TaxTMI 
TaxTMI 
2010 (10) TMI 1144
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....ind that section 145A provides as under :- [Method of accounting in certain cases - Notwithstanding anything to the contrary contained in section 145,- (a) the valuation of purchase and sale of goods and inventory for the purposes of determining the income chargeable under the head "Profits and gains of business or profession" shall be (i) in accordance with the method of accounting regularly employed by the assessee; and (ii) further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation. Explanation : For the purposes of this section, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment. (b) interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received.] 4. Thus, it is observed that section 145A is applicable only for computing the income which is chargea....
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....ve heard the rival submissions and perused the materials available on record. In the instant case the Learned Assessing Officer reduced 90% of ₹ 61,52,875/- under Explanation (baa) of Section 80HHC while computing deduction allowable under section 80HHC on the ground that ₹ 61,.52,875/- is receipt of DEPB and in view of the recent amendment in proviso to section 80HHC(3) as the assessee's export turnover exceed ₹ 10 crores the assessee is not eligible for deduction in respect of DEPB receipt. 9. Before the Learned Commissioner of Income Tax(Appeals) the assessee pointed out that ₹ 61,52,875/- includes ₹ 5,94,525/- which receipt is on account of consultancy charges earned in foreign currency. The Learned Commissioner of Income Tax(Appeals) accepting the submission of the assessee directed the Learned Assessing Officer not to exclude 90% of ₹ 5,94,525/- while calculating deduction allowable under section 80HHC. 10. The Learned Departmental Representative submitted that consultancy charges earned by the assessee is not connected with the export turnover of merchandise of the assessee and therefore, in view of the Explanation (baa) to section 80HHC....
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....f the assessee cannot be held as incorrect. Thus, the drawing charges in question being integral part of the main business of the assessee of manufacturing and selling of machinery and parts, we do not find any error in the order of the Learned Commissioner of Income Tax(Appeals), which is confirmed and this part of the ground of the appeal of the revenue is dismissed. Thus, this ground of appeal of revenue is partly allowed." 13. In the above circumstances, in absence of full details of the nature of consultancy charges earned by the assessee we are not in a position to adjudicate the issue completely. We therefore, set aside the orders of the lower authorities on this issue and restore the issue back to the file of the Learned Assessing Officer for adjudication afresh after allowing reasonable opportunity of hearing to the assessee in light of the discussions made hereinabove. Thus, this ground of appeal of the Revenue is allowed for statistical purposes. 14. Ground No.3 reads as under:- 3. The Learned Commissioner of Income Tax (Appeals) erred in law and on the facts of the case in directing the Learned Assessing Officer to allow deduction under section 80HHC on disclaimer c....
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....he relevant provisions in respect of its claim relating to sales made to Export House as the appellant has sold the goods to the Export House and the export house has exported such goods and has issued a certificate in the prescribed manner that ion respect of the amount of export turnover mentioned in the certificate, the Export House has not claimed the deduction under this Section. The appellant has obtained a certificate from the export house M/s. Clariant (India) Ltd., duly certified by the Auditors, M/s. A.F. Ferguson & Company. In view of the above facts, it is held that the appellant has correctly claimed deduction in respect of sales of ₹ 4,56,02,457/-. The Learned Authorised Representative of the assessee has clearly explained that the facts of the IPCA Laboratories are different. This ground is allowed." 17. Before us the Learned Departmental Representative relied upon the order of the Hon'ble Supreme Court in the case of IPCA Laboratory Ltd., (supra) and submitted that as the export business has suffered loss on export of trading goods the disclaimer certificate issued under section 80HHC (4A)(b) is not proper and the assessee was not entitled for deduction u....
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....ng House in respect of which the certificate has been issued by the Export House or Trading House.]" Further, sub-section (3A) of section 80HHC reads as under : [(3A) For the purposes of sub-section (1A), profits derived by a supporting manufacturer from the sale of goods or merchandise shall be,- (a) in a case where the business carried on by the supporting manufacturer consists exclusively of sale of goods or merchandise to one or more Export Houses or Trading Houses, the profits of the business [* * *]; (b) in a case where the business carried on by the supporting manufacturer does not consist exclusively of sale of goods or merchandise to one or more Export Houses or Trading Houses, the amount which bears to the profits of the business [****] the same proportion as the turnover in respect of sale to the respective Export House or Trading House bears to the total turnover of the Business carried on by the assessee.] 20. Thus, from a reading of the aforesaid provision of law in our considered opinion a supporting manufacturer who receive certificate referred to in sub-section (4A) clause (b) of the Act is entitled for deduction under section 80HHC to the extent of profit ....