TMI Blog2010 (1) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 47.26 lakhs under the head "Miscellaneous expenses". On examination of the details, it was found that the assessee has debited a sum of Rs. 28,25,346 as refund of duty drawback. It is also noted by the Assessing Officer that as per the balance-sheet page 31, the auditors have pointed out that the assessee had received the notice dated September 28, 2002 from the Customs Department in respect of refund of duty drawback as excess claimed on air freight. He also noted that in response to this notice, the assessee has made payment of Rs. 28.02 lakhs to the Customs Department and debited it to the profit and loss account. It is further noticed by the Assessing Officer that this amount was paid for the period April 1, 1998 to September 30, 2002. The assessee was asked as to why this expense debited and claimed through profit and loss account be not disallowed as the same is not the business expense of the assessee for the year under consideration. In reply, it was submitted by the assessee that in the earlier years, the assessee was forced to send some export shipment by air. In some cases, the shipment was on cost, insurance and freight basis also. The duty drawback of such shipments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment dated September 28, 2002, and hence, the same is allowable in the present year. It was his alternative submission that even if the full amount is not allowed in the present year because the part amount was received back in the next year to the extent of Rs. 26,69,832, the same may be excluded from the income in the next year as per the direction of the learned Commissioner of Income-tax (Appeals) but the excess amount, i.e., Rs. 1,55,514 should be allowed in the present year. We have considered the rival submissions. We find that it is an admitted position that when the assessee received the duty drawback, the same is accounted for as income by the assessee. We, therefore, feel that if some excess amount was received by the assessee and the same was offered as income and if the same is being refunded in the subsequent year then the same is allowable as expense or in the alternative, the same has to be deducted from income in the relevant year to which the same is related. In the present case, the amount initially paid by the assessee in the present year is Rs. 28,25,346 out of which a sum of Rs. 26,69,832 has been received back by the assessee from the Customs Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verified various expenditure heads and hence, the ad hoc disallowance made by the Assessing Officer is without any basis and hence, the same should be deleted. The learned Departmental representative for the Revenue supported the orders of the authorities below. We have heard the rival submissions and we find that the disallowance was made by the Assessing Officer for the reason that the assessee has not produced relevant vouchers for his examination. It is noted by the learned Commissioner of Income-tax (Appeals) that the Assessing Officer wanted to pin-point the expenditure not relatable to the business instead of making ad hoc disallowance but since the assessee had not furnished vouchers, the Assessing Officer could not have done this exercise. The assessee has not produced the vouchers before the learned Commissioner of Income-tax (Appeals) or before us. It is also not the submission of the assessee that the assessee can now produce the vouchers before the Assessing Officer if the matter is restored back to the file of the Assessing Officer. In the absence of vouchers, it was not possible for the Assessing Officer to examine as to whether the entire expenses incurred were r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed as business income. Reliance was placed on the judgment of the hon'ble Delhi High Court rendered in CIT v. Shri Ram Honda Power Equip as reported in [2007] 289 ITR 475 and it was submitted that as per this judgment of the hon'ble Delhi High Court, netting is allowable if interest earned can be attributed to exports. It was submitted that in the present case if the guarantee is not provided to AEPC, i.e., Apparel Export Promotion Council, no quota will be allowed to the assessee and no exports could be made by the assessee and hence this income is relatable to export business. The learned Departmental representative for the Revenue supported the orders of the authorities below. We have considered the rival submissions and we find that in the present case, the issue involved is covered against the assessee by the judgment of the hon'ble Delhi High Court rendered in the case of Shri Ram Honda Power Equip as reported in [2007] 289 ITR 475. In that case, it was held by the hon'ble Delhi High Court that where surplus funds are placed by the assessee with the bank and the interest is earned thereon, it can only be categorised as income from other sources. It was also held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 2003-04 and as per ground No. 1 in the assessment year 2004-05. It was submitted by the learned authorised representative for the assessee that this issue should go back to the file of the Assessing Officer for a fresh decision as per the decision of the Special Bench of the Tribunal rendered in the case of Topman Exports v. ITO [2009] 318 ITR (AT) 87 (Mumbai). The learned Departmental representative for the Revenue also agreed and accordingly we set aside the order of the learned Commissioner of Income-tax (Appeals) on this issue in both the years and restore this matter back to the file of the Assessing Officer for a fresh decision in the light of this decision of the Special Bench of the Tribunal rendered in the case of Topman Exports [2009] 318 ITR (AT) 87 (Mumbai). The Assessing Officer should pass necessary order as per law in both the years in the light of this decision of the Special Bench of the Tribunal after providing adequate opportunity of being heard to the assessee. This ground of the assessee is allowed for statistical purposes in both the years. The next issue raised by the assessee is regarding claim of the assessee that deduction under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 497 ; 132 Taxman 297. It is submitted that the first judgment of the hon'ble Bombay High Court was dated July 24, 2000 and the second judgment of the hon'ble Kerala High Court was dated March 12, 2003, and the return of income was filed by the assessee on November 29, 2003. It is also submitted that both the judgments were reversed by the hon'ble Supreme Court in the case of IPCA Laboratory Ltd. v. Deputy CIT as reported in [2004] 266 ITR 521 and the judgment of the hon'ble apex court is dated March 11, 2004, and hence, at the time when return of income for the assessment year 2003-04 was filed on November 29, 2003, there was no contrary judgment to the stand adopted by the assessee and in fact, the judgment of the hon'ble Bombay High Court rendered in the case of Shirke Construction Equipment Ltd. [2000] 246 ITR 429 held the field and hence, the assessee was justified in taking the stand and accordingly the assessee was not required to pay any advance tax and, therefore, interest is not chargeable in the present case under section 234B. Reliance was placed on the judgment of the hon'ble Delhi High Court rendered in the case of CIT v. Anand Prakash as reported in [2009] 316 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied with the compensation granted initially and, therefore, filed an application for enhancement of compensation. By an order dated April 4, 2000, the Additional District Judge enhanced the compensation along with solatium and interest relatable to the assessment years 1989-90 to 2000-01. The assessee received the same during the assessment year 2001-02. The Assessing Officer in that case issued a notice under section 148 in respect of the assessment years 1989-90 to 2000-01 on the ground that the interest on enhanced compensation accrued from year to year and since the assessee had not paid advance tax, interest under section 234B became leviable on year to year basis. Under these facts, it was held by the hon'ble Delhi High Court in the case of CIT v. Anand Prakash as reported in [2009] 316 ITR 141 that interest payable on account of enhanced compensation was not even in the knowledge of the assessee till the completion of the assessments and hence, the assessee could not be expected to have paid advance tax on something which had not been received by him and which could not have been in his contemplation. On this basis, charging of interest under section 234B was deleted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of BHPE Kinlus Joint Venture v. Asst. DIT as reported in 23 SOT 290. As per this Tribunal decision, it was held that when the entire income of the assessee was subject to tax deducted at source, no liability for interest under section 234B can be imposed on the assessee. In the present case, the facts are different. In the present case, it is not the claim of the assessee that its entire income is subject to tax deducted at source and hence, this Tribunal decision is also not applicable to the present case. Now, we examine the applicability of the judgment of the hon'ble Uttranchal High Court rendered in the case of Sedco Forex International Drilling Co. Ltd. as reported in [2003] 264 ITR 320. This judgment is not applicable to the present case because the facts are different. In that case, the dispute was regarding whether salary attributable to off period also accrues in India. It is noted in that case that tax deducted at source was deductible from the entire salary income of the assessee although the same has not been done by the employer according to the law prevailing for which the assessee cannot be faulted. Under these facts, it was held that the assessee was n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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