TMI Blog2012 (12) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same transaction and hence, the total impact has to be seen which is very marginal. Therefore, deletion of dis-allowance upheld - Decided in favor of assessee Dis-allowance of godown hire charges - business expediency – paper transaction – Held that:- CIT(A) gave clear finding that it cannot be proved by the A.O. that the agreement was bogus or not in existence. A.O.’s finding that no services were availed by the assessee under the said agreement cannot be any ground to decide the business expediency. Regarding business expediency, it is noted by CIT(A) that assessee company was engaged in the business of export of SOYA DOC and oil extraction and this was the first year of export. In view of the need for warehouse and godowns, which could arise in future in the course of export business, the agreement has been executed on 22.06.1992. If that be so then it has to be accepted that hiring of godown and warehouse for the purpose of export is very much for the business purpose and even if such godown was not ultimately required to be used for the purpose of export, which were kept ready for such purpose. CIT(A) rightly deleted the dis-allowance - Decided in favor of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld by the assessee as investment and would be taxable under Income from other sources and the remaining part of dividend/interest pertaining to the shares/debentures held as stock in trade would be taxed as business income of the assessee. No infirmity found in order of CIT(A) Penalty u/s 271(1)(c) - dis-allowance u/s 35D of expenditure incurred on the issue of debentures – CIT(A) deleted the penalty on the ground that claim of the appellant u/s.35D in respect of debenture issue expenses is debatable - Held that:- Even after confirming the dis-allowance by the Tribunal in the quantum proceedings, penalty in the present case is not justified because the issue was debatable at the time of filing of return of income and, therefore, we decline to interfere in the order of CIT(A) on this issue. Deduction u/s 10B – adjustment of unabsorbed depreciation – Held that:-To work out the profit of 10B undertaking, only the brought forward unabsorbed deprecation of 10B undertaking should be considered and not brought forward unabsorbed deprecation of any other unit. We, therefore, set aside the order of CIT(A) on this issue and restore the matter back to the file of the A.O. for a fresh d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... narrated by the A.O. 3. CIT(A) has erred on facts and in law in deleting the disallowance of Rs.91.46 lacs on account of godown hire charges without appraising the evidences discussed by the A.O. in the order. 4. CIT(A) has erred on facts and in law in giving relief in regard to deduction u/s 80HHC of Rs.65,57,776/- which is in facts contrary to the facts and circumstances of the case. 5. CIT(A) ought to have appreciated the facts and circumstances of the case and should have confirmed the order of the A.O. in disallowing the loss of Rs.95.55 lacs which was nothing but subterfuge adopted by the assessee for reducing his taxable income. 3.1 Regarding ground No.1, brief facts till the assessment stage are noted by Ld. CIT(A) in para 4.2 of his order which is reproduced below: 4.2 The fats of the case are that the appellant and its group concerns have claimed /declared below mentioned loss/profit in the transaction of sale purchases within the group companies. Gujarat Ambuja Exports Ltd. Rs.45,60,792/- (loss) Gujarat Ambuja Proteins Ltd. Rs.98,78,546/- (loss) Gujarat Ambuja Cotspin Ltd., Rs.1,44,39,338/- (Profit) The loss claimed by the appellant company and Guja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellantcompany very carefully. It is true that the transactions of SOYA DOC are amongst the group companies arid on such transactions the appellant-company has shown to have incurred a loss of Rs. 45,60,792/- and Gujarat Ambuja Cotspin Ltd. has shown a profit on such transactions. It is also true that the profit earned by Gujarat Ambuja Cotspin Ltd. has been shown in its balance sheet as well as in the return of income for the very same assessment year. All these three companies i.e. the appellant company, Gujarat Ambuja Cotspin Ltd. and Gujarat Ambuja Proteins Ltd. are assessed by the same assessing Officer. The main contention of the A.O. while disallowing the loss is that these transactions are found to be non-genuine and on paper only. He has further stated that the transactions are with a view to reduce the taxable income. He has placed heavy reliance on the directions issued u/s 144A, pertaining to trading in wheat by the group concerns because according to him the impugned transactions in SOYA DOC are identical with that of trading in wheat in assessment year 91-92 wherein the issue has already been decided against the company in the case of Gujarat Vita Pharma Ltd. 4.5.