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2014 (1) TMI 1720 - AT - Income TaxComputation of deduction u/s 80HHC(3) - claim of assessee for allowance of 10% Duty Draw Back out of indirect expenses for the purpose of computation of deduction u/s 80HHC(3) - Held that:- AO should have examined the claim of the appellant pertaining to the 10% of Duty Draw Back as direct overhead expenses for earning such export incentives before ascertaining the total indirect cost attributable to the exports, in the light of decision of the Special Bench in the case of Surendra Engineering Corporation [2002 (12) TMI 199 - ITAT BOMBAY-H] and Rang International (2004 (7) TMI 275 - ITAT AHMEDABAD-A ) and should have decided to what extent the claim of deduction by the appellant was allowable on the basis of proportionate expenditure. However, from the order passed by the AO it appears that the AO has not at all considered these aspects and not complied with the directions of the ITAT while giving effect to their order. Therefore, the grievance of the appellant is genuine which needs to be addressed. The AO should have examined the issue in the light of the above decisions and any other later decisions, if any, delivered by the other Courts and then through a speaking order, should have decided whether or not to allow any indirect expenses attributable to Duty Draw Back out of the total indirect expenditure attributable to the exports. However, the order of the AO is silent on this issue. 8. Keeping the above lacuna in the order passed by the AO and the specific directions given by the ITAT on this issue, the AO is directed to comply with the ITAT’s directions and pass a consequential order by addressing the above issue in speaking manner so as to give proper effect to the order of ITAT.
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