TMI Blog2011 (4) TMI 873X X X X Extracts X X X X X X X X Extracts X X X X ..... said amount between the rentals recovered and the discounts been placed before us. Admittedly, the said amount is the rentals in relation to the warehouse. Whether it is from the dealers or from the group companies the recoveries are nothing but rentals. The same having been shown in the income side it would have to be deemed that these are subletting charges received by the assessee and consequently in view of the specific provisions of clause (baa) of the Explanation to section 80HHC, we are of the view that the exclusion of the 90% of the same is on the right footing and does not call for any interference - against assessee. Deduction u/s 80HHC after reducing the deduction u/s 80-IB - Held that:- The issue is squarely covered by the decision of M/s. MRF Ltd., [2009 (10) TMI 653 - MADRAS HIGH COURT] stating that for deduction u/s 80HHC the deduction allowed u/s 80IB need not be reduced from the business profits - AO is directed to grant deduction u/s 80HHC without reducing the deduction u/s. 80IB - in favour of assessee. Restricting the deduction u/s. 80-IB - overhead expenses attributed to the new industrial unit - Held that:- As decided in Food Specialities Ltd. vs. AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant assessment year. 4. In reply the learned DR vehemently supported the orders of the Assessing Officer and the learned CIT(A). 5. We have considered the rival submissions. A perusal of the assessment order clearly shows that the Assessing Officer has not invoked the provisions of sec. 14A. In fact the Assessing Officer has pointed out that the total investment in shares as on 31.03.2003 was Rs. 26,00,31,694/- which included a sum of Rs. 5,28,82,350/- invested during the year. No dividend income has also been admitted during the relevant assessment year. A perusal of the order of the learned CIT(A) clearly shows that the assessee had put forward the plea that it had surplus and reserves sufficient to cover such investment in purchase of shares. This is found in para 3 of the order of the learned CIT(A). The learned CIT(A) has further in para 3 of the order has given a finding that the payment for purchase of shares was made out of OD/CC accounts with the bankers of the assessee company. A perusal of the Balance Sheet of the assessee as on 31.3.2003 shows that the assessee has a reserve and surplus as on 312.3.2003 at Rs. 70.71 crores. Further a perusal of the Balance She ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submission that the discount represented the discount received by the assessee which was also shown by the assessee in the income side of the Profit and Loss account. It was the submission that the same was not liable to be considered for exclusion when computing the deduction u/s. 80HHC. 7. In reply, the learned DR submitted that in regard to the issue of discount no specific ground had been raised and consequently the same could not be considered. In regard to the issue of the share of expenses it was the submission that the share of expenses which was claimed was in fact the rentals and rent itself was a specific item which was specified to be reduced by 90% as per the provisions of clause (baa) of Explanation to section 80HHC. It was the submission that it was the gross rent which was liable to be excluded and this was exactly what the Assessing Officer had done. He relied upon the decision of the Hon'ble jurisdictional High Court in the case of Ambattur Clothing Co. Ltd. v. Assistant Commissioner of Income-tax reported in 326 ITR 245. It was the submission that the said decision related to the computation of deduction u/s 80HHC with regard to the exclusion of the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring for either side that the very issue has been considered and held against the revenue by the Madhya Pradesh High Court in the case of J.P. Tobacco Products P. Ltd. vs. Commissioner of Income Tax reported in (1998) 229 ITR 123. It has also been further submitted that the Bombay High Court also has taken the same view in the case of Commissioner of Income-tax vs. Nima Specific Family Trust reported in (2001) 248 ITR 29. The judgment of the Madhya Pradesh High Court has been taken to the Supreme Court and the Supreme Court in Joint Commissioner of Income-tax vs. Mandideep Engineering and Packaging Industries P. Ltd., (2007) 292 ITR 1, has rejected the S.L.P., by giving the following reasons: "...2. The Madhya Pradesh High Court in J.P. Tobacco Products P. Ltd. v. CIT reported in (1998) 229 ITR 123 took the view that both the sections are independent and, therefore, the deductions could be claimed both under sections 80HH and 80-I on the gross total income. Against this judgment, a special leave petition maws filed in this Court which was dismissed on the ground of delay on July 21, 2000 245 ITR (St.) 71). The decision in J.P. Tobacco Products P. Ltd. (1998) 229 ITR 123 was fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed by both the sides that the issue was squarely covered by the decision of the co-ordinate Bench of this Tribunal in the assessee's own case in ITA No. 1294/Mds/05 and ITA No. 1480/Mds/05 dated 27-07-2009 wherein in para 8 of the said order the co-ordinate Bench of this Tribunal has held as follows: "8. The last issue raised on behalf of the assessee is that Commissioner (A) erred in upholding the order of the AO that proportionate management fees attributable to Pondicherry Unit has to be reduced in computing the profits of eligible business under sec.80IB. This issue has to be restored to the file of AO to consider the actual expenses in view of the order of the Tribunal in the case of Food Specialities Ltd. vs. ACIT reported in 54 ITD 352 wherein it is held as follows: "The basis adopted by the AO for working out the overhead expenses attributed to the new industrial unit had not given reasonable results. The basis of turnover would be one of the factors for working out the reasonable amount of over head expenses attributable t the new unit. The other important factor that had to be considered was the increase in the overhead expenses incurred by the assessee after ..... X X X X Extracts X X X X X X X X Extracts X X X X
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