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2014 (12) TMI 176 - ITAT LUCKNOWBad debts deleted – facts and circumstances of case properly appreciated or not – Held that:- CIT(A) noted that the total claim of ₹ 53,05,057/- included export bad debts and domestic bad debts - it also included some advances written off - advances written off is not allowable u/s 36(1)(vii) although the same is allowable as business loss if it is established that it has accrued during this year - There is no finding given by CIT(A) on this aspect – also, regarding export bad debts, it has to be seen as to whether any deduction was claimed by the assessee u/s 80HHC in the year of export in respect of this export because if deduction was claimed and allowed u/s 80HHC, then this bad debt written off does not remain included in the income of the assessee in any year and the provisions of section 36(2) are not complied with and as a result deduction is not allowable to the assessee - Since there is no finding by CIT(A) on these aspects, the matter is remitted back to the CIT(A) for fresh adjudication – Decided in favour of revenue. Allowability of deduction u/s 80HHC – Exchange fluctuation receipts –Held that:- Definitely, exchange fluctuation gain in respect of realization of export proceeds of current years is to be included in the profit of the business of the present year and same is also to be included in the export turnover and total turnover of the present year but if such exchange fluctuation gain is in respect of export of any earlier year then the same can neither be included in the business profit of the present year nor it can be included in the export turnover and total turnover - The same should relate back to the year of export and in that year, it should be included in business profit as well as export turnover and total turnover - Since the finding of CIT(A) is not on this line, the order of CIT(A) on this issue is not sustainable – thus, the matter is remitted back to the CIT(A) for fresh decision – Decided in favour of revenue. Interest income to be included under income from other sources or business income – Held that:- Following the decision in CIT vs. Jyoti Apparels [2007 (1) TMI 542 - DELHI HIGH COURT] - interest earned on FDR even for the purpose of availing credit facilities from bank does not have immediate nexus with the export business and therefore, it has to be necessarily treated as income from other sources and not business income – thus, interest income cannot be treated as business profit for the purpose of computing deduction allowable to the assessee u/s 80HHC – Decided in favour of revenue. Allowability of deduction u/s 80IB – Held that:- Both the parties agreed that the issue is with regard to the duty draw back and in M/s Liberty India Versus Commissioner of Income Tax [2009 (8) TMI 63 - SUPREME COURT] it has been held that duty drawback, DEPB benefits, rebates etc. cannot be credited against the cost of manufacture of goods debited in the Profit & Loss account for purposes of Sections 80-IA/80-IB as such remissions (credits) would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking – Decided against assessee.
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