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 4.5.3 Coming to the directions of the DCIT u/s 144A of the Act on the basis of which the loss has been disallowed by the A.O. my attention was drawn to the said directions, placed on page Nos. 208 to 209 of the paper book, from which it is absolutely clear that the said directions were issued by the DCIT, pertaining to trading in wheat by the concerns of the group and the same was not pertaining to the transactions in SOYA DOC. Moreover, the amounts of profit and loss mentioned in the said directions were also pertaining to wheat and not pertaining to SOYA DOC. Since the disallowance of loss in the trading of wheat has also been challenged by the appellant in this appeal, this issue is separately considered in this appellate order, and, has been discussed in para 5.5 relating to loss on transactions in wheat as has been held in this para, even in respect of wheat, the facts of the case and the transactions in assessment year 1993-94 are materially different from the facts of the case and the transactions in wheat in assessment year 1991-92 in Gujarat vita Pharma Ltd. In fact, I nay 1993-94, the facts of the case and the transactions are similar in wheat and SOYA DOC as has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al delivery and, therefore, the impugned transactions cannot be considered as speculative in nature. It has also been brought to my notice during the course of appeal hearing that the transactions cannot be speculative in nature in view of the fact that the purchases and sale were from different companies and since the purchases and sales were not to the same company it is not possible to term the transactions as speculative in nature and without actual delivery. In the absence of actual delivery, the stock could not have been passed on from one company to the other company. Reliance placed by the A.O. on certain case laws in his remand report are found to be not relevant to the issue on hand as they are different on facts. 4.6 Thus, in view of the facts and in view of my observations as drawn above, the said transactions in SOYA DOC are required to be considered as genuine transactions, not on paper only and not with a view to evade tax and they cannot be considered as speculative in nature. Therefore, the loss incurred by this appellant company of Rs.45,60,792/- on such transactions of SOYA DOC is required to be allowed as deduction and the addition made by the A.O. is hereby d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment orders in this group of cases for the earlier assessment years 91-92 and 92-93 wherein it was held that the trading in wheat amongst the group concerns was not genuine and was only on paper. It also appears from the assessment order that the appellant sought directions from the DCIT u/s 144A and latter issued directions to the Assessing Officer in all the cases of the group. Perusal of the DCIT's order u/s 144A dated 7.3.96 in the case of the appellant placed at pages 208 and 209 of the paper book shows that the DCIT has based his decision on the assessment s in the case of Gujarat Vita Pharma Ltd. for the assessment year 1991-92 and Gujarat Ambuja Cotspin Ltd. for the assessment year 1992-93 and confirmation of all these assessments by CIT(A) XII. In the letter it is mentioned that the detailed discussion is given in the order u/s 144A for assessment year 93-94 in the case of Gujarat Ambuja Proteins Ltd- end! directed the Assessing Officer to disallow loss in wheat trading in the case of the appellant company. The perusal of the order u/s 144A in the case of- Gujarat Ambuja Proteins Ltd shows that paras 9 and 10 of the order read as under : 9. In view of the above discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmed by the respective buyers and suppliers which are being different parties. In view of the above facts, the loss claimed by the appellant company of Rs.23,10,255/- on the transactions of wheat is required to be allowed as deduction. The A.O. is directed to allow loss of Rs.23,10,255/-. The other observations of the A.O. that alternatively the loss is speculative nature is also not correct as the transaction are supported by actual delivery in view of the evidences furnished. 