TaxTMI 
TaxTMI 
2018 (4) TMI 2035
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....ned CIT (Appeals) is bad in law and wrong on facts. 2. That the learned CIT (Appeals) erred on facts and in the circumstances of the case and in law in upholding the action of the AO in restricting the deduction admissible u/s 80HHC of the Act to the business income instead of allowing the same out of "Gross Total Income" as legally required u/s. 80AB read with sections 80A and 80B(5) of the Act. 3. That the learned CIT (Appeals) erred on facts and in the circumstances of the case and in law in placing reliance upon the order of IT AT in appellant's own case for AY 2001-02 without appreciating the fact that the ITA T had not considered, amongst others, the judgments of the Apex court in the cases of Mysodet Limited vs. CIT; CIT vs. Williamsons Financial Services Limited and that of Allahabad High Court in the case of CIT vs. Arif Industries Limited as well as order of Special Bench of IT AT in the case of Topman Exports vs. ITO. 4. That the learned CIT(Appeals) erred on facts and in the circumstances of the case and in law in not appreciating the fact that under section 80A read with section 80AB, 'deductions allowable u/ss. 80C to 80U have to be ....
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.... and unreasonable. 5.2 That on the facts and circumstances of the case the order passed by the Ld. CIT (A) is perverse since the same is passed without considering the past history of the case as decided by the appellate authorities in earlier assessment years. 6. That on the facts and circumstances of the case, the Ld. CIT (A) erred in law in upholding the action of the AO in restricting the deduction u/s 80HHC as worked out by the Assessing Officer against 'Income from Business' as against 'Gross Total Income'. 7. That on the facts and circumstances of the case, the Ld, CIT (A) erred in law in applying the provisions of Section 80 AB to the 'Head of Income', that is, business income instead of the 'Nature of Income', that is, income derived from exports (covered u/s 80HHC) and thereby upholding the rejection of claim of deduction u/s 80HHC admissible to the appellant. 8. That on the facts and circumstances of the case, the Ld. CIT (A) erred in law in applying the provisions of Section 80AB for upholding the rejection of claim of deduction u/s 80HHC by the Assessing Officer, whereas no such finding was given by th....
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....e from Business" as against "Gross Total Income". 6. That on the facts and circumstances of the case, the Ld. CIT(A) erred in law in applying the provisions of Section 80AB to the 'Head of Income', that is, business income instead of the 'Nature of Income', that is income derived from exports (covered u/s SO HHC) and thereby upholding the rejection of claim of deduction u/s SO HHC admissible to the appellant. 7. That on the facts and circumstances of the case, the Ld. CIT(A) erred in law in applying the judgement of Supreme Court in the case of IPCA Laboratries Ltd. vs DCIT ( 266 ITR 521) to the case of appellant since it had exported only trading goods governed by Sec.80 HHC (3) (b)of the Act. 8. That on the facts and circumstances of the case, the Ld. CIT(A) erred in law in upholding the action of the Assessing Officer in not netting of the interest expense against interest income, which is intimately linked to each other, while working out indirect expenses for the purpose of calculating deduction admissible u/s 80HHC of the Act. 9. That on the facts and circumstances of the case, the Ld. CIT(A) erred in law in not rejecting th....
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....nt order passed by the AO and confirmed by ld. CIT (A) on two grounds : (i) that the AO has no jurisdiction to pass this order u/s 254 but his role was limited to give effect to the order passed by the Tribunal; and (ii) that the language of section 80HHC is categoric enough that overall ceiling for deduction is the gross total income and not the business income as has been held by AO as well as ld. CIT (A). The ld. AR for the assessee company further contended that the order passed by the Tribunal in assessee's own case for AY 2001-02 (supra) is distinguishable and relied upon the decision rendered by Hon'ble High Court of Bombay in case cited as V.M. Salgaocar & Brother (P.) Ltd. vs. ACIT - 281 CTR 191, available at pages 20 to 25 of the case laws paper book. Another decision rendered by the Hon'ble High Court of Bombay in case of CIT vs. J.B. Boda in ITA No.3224 of 2009 order dated 18.10.2010 and All India Lakshmi Commercial Bank Officers' Union vs. Union of India - (1984) 150 ITR 1 (Delhi). 7. However, on the other hand, the ld. DR for the Revenue to repel the arguments addressed by the ld. AR for the assessee company contended that the order passed by the Tribunal in AY 200....
