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2014 (8) TMI 831 - AT - Income TaxComputation of income from House Property – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that the gross annual ratable value of the property for the purposes of computation of house property income is to be determined at the annual value determined by Municipal Corporation - the AO is directed to determine ALV at the value determined by Municipal Corporation – Decided in favour of Assessee. Addition u/s 92 – Purchases of Cefotaxime Sodium & Roxythromycin – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that the transaction between the assessee and the non-resident company was not an "arranged transaction" - The certificates produced by the assessee from various parties establish that the assessee did not buy the product cefoaxime sodium at a price higher than the price at which the same product was sold to others – AO failed to establish a case where provisions of section 92 could be applied to disown the loss incurred by the assessee – Decided in favour of Assessee. Full revenue deduction of VRS & early retirement incentives – Held that:- Various manufacturing unit of assessee at Mulund, Ankleshwar and Goa and under loan licence agreement part of the corporate business and many of the projects which were being maintained at Mulund were continued to be produced under loan licence agreement - the expenditure incurred on VRS was wholly and exclusively for the purpose of business – there was no merit in the action of the lower authorities for declining the assessee’s claim for deduction of VRS and early retirement incentives paid to the workers – Decided against Revenue. Sales-tax set off and refund to be included in the total turnover - Computing of deduction u/s 80HHC – Reduction of Processing charges – Held that:- Following the decision in ACG Associated Capsules Vs. CIT [2012 (2) TMI 101 - SUPREME COURT OF INDIA] - sales tax refund and set off will be considered for reduction as per Explanation (baa) to Section 80HHC -the AO that only net receipts after deducting expenditure incurred for earning such income will be considered for reduction from eligible business profit as per Explanation (baa) – thus, the Matter is remitted back to the AO for adjudication – Decided in favour of Assessee. Indirect cost of trading exports – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that expenditure incurred at branch office at Hyderabad which had no connection or link with export could not be considered as part of indirect cost - the indirect cost to be considered for the purpose of Section 80HHC would be the total indirect cost incurred for the total turnover and not only relating to the export turnover - the expenses incurred at Hyderabad Branch is not directly related to domestic sales which have to be considered as part of indirect cost. Bad debts disallowed – Held that:- Following the decision in TRF Ltd. Vs. CIT [2010 (2) TMI 211 - SUPREME COURT] - After April 1, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable - It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee - since the AO has not examined whether the debt has, in fact, been written off in accounts of the assessee - thus, the matter is remitted back to the AO for fresh consideration – Decided in favour of Assessee. Levy of interest u/s 234D – Held that:- Relying upon CIT Vs. Indian Oil Corporation Ltd. [2012 (9) TMI 517 - BOMBAY HIGH COURT] - the proceeding in regard to refund which has been granted u/s 143(1) of the Act are concluded and final - The refund which has been granted u/s 143(1) of the Act is provisional, to be finally determined when final assessment order is passed under section 143(3) of the Act - Explanation-2 to section 234D of the Act makes it clear that it would be applicable to pending proceedings i. e. where assessment in respect of such assessment year is not completed on 1/6/2003 - the order of the CIT(A) is upheld – Decided against Assessee. Computation of deduction u/s 80HHC - Exclusion of processing charges and bad debts from turnover – Held that:- Following the decision in CIT Vs. Ravindranathan Nair [2007 (11) TMI 10 - Supreme Court of India] - the processing charges were included in the gross total income from cashew business - even according to assessee the charges constituted an important component of gross total income from cashew business - in terms of clause (baa), 90% of the "independent income" had to be deducted from gross total income to arrive at Business Profits to which the fraction had to be applied - the processing charges constituted independent income similar to rent, commission, etc., which formed part of the gross total income, the same had to be reduced by 90% as contemplated in clause (baa) to arrive at Business Profits - the processing charges were includible in the total turnover in the formula under Section 80HHC(3) of the I.T. Act - the AO is directed to re-compute the deduction u/s.80HHC after excluding the net income from processing charges - bad debts recovered is neither part of total turnover nor export turnover for the purpose of Section 80HHC. Re-computation of indirect cost attributable to export of trading goods – Held that:- Following the decision in AVENTIS PHARMA LTD. Versus DEPUTY COMMISSIONER OF IN COME TAX, RANGE-8(1), MUMBAI [2013 (1) TMI 257 - ITAT MUMBAI] - for the purpose of sec. 80HHC(3)(b) r.w.clause (e) of Explanation, the indirect cost to be allocated in the ratio of export turnover of trading goods to the total turnover has to be taken as the total figure of the indirect cost incurred for the total turnover and not the indirect cost directly related to the export turnover as held by the CIT(A) - the AO has reduced from the total cost of business, cost of goods as well as the other items – Decided in favour of Revenue. Calculation of deduction u/s.80HHC without reducing 90% of the DEPB license sold – Held that:- Following the decision in Topman Exports Vs. CIT [2012 (2) TMI 100 - SUPREME COURT OF INDIA] - a subject will be liable to tax and will be entitled to exemption from tax according to the strict language of the taxing statute and if as per the words used in Explanation (baa) to section 80HHC read with the words used in clauses (iiid) and (iiie) of section 28, the assessee was entitled to a deduction under section 80HHC on export profits, the benefit of such deduction cannot be denied to the assessee – the AO is directed to compute the deduction u/s 80HHC – Decided partly in favour of Revenue.
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