TaxTMI 
TaxTMI 
2014 (4) TMI 1260
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....he eligible profits for calculation of deduction u/s 80HHC. 4 That the L d. 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....
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.... Campbell Trd Ltd 49, 76,051 Partap & collection 1,07,358 Misc balances 49,323 Total 51,32,733 These are trading liabilities and the assessee was not 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. ....
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....hese items have been given by the assessee as under: "Details of sundr balance written back Name if part Amount (Rs) Barbour Campbell Trd Ltd 49, 76,051 Partap & collection 1,07,358 Misc balances 49,323 Total 51,32,733 However, 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....
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....d No. 4- After hearing both the parties we find that sundry balances written back amounting to Rs. 5132733/ provision no longer required amounting to Rs. 995752/- and misc receipts were reduced from the profits @ 90% for the purpose of DDB u/s 80HHC. This action of the Assessing officer was confirmed by the Ld. CIT (A). 20 Before 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 oth....