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2012 (12) TMI 783 - AT - Income TaxDeduction u/s 80IB – Denial of Profit from DEPB - gross sale v/s net sales - Held that:- This issue is no more res integra in view of the judgment of M/s Liberty India Versus Commissioner of Income Tax [2009 (8) TMI 63 - SUPREME COURT] wherin held that deduction u/s 80-IB cannot be allowed on the amount of DEPB and duty drawback credited to the profit and loss account - the case of M/s Topman Exports Versus Commissioner of Income Tax, Mumbai [2012 (2) TMI 100 - SUPREME COURT OF INDIA] relied upon by assessee is not applicable to the fact situation prevailing in these grounds - against assessee. Exclusion of interest on fixed deposits from eligible profits for the purposes of deduction u/s 80-IB and 80HHC - Held that:- As decided in Pandian Chemicals Ltd. v. CIT [2003 (4) TMI 3 - SUPREME COURT] interest income does not qualify for deduction u/s 80-HH as it cannot be characterized as having been derived from industrial undertaking in the language of section 80-IB also, similar expression - Rs.derived from’- has been employed which is there in section 80-HH. As the interest on fixed deposits from bank cannot be held to be Rs.derived from’ eligible undertaking, in our considered opinion, the same cannot qualify for deduction u/s 80-IB. As the interest income in the present circumstances as 'Business income’, it will merit inclusion at the first instance and thereafter 90% of the net interest is to be allowed as per the mandate of the Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. v. CIT [2012(2) TMI 101 - SUPREME COURT OF INDIA] - direct the AO to reduce 90% of the net interest income after verifying the amount liable to be deducted from the gross interest receipt Deduction u/s 80-IB - Exchange fluctuation gain – Held that:- Assessee was held to be eligible for deduction in respect of foreign exchange gain relying on CIT v. United Riceland Ltd. []. No contrary judgment has been brought to notice - ground of appeal allowed. Deduction u/s 80HHC on processing charges and Scrap sales – Held that:- As decided in CIT v. Dresser Rand India Pvt. Ltd. [2010 (4) TMI 153 - BOMBAY HIGH COURT] following the judgment in the case of K.Ravindranathan Nair [2007 (11) TMI 10 - SUPREME COURT OF INDIA] the amount of processing charges are not eligible for deduction u/s 80HHC but deserves to succeed insofar as the question of deduction u/s 80-IB on the amount of processing charges is concerned - the assessee to be eligible for deduction u/s 80HHC / 80-IB on the amount of scrap sales. Deduction u/s 80HHC on DEPB license - Held that:- As per M/s Topman Exports Versus Commissioner of Income Tax, Mumbai [2012 (2) TMI 100 - SUPREME COURT OF INDIA] the assessee cannot be denied deduction u/s 80HHC on DEPB licenseb - in favour of assessee. Addition in respect of MODVAT Credit – Held that:- Amount of tax, duty, cess etc. is liable to be included in the value of purchases, sales, opening and closing stock. It is not appropriate to include the closing Modvat in the figure of closing stock without modifying the figures of purchases, sales and opening stock as confirmed in CIT Versus MAHALAXMI GLASS WORKS P. LTD. [2009 (4) TMI 182 - BOMBAY HIGH COURT]- restore the matter to the file of A.O. for deciding it afresh in accordance with the afore-noted judgements and the provisions of section 145A - These grounds are, therefore, allowed. Disallowance on account of life membership fee of N.S.C.I. – Held that:- The issue raised in this ground is fairly settled in assessee’s favour in view of the binding precedents of the Hon’ble High Court in the case of Otis Elevator v. CIT [1991 (4) TMI 53 - BOMBAY HIGH COURT] on the point - in favour of assessee. Deduction u/s 80HHC - Rate difference, Discount received and Sundry expenses written off – Held that:- Assessee could not produce any material on record to indicate the details of such amounts. Also in the appeal of the assessee as well as Revenue, the third item has been mentioned as “Sundry expenses written off”. It is obvious that the Rs.write off’ of any amount is always debited to the Profit and loss account and hence there can be no question of any deduction on such amount. Be that as it may, the availability of deduction u/s 80-IB / 80HHC cannot be adjudicated in respect of these three amounts unless their nature is clearly put forth - set aside the impugned order and remit the matter back to AO for deciding this issue afresh.
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