TaxTMI 
TaxTMI 
2016 (10) TMI 1271
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.... under section 143(3) of the Act vide order dated 29.12.2006; wherein the income of the assessee was determined at R. 11,35,58,715/- under the normal provisions of the Act and 'Book Profits' under section 115JB of the Act were computed at Rs. 10,94,92,680/- due to certain additions/disallowances. 2.2 Aggrieved by the order of assessment dated 29.12.2006 for ay 2004- 05, the assessee preferred an appeal before the CIT(A)-I, Mumbai who disposed off the appeal vide the impugned order dated 24.12.2008 allowing the assessee partial relief. 3. Presently, both Revenue and the assessee being aggrieved by the order of the CIT(A)-1, Mumbai dated 24.12.2008 for A.Y. 2004-05, have preferred appeals which are being disposed off hereunder. Assessee's appeal in ITA No. 1382/Mum/2009 4. In this appeal, the assessee has raised the following grounds: - "GROUND I: Application of Rule 80 of the Income Tax Rules, 1962 ("the Rules") 1. On the facts and circumstances of the case and in law, the Learned CIT(A) erred in directing the AO to compute disallowance of interest and other expenditures u/s. 14A by applying Rule 80 of the Rules. 2. The Appellant most humbly prays....
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.... other items of miscellaneous income aggregating to Rs. 123594369/- while computing deduction u/s. 80HHC of the Act on the ground that they are covered under explanation (baa) as "any other receipt of the similar nature included in such profits". 2. The Appellant prays that it be held that the said items are related to business operations and are not in the nature as envisaged under explanation (baa). With out prejudice to Ground VI above : GROUND VII Not allowing to set off the incentives against the profits 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the AO of rejecting Appellant's claim of getting deduction u/s. 80HHC in respect of sale of Duty Entitlement Pass Book ("DEPB") Licence and Duty Draw back amounting to Rs. 48585160/- 2. The Appellant prays that it be held that the Appellant is entitled to the deduction u/s. 80HHC. 3. Without prejudice if the act of CIT(A) is upheld, the AO be directed to exclude only the profit on transfer of DEPB and not the entire DEPB receipts. GROUND VIII The Appellant craves leave to add, to alter and/or t....
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....ct accordingly. Consequently, grounds I and II of the assessee's appeal are treated as allowed for statistical purposes. 6. Ground No. III - Disallowance of non-compete fee paid to ex- Directors 6.1 In this ground, the assessee challenges the impugned order of the learned CIT(A) in confirming the AO's action in disallowing non-compete fee paid to ex-directors. 6.2 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. We find that this issue has been held in favour of Revenue and against the assessee in the decisions of the Coordinate Bench of the Tribunal in the assessee's own case for A.Y. 2003-04 in ITA No. 6721/Mum/2007 dated 10.08.2016, following the decision of another Coordinate Bench in the assessee's own case for A.Y. 2002-03 in ITA No. 6720/Mum/2007 dated 12.06.2013. In its order for A.Y. 2003-04 (supra), to which both of us are party, at para 6 thereof it was held us under: - "6. We have heard the rival submissions, perused the materials on record and carefully gone through the orders of the Revenue authorities. On perusal of the records, it is found that this issue h....
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....he case of J.K. Industries vs. ACIT (2013) 351 ITR 434 (Kar). Consequently, ground No. V of the assessee's appeal is dismissed. 9. Ground No. VI - Deduction of Miscellaneous income while computing deduction under section 80HHC 9.1 In this ground, the assessee assails the impugned order of the learned CIT(A) in confirming the action of the AO of excluding incentives and other items of miscellaneous income while computing the disallowance under section 80HHC on the ground that they are covered under Explanation (baa) to section 80HHC of the Act. The learned counsel for the assessee submitted that the very same issue raised by the assessee before a Coordinate Bench of the Tribunal for A.Y. 2003-04 was set aside and restored to the file of the AO in its order in ITA No. 6721/Mum/2007 dated 10.08.2016. 9.2 After hearing both parties in the matter, we have carefully considered the material on record; including the judicial decision cited. We find that as contended by the assessee, the very same issue was raised before a Coordinate Bench of this Tribunal in the assessee's own case for A.Y. 2003-04 (supra). It is seen from a perusal of the orders of the authorities below that the ....