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....redit sales and staff advances Rs.20,66,99,992 Total Rs.45,30,17,622/- 2 ITA NO.4504/DEL/2005 (AY 2002-03) (a) Interest earned from bank Rs.27,13,39,067/- (b) Interest from credit sales and staff advances Rs.13,89,17,509/- Total Rs.41,02,56,576/- 12. Assessee company claimed the aforesaid interest income earned from various sources as business income but the AO treated the same as income from other sources and taxed the same. The ld. CIT (A) confirmed the findings returned by AO. 13. So far as question of treating the interest income earned by the assessee company from advances/loans given to its staff is concerned, this issue is also directly and substantially pending adjudication before the Hon'ble jurisdictional High Court in assessee's own case for AY 2001-02 in ITA 127/2009 in which following substantial question of law has been framed :- "(2) Whether the interest received by the appellant assessee from staff on loans, is assessable under the head "income from business" or as "income from other sources"?" So, we are inclined to relegate this issue to the file of AO to decide in accordance with t....
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....e. 16.3 In respect of repayment of loans/advances given to the employees it is observed that the assessee had preferred an appeal before Hon'ble Delhi High Court against the order of this Tribunal in ITA No. 5113/del/2004 for the relevant assessment year. Hon'ble Delhi High Court in ITA No.127/2009 vide order dated 07/02/2012 (placed at page 346 to 347 of paper book volume 2) has been pleased to admit the question of law framed as under: "2. Whether the interest received by. the appellant assessee from staff on loans, is assessable under the head "income from business" or as "income from other sources"? 16.4 In respect of any funds that must have been interest received by the assessee from transfer of assets / investments the assessee has not brought on record to demonstrate the nexus between such interest earned with the business activity carried on by the assessee. 16.5 We accordingly set aside this issue back to the assessing officer to segregate the interest earned under each category. The assessing officer shall allow the interest earned from the funds deployed as advance received from customers, security deposits from customers, cre....
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.... the Tribunal in assessee's own case in AY 2001-02 in ITA No.3289/Del/2010. 18. Since the issue in controversy has already been decided by the coordinate Bench of the Tribunal in assessee's own case, this issue is ordered to be set aside to the file of the AO to decide afresh in the light of the fact that the assessee company has made investment in UTI and bonds in the year 1990-91 from its own funds and has not incurred any interest thereon to earn the exempt income in accordance with the decision rendered by the Hon'ble jurisdictional High Court as well as in the light of the decision rendered by the coordinate Bench of the Tribunal in assessee's own case for AY 2008-09 in ITA No.725/Del/2014 order dated 25.05.2017. Moreover, the issue in controversy pertaining to AYs 2006-07, 2007-08 and 2001-02 is already pending adjudication with the AO having been set aside by the Tribunal vide order dated 30.01.2015, available at pages 69 to 86 of the case law paper book, by making following observations :- "9. Brief facts apropos ground Nos. 2 to 2.3 raised by assessee and Ground Nos. 2 and 2.1 raised by Department are that assessee had received tax free interest from UTI Rs. 3,....
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.... ITA NO.4504/DEL/2005 (AY 2002-03) 20. AO has not allowed the netting of interest expenses against interest income earned by the assessee during the years under assessment for the purpose of claiming deduction u/s 80HHC of the Act. Ld. CIT (A) also confirmed the findings returned by the AO. 21. Undisputedly, the assessee is a trader exporter and has claimed deduction u/s 80HHC by substracting direct costs and indirect costs from the export turnover. Ld. AR for the assessee company contended that for computing deduction and while computing indirect costs, net interest paid less interest income is to be taken into account. However, the Revenue has considered gross interest paid. Ld. AR for the assessee company relied upon the decision of Hon'ble Supreme Court in ACG Associated Capsules (P.) Ltd. vs. CIT - 343 ITR 89 (SC) wherein Hon'ble Apex Court has held as under :- "Held accordingly, that ninety per cent. Of not the gross rent or gross interest but only the net interest or net rent, which had been included in the profits of business of the assessee as computed under the head "Profits and gains of business or profession", was to be deducted under clause (1) of....