TaxTMI 
TaxTMI 
2010 (5) TMI 913
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....and exclusively 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 the....
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....purchase order itself which was an inherent feature in 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)....
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....its of the business , for the purpose of computation of deduction u/s 80HHC." 11. 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 in favour of the appellant in its own case by the CIT(A) for A.Y. 2001-02 and A. Y. 2003-04 and by the order of Hon'ble ITAT for A.Y. 1997-98 and A.Y. 2001-02 in ITA Nos.612/Ahd/2001 and 728/Ahd/2005. Respectfully following the above decisions of the Hon'ble ITAT, I direct the AO to include the above income in business profit while computing deduction u/s 80HHC. As regards the other two items of income the A.O. held that the receipts are not derived from export business of the appellant. So he excluded 90% of the said income while computing deduction u/s.80HHC. The A.R. submitted that the write off payme....
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....g and forwarding income Rs.8,75,570/- 3) Labour charges income Rs. 104188/ 4) Insurance claim income Rs. 74980/- 5) Rate difference Rs. 5,189/- 6) Bad debts recovered Rs. 82,794/- 7) GST set Off Rs,2,37,513/- The contention of the Id. Departmental Representative is that these are not the income derived from export and, therefore, the assessee is not entitled to any deduction. The deduction u/s.80HHC(3) is computed by comparing the export turnover of the assessee with the total turnover and the profit from business earned by the assessee. The amount so arrived at is deemed by sub-section of section 80HHC as income derived from export. What, therefore, we have to determine is whether they are the business income of the assessee and if that be so, that would fall for consideration in computation of the deduction. Such incomes are, (i) Interest income Rs. 2,95,907/- , (ii) Packing and forwarding income of Rs. 8,75,570/-, (iii) Labour charges income Rs. 10,188/- and (iv) Insurance claims income Rs. 7,980/-. It is thus clear that all the aforesaid income are business income of the assessee and no separate assessment under any other head is made b....