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2019 (4) TMI 371 - HC - Income TaxDeduction u/s 80 HHC - export of cured coffee by assessee - distinction between the goods or merchandise manufactured or processed by the Assessee and the export of trading goods - stand of the Revenue is that the process of coffee by the sister concern on job work and the request or on behalf of the Assessee amounts to 'processing' by Assessee - contention of the Assessee is that such job work done by the third party cannot be said to be on behalf of the Asseseee and therefore even if such processing is done, cured coffee will remain "trading goods", covered by clause (b) of Section 80 HHC (3) - Tribunal concluded that the Appellant engaged in export of cured coffee even though the raw coffee was cured by others with a view to re-compute the deduction under Section 80 HHC applying the statutory formula applicable to the exporter of processed goods as against the formula adopted by the Appellant applicable to the export of trading goods HELD THAT:- We are unable to accept the contention raised on behalf of the Assessee. The words ‘Manufacture’ or 'Processing' by the Assessee are wide enough to cover the processing of coffee undertaken by the third party on behalf of the Assessee also. The job work was assigned to the third party by the Assessee undoubtedly and therefore the same cannot be said to have purchased such cured coffee from the sister concerns. Therefore the sub clause (a) will apply and not the sub clause (b) as contended by the Assessee. Revision u/s 263 - No merit in the contention raised the Assessee, because in view of the clear definition of direct and indirect costs in the Explanation (d) & (e) in Section 80HHC of the Act. The said bifurcation by Assessing authority would not bind the CIT (Administration) to invoke his revisional powers under Section 263 of the Act. The learned CIT (Administration) has clearly given reason in the Show cause notice u/s. 263 issued by him that the Assessing Authority has adopted indirect cost as per the clause (b) to the extent of ₹ 2,89,563/- only as against ₹ 9,52,932/- and therefore excess deduction u/s. 80 HHC to that extent has been allowed by the Assessing Authority. Hence, Section 263 was invoked by CIT (Administration) to revise the said assessment order. Upon the query made by the Court about the working of two figures of indirect costs i.e., sum of ₹ 2,89,563/- as taken by the Assessee and a sum of ₹ 9,52,932/- as taken by the CIT (Administration), the learned counsel for the Asssessee was unable to give the details with regard to the same, except submitting that the Assessee has maintained separate Books of Accounts for both type of goods and therefore the figures of indirect costs as disclosed by the Assessee and accepted by the Assessing Authority, ought to have been accepted by the CIT (Administration) as well. We are not impressed by the said submission made on behalf of the Assessee. Computation of exact amount of deduction under Section 80HHC is a fact finding exercise. Section 260 A enables the High Court to decide only the substantial questions of law and not return any finding of facts, which are arrived at by the Tribunal, which is the final fact finding body. Unless the finding of facts are shown to be perverse, the High Court cannot hold such findings to be erroneous , in any manner and they are binding on the High Court. We do not find any such perversity in the findings by the learned Tribunal - Decided in favour of the Revenue and against the Assessee. Computation of deduction u/s 80HHC - Whether interest income and lease income should not be reckoned in the computation of eligible profits in the ultimate quantification of deduction on the ground of no direct nexus of the said deposits and the leasing activity of the business? - HELD THAT:- Though the lease rental income earned by the Assessee cannot be taxed as "income from other sources" under Section 56 of the Act, but the lease rent in the hands of the Assesee cannot be said to be income derived from export business of the Assessee. However, the definition of Clause (baa) under the Explanation to Section 80HHC, includes such other receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature are included in such export profits to the extent of 10% by excluding 90% thereof by the deeming fiction viz., clause (baa) of the Explanation. No reason to deprive the Assessee before us in the present case of the said benefit to the extent of 10% by applying clause (baa) as quoted above. Therefore, to that extent only the aforesaid question is answered in favour of the Assessee and against Revenue.
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