3.2.4 From the above para of the order of Ld. CIT(A) we find that a clear finding is given by him that the transactions are followed by actual delivery confirmed by respective buyers and suppliers which are different parties and therefore, the modus operandi of other assessees in other assessments cannot be made applicable in the present case. This is also noted by Ld. CIT(A) in his order that if the total transaction of 5th December and onwards are ignored in the hands of all the four group companies, the tax effect is very small of Rs.13,446/- only. If the transaction is held to be bogus in the hands of this company which has incurred loss on account of such transaction, it has to be held as bogus i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establish the necessity and business expediency of hiring of large scale godowns, that the godowns itself were not existence and hence, the agreement could not be validly accepted in the eye of law, that this was only a paper transaction that this was merely an after thought with a view to reduce the tax liability of the appellant company and, therefore, the claim cannot be allowed as genuine business expenditure as no services were utilized during the course of business* The assesses was accordingly served with a show cause notice as to why claim of deduction of godown rent service charges as mentioned in the agreement should not be disallowed and added to the total income. The appellant filed its reply vide letter dated 20.3.96, the main contentions of which have been reproduced at page 13 of the assessment order, which is reproduced below: (a) There is no question of disallowance of above expenditure of Rs. 91.46 lacs, as the same is fully supported with all the necessary documents. (b) similar question arose in the case of Gujarat Ambuja Proteins Ltd. in A.Y, 1992-93 for payment made to coastal Roadways Ltd. On identical facts the Hon'ble C-I.T.(A) has removed the disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f authorities below. We find that this issue was decided by Ld. CIT(A) in para 7.6 of his order which is reproduced below: 7.6 I have considered the facts of the case of the relevant issue/ observations of the Assessing Officer as well as the submissions of the appellant company. At the outset, the facts of the present expenditure for godown rent of Rs.91.46 lacs are identical to that of similar payment of godown rent of Rs.72.48 lacs by GAPL for the A.Y. 1992-93. The said addition has already been deleted, by the CIT (A) in his order dated 25.7.95, Apart from this/ it has been claimed by the appellant company that the company was engaged in the business of export of SOYA DOC and oil extractions and this was the first year of export in the case of appellant company. Thus it has been claimed by the appellant company that in view of the need for warehouse and godowns which could arise in future in the normal course of the business an agreement had been executed on 22*06.92. In the assessment proceedings it had not been proved by the Assessing Officer that the agreement was either bogus or not in existence. The Assessing Officer's finding that no services was availed by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material to show the procurement plan and places from where the procurement was to be made and the storage period, volume to be procured at a time and quantity to be kept at a time etc. In the present case, on page 371 384, assessee has furnished the copy of outward register showing details of export with parties names, vessels name, item, quantity, weight along with Despatch date and name of port being Porbandar, Dwarka, Kandla, Okha, Jamnagar etc. and the same is during Sep 1992 to March 1993 for export of SOYA DOC etc. Since the facts are different, this tribunal decision is not applicable in the present case. In the present case, the assessee has not only given the agreement for rent and evidence for payment of rent, evidence is also placed on record regarding actual export during relevant period from different places for which warehouse and godowns were hired and hence, in the light of these facts, we do not find any reason to interfere in the order of Ld. CIT(A) on this issue also. Ground No.3 is also rejected. 3.4 Regarding ground No.4, the facts are noted by Ld. CIT(A) in para 9.1 of his order which is reproduced below: Ground No.9 is to the effect that the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been allowed as the report in Form No. 10 CCAC is treated as not correct as therein deduction claimed was for Rs.65,57,776/- Opposing this the appellant has relied upon the Judgement of Delhi I TAT in the case of shriram Pistons K Rings Vs. CIT, reported in 81 Taxman 164, wherein it has been held that report of accountant, as contemplated in sub-section (4), is required for limited purpose of making a valid claim for deduction and, therefore, the assesses is not required to furnish the revised report for allowance of deduction on profits from export business1as computed by the Assessing Officer. The Hon'ble Bombay ITAT has also made similar observations as reported in 35 TTJ 259. Thus, the assessing Officer was not correct in disallowing the deduction u/s 80-HHC as worked out by him of Rs.40,31 ,535/-. Thus, at the outset, the appellant company is entitled to a deduction of Rs.40,31,535/- u/s 80-HHC even on the basis of calculation of the assessing Officer as is apparent from the assessment order. This leads to the other