TaxTMI 
TaxTMI 
2016 (6) TMI 1145
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....officer to allow these expenditure to the year to which it pertains; 3. Disallowances U/s 14A136(1)(iii) Erred in confirming the disallowances u/s 14A/36(1)(iii) of Rs. 50,000 (adhoc amount) for Interest and Expenditure with respect to investment without appreciating the fact that the assessee has not incurred any expenditure and without any finding to the effect; 4. Depreciation on cars erred in confirming disallowances of depreciation on car purchased in the name of an employee Rs. 200,565/-; erred in not accepting the principle laid down by Hon'ble Supreme Court in Mysore Minerals Ltd. (239 ITR 775) wherein it has been laid down that beneficial owner is entitle to depreciation on asset; 5. Export to Iraq Erred in confirming disallowances of commission paid to the agent or their nominee in respect of the Exports to Iraq; Erred in applying explanation to section 37(1) to the facts of the case in respect of commission paid to the agent or their nominee since payment of commission neither an offence nor it is prohibited by any law enacted by the State or Central Government of India; 6. Deduction u/s 80HHC 6.1 Determination of profit of the businesse rr....
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....om debtors for export of goods and should be considered as profit of the business. In ITA No. 2094/Mum/2008 the Revenue raised the following grounds of appeal: 1. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the A.O. not to exclude foreign exchange gain of Rs. 91,16,185/- from total turnover and export turnover for the purpose of calculating deduction u/s. 80HHC of the Income Tax Act." 2. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the A.O. not to exclude 90% of foreign exchange gain of Rs. 91,16,185/- from profits of business within the meaning of clause (baa) of explanation to section 80HHC of the Income Tax Act." 3. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the A.O. not to exclude 90% of sundry credit balances written back amounting to Rs. 50,50,083/- and provision for doubtful debts written back amounting to Rs. 27,23,780/- from profits of business within the meaning of clause (baa) of explanation u/s. 80HHC of the Income Tax Act." 4. The appellant prays that the order of CIT(A) on the above grounds be set aside and t....
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....er reached finality on disposal of writ petition in A.Y. 1992-93. After analysing the case law on the issue the Third Member has agreed that the liability has to be allowed when the same was crystallised in A.Y. 1992-93. This also indicates that even in mercantile system of accounting, year of crystallization of liability is important than nomenclature as prior period expenditure. There is no such finding by the A.O. with reference to the nature of expenditure and the year of crystallization. While accepting the income the A.O. not only disallowed the prior period expenditure of Rs. 3,19,780/- but also net debit of Rs. 12,891/- thereby making disallowance of Rs. 3,32,671/- more than the amount involved, which indicates that the A.O. has not applied his mind while considering the disallowance. Since the A.O. has disallowed only the net amount after accepting the prior period income in A.Y. 2003-04 and the assessee has no objection for similar treatment in this year, we direct the A.O. to disallow the amount of Rs. 12,891/- only, which is the net debit made to the P & L Account. With this direction the ground is considered partly allowed." 4. Keeping in view the order of Co-ordina....
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....red to the file of the A.O. to re-examine the nature of purchase of car, source thereof and claim of expenditure, etc. to decide whether the assessee company is a beneficial owner or not. If the assessee has beneficiary ownership of the assets then the A.O. is directed to allow the depreciation. The A.O. is to decide accordingly after giving proper opportunity to the assessee. The ground is restored to the file of the A.O." 6. Hence, keeping in view the order of Co-ordinate Bench and Principle of Consistency, this ground of appeal is also allowed in favour of assessee and we direct the AO to examine this issue in the light of observation/direction given in assessee's case for AY 2004-05 in ITA No. 2027/M/2008. 7. Ground No.5 raised in the present appeal is in respect of commission of export to Iraq. AR of assessee argued that this ground of appeal is also covered in favour of assessee by the order Hon'ble Calcutta High Court in CIT vs. Rajrani Export (AIT 2013-75- High Court) and Co-ordinate Bench of ITAT, Mumbai in NSIL Exports Ltd. vs. DCIT [2014] 44.taxman.com. 246, and Air Pac Exports Vs. ACIT (152 ITD 634), Mumbai. On the other hand, ld. DR for the revenue argued that th....
