TaxTMI 
TaxTMI 
2014 (4) TMI 1260
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..... CIT (A) has erred in law and on the facts while reducing 90% of the following items of income from the eligible profits for the purpose of calculation of deduction u/s 80HHC: a) Sundry Balances written back Rs. 51,32,733 b) Provisions no longer required written back Rs. 9,95,752 c) Misc receipts Rs. 3,19,140 Rs. 64,47,625 5 That the L d. CIT(A) has erred in law and on the facts while directing to include Misc. income of Rs. 6447625/- (referred in ground no. 4) in the total turnover of the appellant for calculating deduction u/s 80HHC. 6 That the L d. CIT(A) has erred in law and on the facts while excluding 90% of grossa interest income of Rs. 3027072/- insteasd of As. 90% of net interest income As. 2237509/- 7 That the L d. CIT (A) has erred in law and on the facts while not admitting the additional ground of appeal raised by the appellant vide letter dated 28. 12.2007 as below: That the Assessing officer has erred in law and on the facts while not granting deduction under proviso to sec 80HHC(3) on duty draw back amounting to Rs. 287513/-" 3 Ground No. 1 - After hearing both the parties we find that during assessment proceedings it ....
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....required to pay the sums and therefore earlier purchases which were inflated now can be reduced and this becomes normal profit. As far as Misc. receipts are concerned, same relate to rebte and discount, duty drawback and sale of samples. These being part of the business and therefore should be held to be eligible for deduction. In this respect he relied on the following decisions: (i) Tribunal's order in the case of VMT Spinning Co. Ltd Vs. ACIT in ITA No. 682/07 for the Assessment year 2002-03 dated 13.7.2012 (10B allowed on provisions w/back) (ii) CIT vs. Metalman Auto P. Ltd, 336 ITR 434 (PH) Misc income, discount received, sundry credit balance written back eligible for deduction u/s 80iB). 11 On the other hand, the L d. D.R. for the Revenue submitted that clear details of various items has not been provided. Further as far as interest and Duty Drawback is concerned, same is not part of income from the industrial undertaking. Therefore same cannot be allowed for deduction purposes. In this regard he relied on the decision of Hon'ble Supreme Court in case of Pandian Chemicals Ltd Vs. CIT, 262 ITR 278 (S.C) and Liberty India vs. CIT, 317 ITR 218 (S.C). 12 We hav....
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.... from the above details it is not clear whether these balances pertain to the Revenue account or capital account. Therefore we set aside the order of the Ld. CIT(A) and remit the matter back to the file of Assessing officer for re-examining of the issue. If the balance have been written back on account of Revenue receipts then deduction may be allowed otherwise in accordance with the provisions of the Act. (iv) Misc Receipts - Details of misc receipts is as under: Rebate & discount Rs. 24,516 Duty Drawback Rs. 2, 87,513 Sale of samaples Rs. 7111 Rs. 86,85,134 As far as Duty Drawback is concerned the Ld. D.R. for the Revenue is right in pointing out that this item is not eligible for deduction in view of the decision of Hon'ble Supreme Court in case of Liberty India Vs. CIT (supra). In that case it was clearly held that Duty Drawback benefits did not form part of the profit for the purpose of deduction u/s 801A/801B, therefore following this decision we hold that no deduction is eligible on DDB 13 As far as rebate and discount and sale of samples is concerned, both receipts are of the nature of Revenue and are related to normal business of the assess....
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....fore us. the Ld. Counsel for the assessee submitted that these items should not have been reduced from the profits and in this regard he relied on the decision of the Tribunal in following cases: (i) Tribunal's order dated 31. 1.2008 in case of DC/ T V. Mahavir Spinning Mills Ltd in ITA No. 737/2004 for Assessment year 2000- 01 where ITAT held that Misc income comprising of sundry balances written back, rebate & discount from suppliers, refund of insurance premium were held in the nature of business income and therefore 90% of the same not reduced while calculating deduction u/s 80HHC. (ii) Munjal Showa Ltd vs. DCIT - 94 TTJ 227 Tribunal Delhi) - 90% of balance written back, discount from parties not reduced) (iii) Diamond Dye Chem Ltd Vs. DCIT (Mum) dated 5.1.2011 (90% of balances written back not be reduced). 21 On the other hand, the Ld. D.R. for the Revenue strongly supported the order of the Ld. CIT (A). 22 After considering the rival submissions we find that as far as items of sundry balances is concerned, nature of the amount written back has not been examined by the Assessing officer and was not available before us, therefore we set aside the order of the L....