TMI Blog2001 (1) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign travel, which was disallowed by the AO in the assessments on the ground that the expenses were not incurred for the purpose of the business of the assessee. Aggrieved against the disallowance, assessee went in appeal before the learned CIT(A), who confirmed the action of the AO. 3. There is another issue also invoved in the present appeals inasmuch as assessee has agitated the action of the AO, which was later on confirmed by learned CIT(A) in reducing the claim made under ss. 80HH and 80-I on the amount of duty drawback and interest on the ground that these sums were not derived from industrial undertakings and as such cannot form part of the profits and gains. 4. On the date of hearing, learned counsel for the assessee reiterat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, it should be treated as profits and gains of the business. He relied upon the decision of CIT vs. Universal Radiators (1984) 145 ITR 195 (Mad), CIT vs. India Pistons (1986) 66 CTR (Mad) 124 : (1987) 167 ITR 917 (Mad) and CIT vs. Davidson of India Ltd. (1986) 55 CTR (Cal) 238 : (1987) 161 ITR 407 (Cal) in support of his contention. In respect of interest income learned counsel was fair enough to concede that deduction under ss. 80-I and 80HH may not be granted with reference to such interest income. 5. On the other hand, learned Departmental Representative took us to p. 3 of the learned CIT(A) s order and submitted that disallowance was perfectly in order. Moreover, according to him, expenses pertain to the year which are not the years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant has not been examined by the AO in the absence of sufficient details and descriptions. It also looks paradoxical to note that on the one hand the assessee sells its products entirely to its 100 per cent holding company in India and on the other hand in incurs expenditure on sales promotion abroad. Factum of the exports having been made in earlier year also runs contrary to the claim of the assessee that entire sales are made in India to its 100 per cent holding company. Moreover, the balance amount of expenditure amounting to Rs. 3,84,339 in asst. yr. 1992-93 and Rs. 2,15,849 in asst. yr. 1993-94 are claimed to have been incurred for attending conference of all chairman and managing directors of all companies in Electrolux Group at Stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC), that the expression "attributable to" was wider in import than the expression "derived from". The word "derived from" require direct nexus between the profits and gains and the industrial undertaking. The word "derived" has come to be discussed and interpreted by the apex Court in the case of National Organic Chemical Industries Ltd. vs. Collector of Central Excise 106 STC 467. The relevant portion of the judgment as contained in paras. 10 and 11, reads thus: "10. The dictionaries state that the word derive is usually followed by the word from , and it means, get or trace from a source, arise from, originate in, show the origin or formation of." "11. The use of the words derived from in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puts raise the cost of production in export industries and thereby affect the competitiveness of exports. Therefore, exporters need to be compensated for the escalation in their costs attributable to such customs and excise duties. Import entitlement has a statutory basis and is given under an order under s. 3 of the Imports and Exports (Control) Act, 1947. Through the import replenishment licences the exporters are allowed to import limited permissible items. IE is saleable also. Thus, duty drawback and import entitlements though both are export incentives scheme, but as it is clear from the above that duty drawback is intended to reduce the cost, whereas import entitlement is an incident of business and comes to the assessee by way of sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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