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....t who is not connected to the Iraqi authorities. Therefore, in the absence of specific finding that the payments were made to the Iraqi Authorities, it cannot be held as illegal payment infraction of law. Even if the assessee fail to prove beyond doubt that the payments in question inconsonance to the service rendered by the agent the same cannot be held as illegal in the absence of any evidence to prove that the assessee intended to pay the amount illegally through agent." Similar view was taken by Co-ordinate Bench of Mumbai Tribunal in Air Pac Exports V/s ACIT [152 ITD 634]-Mum in ITA No. 2981 to 2983/M/2012 for AY-2001-02 to 2002-03 vide order dated 11.06.2014. We have also gone through the order of Co-ordinate Bench of this Tribunal in M/s Cipla Ltd. Vs. DCIT vide order dated 27.09.2009, relied by Ld. DR for Revenue, wherein this Tribunal has taken a contrary view. We have noticed that the order passed in M/s Cipla Ltd. was differentiated by coordinate bench of this Tribunal in NSIL Exports Ltd. (supra) holding that, Cipla was involved in illicit payment made to Iraq Government as per Volker Committee Report holding as under: "35. It is seen that the revenue authorities ....
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....issioner of Income Tax V/s. Dresser Rand India Private Limited reported in (2010) 323 ITR 429 (Bom). The dispute in the present case relates to the balance written back in respect of the expenditure incurred by the assessee. The Commissioner of Income Tax (Appeals) in his order has recorded a finding that in the facts of the present case, the balance written back in respect of the expenditure incurred amounting to Rs. 6,53,961/- is liable to be considered as business income eligible for deduction under Section 80HHC. In such a case, whether the decision of this Court in the case of Dresser Rand India Private Limited (supra) would apply is the question. Since this aspect of the matter is not considered by the Income Tax Appellate Tribunal, by consent, the order of the Income Tax Appellate is set aside on the fourth question and the said issue is restored to the file of the assessing officer for fresh consideration and in accordance with law. While passing fresh order, the assessing officer shall also take into consideration, the decision of this Court in the case of Commissioner of Income Tax V/s Pfizer Limited reported in (2011) 330 ITR 62 (Bom). " Hence, keeping in view t....
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....garding exclusion of foreign exchange gain in respect of export proceeds in the export turnover and the profit of business while computing deduction under section 80HHC. The AO had excluded the same and treated the same as income from other sources. CIT(A) has held that foreign exchange gain in respect of export made by the assessee is part of export business and therefore the same had to be included in the export turnover while computing the profit of business. Aggrieved by the said decision the revenue is in appeal. 3.2.1 After hearing both the parties we find that the issue raised is covered by the decision of the Special Bench of the tribunal in case of Prakash L. Shah (306 ITR (AT) Page-1) in which it has been held that exchange gain in relation to export proceeds has to be taken as part of export turnover and profit of business of the year in which the export was made. In this case the Learned AR submitted that the foreign exchange gain was in respect of export of relevant year only and such claim has not been contraverted before us by the Learned DR. We therefore respectfully following the decision of the Special Bench (supra) see no infirmity in the order of CIT(A) and t....
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....s of the case, the Tribunal was justified in upholding the order of CIT (A) in favour of the assessee company, the issue of exclusion of foreign exchange gain in respect of export profit from the export turnover for the purpose of computation under Section 80HHC of the Act ?" 2. In so far question (a) is concerned, the Tribunal by the impugned order has followed the decision of this Court in the matter of Commissioner of Income Tax V/so Badridas Gauridu (P) Limited reported in (2003) 261 ITR 256 (Bom) to hold that exchange rate gain on forward contract is business income. Accordingly; the Tribunal held that the foreign exchange gain would be export profit and, hence, cannot be excluded from export turnover under Section 80HHC of the Income Tax Act, 1961. In view of the above, we see no reason to entertain question (a). 3. In so far as question (b) is concerned, counsel for the parries state that this, issue is covered in favour of the assessee and against the Revenue by the decision of this Court in the matter of Commissioner of Income Tax V/so Gem Plus Jewellery India Limited reported in (2011) 330 ITR 175 (see page 183). In that view of the matter, we see no reason to enter....