argument of the appellant company that the appellant is entitled for a deduction of Rs.65,57,776/- u/s 80-HHC as claimed in the return of income on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n claimed was Rs.65,57,776/-. It is held by Ld. CIT(A) that under these facts, the deduction computed by the A.O. of Rs.40.31 lacs was clearly allowable and it cannot be disallowed in any case. For the balance amount of deduction claimed by the assessee, Ld. CIT(A) has directed the A.O. to recalculate deduction u/s 80HHC without ignoring the transaction of the assessee pertaining to SOYA DOC and Wheat because it is held by Ld. CIT(A) that the same are not bogus. This direction is also given by Ld. CIT(A) that A.O. should allow deduction u/s 80HHC to the extent of export profit subject to this that total deduction under Chapter VIA should not exceed gross total income as to be recomputed by the A.O. in view of his earlier direction in this order. Considering the facts of the case, we do not find any good reason to interfere in the order of Ld. CIT(A) on this issue also. This ground of the revenue is also rejected. 3.5 Regarding ground No.5, the facts till the assessment stage are noted by Ld. CIT(A) in para 11.2 to 11.3 of his order which are reproduced below: 11.2 The facts as per the assessment order, where this issue is discussed in great details at pages 21 to 27, are tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice to the-appellant to show cause as to why the said loss should, not be disallowed. The appellant vide letter dated 27.3.96 explained the reasons, which are reproduced by the A.O. on pages 23 to 24 of the assessment order. In brief the explanations were to the following effect : (i) As the appellant vas a now entrant, to the business they wanted to play safe and, therefore, the prices were prefixed considering the trend of prices in the market from year to year. (ii) The appellant knew that the person who makes the most of the marketing in SOYA COC got huge business and a. firm, footing in the industry and, therefore, they were on the look out for: ?. major party like UPL and it was considered to : be prestigious to be associated with it ; and when the appellant got the order of supply of 20,000 M.T., it was considered to be major achievement for the new entrant i.e. the appellant. (iii) The appellant did not want to take the risk, of fluctuation in the market prices later on and did not want to loose its business if the prices were not agreeable later on and, therefore, it agreed to the prices, as agreed in advance. (iv) Generally, the normal trend in the market of SOY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e but the assessee has also supplied 82312.500 M.T. @ 5,900/- as per the terms and condition of the said purchase order. The A.O., therefore, considered that at the most the loss incurred in this particular transaction can be allowed, which worked out to Rs.9,05,410/-. In his opinion, the balance of Rs.95,55,520/- could not be allowed as the same was not in accordance with the terms and conditions o the purchase order. He thus disallowed the loss of Rs.95,55,520/-. 3.5.1 Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) who has deleted this disallowance and now, the revenue is in appeal before us. 3.5.2 Ld. D.R. supported the assessment order whereas Ld. A.R. supported the order of Ld. CIT(A). 3.5.3 We have considered the rival submissions and perused the material on record and have gone through the orders of authorities below. We find that a clear finding is given by Ld. CIT(A) that there is no dispute about sale rates and loss were made at the price agreed upon in advance. Regarding purchase price, it is noted by him that the details of market price prevailing at the time of such transactions were also furnished which cannot be proved to be wro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions, perused the material on record and have gone through the orders of authorities below. We find that this finding is given by Ld. CIT(A) that the amount of interest pertaining to interests on term loan from Bank of Baroda. This is also stated by the A.O. on page 12 of the assessment order that the amount of Rs.6,99,954/- is in respect of term loan interest. On page 110 of the paper book is the copy of the ledger account as per which, 4 amounts each of Rs.5.05 lacs totaling Rs.20.20 lacs was paid during this year against which an amount of Rs.6,99,954/- was adjusted in respect of interest for the preceding year. Hence, it is seen from the records that the payment of this interest was made during this year and, therefore, deduction is allowable in the present year u/s 43B. Therefore, this disallowance is deleted. 4.2 Regarding the 2nd issue, it is submitted by the Ld. A.R. that while passing the assessment order for the assessment year 1994-95 u/s 143(3) on 25.03.1997, the A.O. disallowed this expenditure of Rs.12,46,671/- on this basis that it pertains to assessment year 1993-94 and, therefore, this ground has been taken in the present year as additional ground. Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the fact that it was rightly done so by the A.O. 4) The Ld. CIT(A) erred in law and on facts in directing the A.O. to give deduction u/s 80-I without deduction u/s 80HH from the total income. 5) The Ld. CIT(A) erred in law and on facts in deleting the addition of Rs.14.45 lacs and Rs.5.34 lacs on account of purchase price of wheat from group concerns. 5.1 Regarding all these grounds, Ld. D.R. supported the assessment order whereas Ld. A.R. supported the order of Ld. CIT(A). Regarding ground No.4, he placed reliance on the judgement of Hon ble Gujarat High Court rendered in the case of CIT Vs Amod Stamping as reported in 274 ITR 176. 5.1.1 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the judgement cited by the Ld. A.R. in respects of ground No.4. Regarding ground No.1 of the revenue s appeal, we find that Ld. CIT(A) has decided this issue by following his own order in the case of Gujarat Ambuja Exports Ltd. for the assessment year 1993-94. Against this order of the CIT(A) also, appeal was filed before us and the same has been decided by us in above para. Similar issue was decided by us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of the case and observations of the A.O. as well as the submissions made by the appellant. At the outset from the nature of transactions it is very clear that these transactions of purchases from the associate concerns are not pertaining to transaction of purchases and sales considered by the Assessing Officer separately in the assessment order, pertaining to which the Assessing Officer disallowed the loss- In these transactions the loss and corresponding profits were same amongst the associate concerns. Further, there was no evidences with the Assessing Officer to indicate that it was a part of the same transactions- Had it been a part of the same transactions there would have been difference- to thin extent between the profit loss of the group concern in the total Wheat transactions. Further, it is pointed out to me that corresponding sales of such purchases have been duly recorded in the books of account, and, therefore, Department is required to take Into account the purchases as in absence? of purchase there cannot be sales. It is pointed out to me that there was a bonafide mistake in considering the purchase in the original return of income which were covered by fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e evidences collected and relied upon by the assessee. 2. The CIT(A) on facts and in law- ought not to have given relief in regard to addition made by the A0OS in respect of dividend on shares and debentures as on; the basis of the evidences collected by the A.O. the same was required to be tax rd as income from other sources only, 3. The CIT(A), in facts and on law has erred in giving the relief in regard to speculation loss of Rs.1.25 crores in total disregard of the evidences and facts and circumstances of the case 4. The C1T(A) has erred in law and on facts in holding that deduction u/s 8O-I should be given without deduction u/s 80-HB of the Act. 5. The GIT (A) has erred in facts and on law in giving relief to the addition of Rs.2l.74 lakhs which he ought to have confirmed in view of the facts and the circumstances and the evidences collected and discussed by the A.O. in the Assessment Order. On the facts and in the circumstances of the ease, the Id. DCIT (A)/CIT (A) ought to have upheld the order of the A.O. It is therefore, prayed that the order of the Id. DCIT (A) / CIT (A) may be set aside and that of the order of the A.O. be restored to .the above extent. 6.1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tures held as stock-in-trade. In view of this and in view of what I have held above in para 5.5.1, the A.O. is directed to obtain the requisite details and evidence form the appellant and work out the part of dividend/interest income taxable as income from other sources and the remaining part taxable as part of share business income of the appellant. The appellant is expected to furnish the requisite details and evidence before the A.O.. This ground of appeal is, therefore, treated as decided accordingly. 6.2.1 From the above para of the order of Ld. CIT(A), we find that this is the decision of Ld. CIT(A) that a part of income from dividend on shares and interest on debentures will pertain to shares/debentures held by the assessee as investment and the remaining pat of dividend/interest will pertain to the shares/debentures held as stock in trade. Ld. CIT(A) has directed the A.O. to obtain the required details and evidence from the assessee and work out the part of dividend/interest income taxable as income from other sources in respect of shares and debentures held by the assessee as investment and the remaining part should be taxed as business income of the assessee. