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2010 (12) TMI 944 - HC - Income TaxDeduction under Section 80HHC disallowed - whether the professional charges received by the appellant would fall under explanation (baa) below Section 80HHC? – Whether Tribunal was right in law applying the Explanation (baa) in respect of receipts for rendering composite services consisting of procuring order supervising production and quality and ensuring shipment in time when the said Explanation deals only with the receipts in the nature of brokerage, commission, interest, rent, charges or any other receipt of a similar nature? - Held that:- Assessing Authority and the Appellate Authority have not applied the principles of Ejesdum Generis which has been pressed into service to the facts of the case and if applied it would lead to a situation where the assessee would be entitled to project an erroneous figure relating to "Export Profits" which is not the intention of the law makers. This amount which is claimed as deduction under Section 80HHC by the Assessee would not constitute sale proceeds from exports, assessee in question except procuring the export order has not carried on any activity which has nexus to the export in sofar as the receipt of amount of Rs. 18,45,733/- is concerned, question answered in the affirmative i.e., in favour of the revenue and against the assessee Bifurcate the professional charges between procuring order and rendering other services so as to exclude only that part of professional charges as attributable to procuring order in computing profits of the business - Held that:- When the AO selected the case for scrutiny proceedings and raised queries as to why 90% of the professional charges has not been reduced out of "profits of the business". The assessee has submitted the letter dated 29.1.2003 and contended that these receipts are considered as business income and related to expenses are considered as business expenses. The assessee himself has stated that he will not be able to bifurcate this part of the expenses separately since administrative set up and market set up are common to export business and this activity of indirect exports - AO has deducted 90% of the professional charges received from, profits on business by reducing 10% towards charges attributable to procuring the order and thus question Nos. and 4 formulated hereinabove is to be answered in the affirmative namely Tribunal was right in not issuing any directions to the Assessing Officer to bifurcate professional charges between procuring order and rendering other services so as to exclude only that part as attributable to procuring order in computing the profits of the business.
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