TaxTMI 
TaxTMI 
2020 (7) TMI 20
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....the I.T. Rules as held by jurisdictional Bombay High Court as the order was passed by the assessing officer in Mumbai? (ii) Whether the Tribunal was correct in holding that cash compensatory assistance and duty drawback is liable to tax on receipt basis and not on the accrual basis contrary to the view expressed by it in the case of the assessee for the Assessment year 1994- 95 and recorded a perverse finding? (iii) Whether the tribunal was correct in holding that the payments made by the assessee in cash exceeding Rs. 10,000/- cannot be disallowed by applying Section 40(A)(3) of the Act, as the same were paid in exceptional circumstances when the exceptions claimed by the assessee does not fall under Rule 6 DD (j) of the Rules and recorded a perverse finding? (iv) Whether the tribunal was correct in holding that the interest received on bank deposits, interest from employees and customers, commission income, rental income, commission income on technical services cannot be reduced by 90% when computing profits of business as per Explanation (baa) to Section 80HHC of the Act, despite this income having not been earned in the course of export and whe....
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....for exceptional circumstances to attract Rule 6DD(j) of the Rules and was disallowed under Section 40(A)(3) of the Act. (iv) The assessing officer held that 90% of the interest received on bank deposits, interest from employees and customers, income from commission, rental income, income on commission from technical services has been excluded for the purposes of computing profits of the business as per Explanation (baa) to Section 80HHC of the Act. (v) The claim with regard to a sum of Rs. 8,84,75,000/-, which was claimed as custom duty paid and included in closing stock and was made by way of rectification application was rejected. (vi) The assessee deducted Tax at Source and the same was not remitted within the due date. Therefore, assessing officer levied compensatory interest for delay in remittance under Section 201(1A) of the Act. 3. Being aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) by an order dated 27.09.2008 upheld the finding of the assessing officer insofar as it pertains to disallowance of a sum of Rs. 94,912/- as the expenses were not incurred ....
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....sed return and in fact a claim for deduction should be made in the return. It is further submitted that the tribunal could not have dealt with the claim for deduction in the light of Section 43B of the Act for the first time as it is not a pure question of law and the matter should have been remitted to the assessing officer as the same was raised for the first time before the assessing officer. In support of aforesaid submissions, reliance has been placed on decision of the supreme court in 'GOETZE (INDIA) LTD. VS. COMMISSIONER OF INCOME-TAX', (2006) 157 TAXMAN 1 (SC). 6. On the other hand, learned counsel for the assessee has submitted that substantial question of law No.2 as framed is misconceived as the tribunal has allowed the deduction on accrual basis only. It is further submitted that explanation (baa) to Section 80HHC does not refer to export turnover and therefore, before a receipt is liable to be excluded to the extent of 90% it must be a receipt of nature similar to brokerage, commission, interest, rent or charges. It is also pointed out that the decision in the case of CIT, THIRUVANATHAPURAM V. K.RAVINDRANATH NAIR (2007) 295 ITR 228 (SC) does not deal with the issue....
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....he same as issues covered under the aforesaid questions of law are pure finding of fact. From close scrutiny of the order passed by the tribunal, it is axiomatic that 4th substantial question of law does not arise for consideration as it is held against the assessee by the tribunal. The 5th and 8th substantial questions of law have been answered against the revenue by the Supreme Court in 'ACG ASSOCIATED CAPSULES (P) LTD. VS. CIT', 343 ITR 89 SC and COMMISSIONER OF INCOME TAX, NEW DELHI VS.ELI LILLY & CO. (INDIA) (P.) LTD.', 312 ITR 225 (SC) respectively. Accordingly, the same are answered against the revenue and in favour of the assessee. 8. Substantial question of law Nos.2, 6 & 7 survive for consideration in this appeal. Insofar as substantial question of law No.2 is concerned from perusal of paragraph 12 of the order passed by the Income Tax Appellate Tribunal, it is evident that the tribunal has permitted deduction on accrual basis and has held that an amount would be receivable only when the income accrues to the assessee and income would accrue to the assessee only when the assessee gets such a right to receive the income. It has further been held that assessee would get ....