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gone through the orders of authorities below and the judgements cited by the Ld. A.R. We find that in the present case, penalty was imposed by the A.O. u/s 271(1)(c) in respect of disallowance of Rs.1,44,38,852/- u/s 35D incurred on the issue of debentures. This penalty was deleted by Ld. CIT(A) as per paras 4, 4,1 and 4.2 of his order which are reproduced below: 4. I have considered the submissions of the A.R. carefully. I have also gone through the case laws cited by the Id. A.R. I find that the issue of claim of the appellant u/s.35D of the Act in respect of debenture issue expenses is debatable. The appellant had claimed the same as revenue expenditure relying on the decision of Supreme Court in India Cements Ltd. Vs. CIT. However, the Hon'ble Tribunal has held that the issue expenses of convertible debentures are not allowable u/s.37(1) of the Act relying on the decision of I.T.A.T. Ahmedabad Bench in the case of Ashima Syntex Ltd Vs. ACIT 100 ITD 247 (Ahd)(SB) which was rendered on 24.3.2006 . The fact that the tax appeal of the appellant has been admitted before the Hon'ble Gujarat High Court shows that the issue is debatable. 4.1 I however don't agree with the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) has erred in law and on facts in deleting the following additions: i) On account of loss in inter group transactions Rs.5,413/- ii) On account of short form capital loss through A Chhataria Co. Rs.20,38,500/- 2) On the facts and in the circumstances of the case, the Ld. CIT(A) /Dy. CIT(A) ought to have upheld the order of the A.O. 3) It is, therefore, prayed that the order of the Ld. CIT(A) / Dy. CIT(A) may be set aside and that of the order of the A.O. be restored to the above extent. 8.1.1 Ld. DR supported the assessment order whereas the Ld. A.R. supported the order of Ld. CIT(A). 8.1.2 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. Regarding ground No.1, we find that this issue was decided by Ld. CIT(A) as per para 14 15 of his order which are reproduced below: 14. At the appellate stage, it is clarified that the appellant had actually earned a profit of Rs.5413/- on inter-group sales transactions and it was held to be not a real transaction by the department. In view of this, the appellant had reduced the book profit from the computation from the total income as in cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The Assessing Officer could not prove that no delivery was involved and it was a mere accommodation given to the assessee by the broker. So much so that the broker through all transactions took place, was never examined and his sides of the story was not even considered. In nutshell, the Assessing Officer just made this disallowance on the basis of inferences which were not well placed as discussed above. There is nothing on record to prove that the loss was not genuine. On the rates involved in different transactions, there is no adverse inference drawn. Sine substantial loss was claimed, the disallowance w s perhaps restored to on unsupported inference. Since, there is nothing to prove that the loss was not genuine, the A.O. is directed to allow the same as claimed. This ground of appeal is therefore decided in favour of the assessee. 8.2.1 From the above para of the order of Ld. CIT(A), we find that a clear finding is given by Ld. CIT(A) that the addition was made by the A.O. on the basis of expenses allowed without bringing any adverse material on record and in fact, without making proper inquiry. This finding is also given by Ld. CIT(A) that there is nothing on record to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A.R. supported the order of Ld. CIT(A). He placed reliance on the Tribunal decision rendered in assessee s own case for the assessment year 2003-04 in I.T.A.No. 2511/Ahd/2007 dated 24.12.2010. He submitted a copy of this tribunal decision and drawn our attention to para 28 of this Tribunal decision. 10.1.2 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the decision cited by the Ld. A.R. in the assessee s own case for the assessment year 2003-04. We find that a similar issue was raised by the revenue before the tribunal in that year and the same was decided by the Tribunal in favour of the assessee in para 28 of the Tribunal decision which is reproduced below: 28. We have carefully considered the arguments of both the sides and perused the material placed before us. We find hat the issue is also squarely covered in favour of the assessee by the decision of Hon'ble Apex Court in the case of CIT Vs. Lakshmi Machine Works, 290 ITR 667. In -this case, Then-Lordships held as under: "Section 80HHC of the Income-tax Act, 1961, is a beneficial section : it was intended to provide incentive to promo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in confirming the action of Id. AO in levying interest under section 234B / C of the Act. 6. The learned CIT (A) has erred in law and on facts in confirming the action of Ld. AO in initiating penalty proceedings U/s. 271(l)(c) of the Act without recordings the satisfaction contemplated under the said section. