TMI Blog2011 (8) TMI 1225X X X X Extracts X X X X X X X X Extracts X X X X ..... e us. 4. Ground No.1,2 and 3 are against the inclusion of labour charges of Kormangala Unit amounting to ₹ 3,20,94,126/- in the total turnover for calculation of deduction under section 80HHC of the Act. 5. Brief facts of the above issue are, the AO observed that the assessee has filed separate Profit and Loss Account for various units. However, the business of all the units are interlaced. The Koramangala Unit of the assessee has been stated to be doing the job work of manufacturing of shirts for its own exports as well for other concerns associated with the assessee in terms of section 40A(2)(b). The AO further observed that the turnover of the Koramangala unit has not been taken in to account while calculating the total turnover for calculation of deduction under section 80HHC. Also, the assessee has removed profits of this unit of ₹ 32,445/- from the calculation of profits of the business under clause baa(1) of Explanation after section 80HHC(4C). He also observed that the profits from this unit has been shown at a very nominal figure as the assessee is charging at a very nominal rate from its sister concerns and also for its export. The transfer price of shir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lothing Co.(supra). 8. Having carefully heard the submissions of the rival parties and perusing the material available on record we find that on the similar issue the Tribunal in the assessee s own case in Metropolitan Trading Company V/s ITO in ITA No.4349/Mum/2009 (AY-2001-02) order dated 13.4.2011, vide paragraphs 13 of its order held as under : 13. We have considered the rival submissions. The first part of the reason recorded deals with the question regarding the turnover of the Koramangala unit of ₹ 2,79,81,165/- not having been taken into account while calculating the total turnover for the calculation of deduction u/s. 80 HHC. Also the assessee has removed loss of this unit of ₹ 12,69,654/- from the calculation of the profits of the business under clause (baa) of Explanation after 80 HHC (4C). As already mentioned the reasons were recorded by the AO on 28.3.2006. Even as early 21/2/2005 the AO passed order of assessment u/s.143(3) read with Sec.147 of the Act, pursuant to the 1st reassessment notice, wherein the AO treated 90% of the labour charges received of ₹ 2,79,81,165 by the Koramangala Unit as falling within clause(a) of Explanation -(baa) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter to the file of the AO to decide the same afresh in the light of the directions given by the Tribunal (supra) and according to law after providing reasonable opportunity of being heard to the assessee. The grounds taken by the assessee are, therefore, partly allowed for statistical purposes. 9. Grounds No.4, 4.1 and 4.2 are against the confirming the action of the AO in holding that the Sales Tax Refund of ₹ 6,14,188/- and Misc. Income of ₹ 2167 are in the nature of other income not connected with the main business of the assessee. 10. Brief facts on the above issue are that the AO noted that the assessee has not excluded the sales tax refund of ₹ 6,14,188 and miscellaneous income of ₹ 2,167/- and other receipts for the purpose of deduction under section 80HHC. According to the AO, these incomes are clearly in the nature of other income as they are not connected with the main business of the assessee. The AO following the decision of the Hon. Supreme Court in CIT V/s Stearling Foods Ltd. ( 237 ITR 579) (SC), held that the incomes which are only attributable to the main business of the assessee and are not derived from the same have to be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue, we respectfully following the order of the Tribunal and the judgments of the Hon ble Supreme Court and the Hon ble Jurisdictional High Court (supra) direct the AO not to exclude the sales tax refund while calculating the deduction under section 80HHC of the Act. However, in the absence of any arguments or supporting material in respect of miscellaneous income of ₹ 2167/-, the same is therefore, rejected and accordingly the grounds taken by the assessee are partly allowed. 14. Ground No.5 is against the disallowance of car expenses and depreciation. 15. Brief facts on the above issue are that the AO has disallowed 20% car expenses and depreciation on the ground that the assessee does not maintain any logbook to show that the car is used exclusively for the business purpose. Accordingly, the AO disallowed ₹ 64,294/- towards car expenses and ₹ 15,312/- on account of car depreciation. On appeal, the learned Commissioner of Income Tax (A) confirmed the disallowance made by the AO. 16. At the time of hearing, the learned counsel for the assessee submits that this issue is also partly covered in favour of the assessee by the decision of the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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