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....nate Bench of this Tribunal in the assessee's own case for A.Y. 2003-04 in its order in ITA No. 6721/Mum/2007 dated 16.08.2016. At paras 12 and 13 thereof, the Coordinate Bench has observed and held as under: - "12. Ground No.VII of the appeal relates to not allowing set off of incentives against profits. The assessee claimed set off of miscellaneous income for an amount of Rs. 8,39,51,299/-. However, the AO treated the above amount as sundry creditors and hence are not eligible for deduction u/s 80 HHC and has to be reduced to 90%. Further, the AO also held that this amount includes the sale of DEPB licence of Rs. 2,68,47,494/- and duty draw back of Rs. 1,32,91,296/- and as such these have no direct nexus with the export activity of the assessee company and is not eligible for deduction. While the assessee carried the matter in appeal, the learned CIT (A) has also held that the turnover of the appellant is more than Rs. 10 crores and hence, the assessee is not eligible for deduction as claimed by the assessee in view of the amended provisions of the Act and accordingly, the learned CIT (A) rejected the claim of the assessee. Hence, the assessee is in appeal before the Tri....
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.... allowed. Revenue's Appeal in ITA No. 1573/Mum/2009 13. In this appeal, Revenue has raised the following grounds: - "1. Whether on the facts and circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 59,31,4771- made by the Assessing Officer to the closing stock being unutilized MODVAT credit. 2. Whether on the facts and circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to adopt the net interest for the purpose of deduction u/s 80HHC. 3. Whether on the facts and circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to deduct 90% of the net service income only after adjustment of expenses, if any for the purpose of deduction u/s 80HHC. 4. Whether on the facts and circumstances of the case and in law, the CIT(A) erred in allowing the assessee's ground of appeal relating to addition of provisions for doubtful debts and advances and provisions for diminution in the value of investment while computing the tax liability u/s.115JB of the Act. 5. The appellant craves leave to add to, amend or withdraw the aforesaid ground of appeal.....
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....f his order: - "At the time of hearing of this appeal, the learned counsel for the appellant have submitted that the appellant has already added Modvat credit in the closing stock of finished goods of Rs. 1,18,860/- and added Modvat credit on raw materials of Rs. 51,49,495/- and therefore no further addition is required to be made. In assessment year 2000-01, on this issue, it was held that the appellant had added back Rs. 53,38,796 as per provisions of section 145A of the Act and this amount as added by the assessing officer is not of unutilised Modvat but it was the amount of deposit made by the appellant with the excise authorities. Therefore, there was no reason for making this disallowance by the assessing officer hence this addition is deleted." 38. In our view, the issue has been rightly decided by the learned CIT(A) and the valuation of closing stock is already in consonance with section 145A. His order is, therefore, confirmed on this issue." Following the aforesaid decision of Coordinate Bench of this Tribunal in the assessee's own case for A.Y. 2001-02, we uphold the decision of the learned CIT(A) in directing the AO to delete the addition m....
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....itted that the order of the learned CIT(A) is to be upheld as this issue is well settled by various judicial pronouncements, that for the purpose of computing deduction under section 80HHC of the Act, 90% of net income from services is to be deducted after adjustment for expenses, if any. In this regard, reliance was placed on the following judicial pronouncements: - (i) ACG Associated Capsules (P) Ltd. vs. CIT (2012) 343 ITR 89 (SC) (ii) Lalsons Enterprises vs. DCIT (2004) 89 itd 25 (Del. SB) (iii) Shri Ram Honda Power Equipment (2007) 289 ITR 475 (Del) 16.3 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. In our view, this issue is settled by judicial pronouncements cited above by the decisions of the Hon'ble Apex Court in the case of ACG Associated Capsules (P) Ltd. vs. CIT (supra), of the Hon'ble Delhi High Court in the case of Shri Ram Honda Power Equipment (supra) and of the ITAT - Delhi (Special Bench) in the case of Lalson Enterprises (2004) 89 IGD 25 (Del SB). Respectfully following these decisions (supra), we uphold the decision of the learned....