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 11.1 Regarding ground No.1, it was submitted by Ld. A.R. that this issue is covered in favour of the assessee by the tribunal order in assessee s own case for the assessment year 2003-04 in I.T.A.No. 2137/Ahd/2007 dated 24.12.2010. He submitted a copy of this tribunal decision and drawn our attention to pages 17-19 of this Tribunal order. Ld. D.R. supported the orders of authorities below. 11.1.1 We have considered the rival submissions, perused the material on record and have g one through the orders of authorities below. We find that in assessment year 2003-04, similar issue was raised before the tribunal and it was pointed out before the Tribunal that this issue of disallowance of deduction u/s 35D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this issue and restore the matter back to the file of the A.O. for a fresh decision in the light of above discussion after providing adequate opportunity of being heard to the assessee. This ground is allowed for statistical purposes. 11.3 Regarding ground No.3, it was fairly conceded by the Ld. A.R. that this is covered against the assessee by the tribunal order in assessee s own case for assessment year 2003-04 in I.T.A.No. 2137/Ahd/2007 dated 29.12.2010. He drawn our attention to para 13 14 of this tribunal decision. Respectfully following the precedence, in the present year also, this issue is decided against the assessee. Ground No.3 of the assessee is rejected. 11.4 Ground No.4 is general. 11.5 Ground No.5 is regarding levy of interest u/s 234B and 234C which is consequential issue and ground No.6 is regarding initiation of penalty proceedings u/s 271(1)(c) which is premature. 11.6 In the result, this appeal of the assessee is partly allowed. 12. Now, we take up the cross appeals of the assessee and the revenue in case of Gujarat Ambuja Exports Ltd. for the assessment year 2005-06 in I.T.A.No. 1539 and 1965/Ahd/2009. 12.1 First, we take up the revenue s appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court rendered in the case of CIT Vs Amba Impex as report ed in 282 ITR 144. 12.1.2 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the judgements cited by the Ld. A.R. Regarding grounds No.1 2, we find that this issue is covered in favour of the assessee by both the judgements cited by the Ld. A.R. and hence, by respectfully following these two judgements, we decide this issue in favour of the assessee and accordingly, these two grounds of the revenue s appeal are rejected. 12.2 Regarding ground No.3, we find that the issue in dispute is regarding expenses incurred by the assessee on renovation of D. G. Set which was converted into furnace oil from HSD. This issue was decided by Ld. CIT(A) in favour of the assessee by following various judgements of various High Courts and the judgement of Hon ble Apex Court rendered in the case of Empire Jute Co. Vs CIT as reported in 124 ITR 01. Before us, reliance was placed by the Ld. A.R. on the judgement of Hon ble Karnataka High Court rendered in the case of Sagar Talkies (supra). In para 7.2 of his order, Ld. CIT(A) has noted these submissions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit u/s 10B was over in assessment year 2004-05. Accordingly, this ground of the assessee is rejected. 13.2 Ground No.2 3 are as under: 2. The learned CIT (A) has erred in law and facts in confirming the action of Id. AO in not granting deduction U/s. 10B of the Act on Cotton Yarn Division on the income from commission on ocean freight Rs. 7,15,225/- Misc. income Rs. 6,57,491/-, Interest income Rs. 2,33,64,787/- and exchange fluctuation gain Rs. 8,47,31,260/-. 3. Alternatively and without prejudice, only the net and not gross income from commission on Ocean freight, Misc. income, Interest income and exchange fluctuation gain from Cotton Yarn Division can be reduced while calculating deduction / exemption U/s. 1 OB of the Act on Cotton Yarn Division. 13.2.1 It was submitted by the Ld. A.R. that if the ground No.1 of the assessee is rejected, then these two grounds become of academic interest. Accordingly, these two grounds are also rejected being of academic interest only. 13.3 Ground NO.4 is as under: 4. The learned CIT (A) has erred in law and on facts in confirming the action of Id. AO in including excise duty and sales tax to the total turnover while calcul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Alternatively and without prejudice, only the net and not the gross income from Commission on Ocean -.freight, