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2018 (9) TMI 2076 - AT - Income TaxReopening of assessment u/s 147 - Assessee has filed objections to reopening which has not been disposed of by the Assessing Officer by way of a separate order before framing the assessment - HELD THAT:- In our opinion such disposal of objection by way of separate order is mandatory in view of the decision of the hon'ble Bombay High Court in the case of KSS Petron Pvt [2016 (10) TMI 1112 - BOMBAY HIGH COURT] after following the decision of the hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. [2002 (11) TMI 7 - SUPREME COURT] held that in case of non-disposal of objection the assessment has to be quashed. Even otherwise the reasons recorded for reopening of the assessment are not valid reasons. First reasons recorded is invalid as it is covered in favour of the assessee. Addition towards various bad debts and advance given during the ordinary course of business of the assessee written off - HELD THAT:- We find that the learned Commissioner of Income-tax (Appeals) ought to have passed the making order after considering the facts on record. A perusal of the assessment order reveals that the assessee has filed all the necessary details in respect of sundry debtors and trading advances which were written off in the books of account. Both the authorities below have not gone into the evidence filed by the assessee. On the other hand the position of law is very clear that if the amounts are written off in the books of account by the assessee, the same have to be allowed. Under these circumstances, we are not in agreement with the conclusion of the learned Commissioner of Income-tax (Appeals) and accordingly direct the Assessing Officer to delete the disallowance. Disallowance of reallocation expenses pertaining to head office - HELD THAT:- AO has given a clear finding that the expenditure claimed under various heads also related to the Daman unit and therefore the same was estimated. There is no material produced before us to controvert the said finding. Merely because the accounts are audited does not mean that expenses incurred for the head office could not relate to the other unit. The assessee has also referred to some other decisions but in none of the cases it has been held that even if there is material to show that expenditure relating to a particular unit has been incurred the same cannot be determined on estimate. Therefore in our view the allocation made by the Assessing Officer on estimate is justified on the facts of the case. However, we find some merit in the alternate submission that only the incremental and additional expenses on account of commencement and establishment of Daman unit should be re-allocated to the said unit. There is no clear finding on this aspect and therefore it needs further examination. We there fore restore this aspect to the file of the Assessing Officer for passing a fresh order after necessary examination and after allowing an opportunity of hearing to the assessee Exclusion of other income while calculating the deduction under section 80-IB - HELD THAT:- We find that the issue is covered in favour of the assessee by the decision of the co-ordinate Bench of the Tribunal in the assessee's own case. Not allowing the exclusion of income from the expenses attributable that that income or revenue under the same head - HELD THAT:- We observe that the hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. [2012 (2) TMI 101 - SUPREME COURT]has held that the income has to be netted against the expenses incurred under the same head. We, therefore, respectfully following the same, direct the Assessing Officer to delete the addition. Excluding the deduction under section 80-IB while computing the deduction under section 80HHC - HELD THAT:- We find that the issue is decided by the hon'ble Bombay High Court in the case of Associated Capsules P. Ltd. [2011 (1) TMI 787 - BOMBAY HIGH COURT] wherein it has been held that while computing the deduction under section 80HHC deduction under section 80-IB is not to be excluded. We, therefore, respectfully following the decision, set aside the order of the learned Commissioner of Income-tax (Appeals) on this issue and direct the Assessing Officer to allow the deduction under section 80HHC in respect of the same income. Applying Explanation (baa) to section 80HHC in respect of various receipts like interest from banks, royalty receipt, rent, etc - HELD THAT: - We find that the identical issue has been decided in favour of the assessee by the decision of the co-ordinate Bench of the Tribunal in the assessee's own case held f royalty received reliance was placed on the decision of the Tribunal in the case of Glaxo Smithkline Asia (P.) Ltd.[2005 (8) TMI 301 - ITAT DELHI-C] in which it was specifically held that computed on the basis of profit of business computed under the head profit or gains of business or profession, under the provisions of the Act and as per method prescribed under sub-section (3) or (3A) of section 80HHC and the deduction actually available under the provisions of sub-section (1B) of section 80HHC will be allowed as deduction under clause (iv) of Explanation I to section 115JB. Applying Explanation (baa) to section 80HHC in respect of labour charges received from job-work is a part of the operational income of the assessee - As decided in BANGALORE CLOTHING CO. [2003 (1) TMI 89 - BOMBAY HIGH COURT] where element of turnover was involved, 90 per cent. of the job charges could not be excluded from the profit of business. The Tribunal following the said judgment held that 90 per cent. of job charges was not required to be excluded as per Explanation (baa). We have to follow the decision of the co-ordinate Bench as the co-ordinate Bench had specifically considered the judgment of the hon'ble Supreme Court in the case of K. Ravindranathan Nair[2000 (11) TMI 3 - SUPREME COURT] relied upon by the learned Departmental representative. Therefore, respectfully following the decision of the Tribunal in the case of Star India Pvt. Ltd. [2008 (5) TMI 660 - ITAT MUMBAI] we see no infirmity in the order of the Commissioner of Income-tax (Appeals) allowing the claim of the assessee Treating the duty drawback as a benefit falling under section 28(iii)(c) of the Act and denying the benefit of deduction under section 80HHC read with Explanation (baa) under section 80HHC - HELD THAT:- We are of the view that the export incentives received by the asses see by way of duty drawback are part of the profit and gains from business and profession and therefore the assessee is entitled to deduction under section 80HHC on the export incentive in the form of duty drawback. The issue is squarely covered by the apex court in favour of the assessee in the case of Topman Exports [2012 (2) TMI 100 - SUPREME COURT]. Accordingly, we set aside the order of the learned Commissioner of Income-tax (Appeals) and direct the Assessing Officer to allow the deduction under section 80HHC as claimed by the assessee.
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