportunity of hearing to the assessee. thus, this ground of appeal of assessee is allowed for statistical purposes. 34. Ground no.5.2 of the appeal of the assessee reads as under: "5.2 Without prejudice to the above, if the CIT(A) action is upheld, then on like to like basis, the manufactured export turnover of Rs. 15,17,95,464 should be also included in the export turnover' (which is the numerator) for the purpose of calculating the deduction available under section 80HHC of the Act." 35. At the time of the hearing the Learned Authorised Representative of the Assessee submitted that he is not pressing this ground of appeal and accordingly the same is dismissed. 36 Ground no.6. of the appeal of the assessee reads as under:- "6.1 The CIT(A) has erred in law and in facts of the case in upholding the AO's action in charging interest of Rs. 1,88,072 under section 234D of the Act, without considering the fact that the refund (on which interest has been charged) was granted to the appellant on May 30, 2003, which is before the insertion of provisions of section 234D of the Act with effect from June 1, 2003. ....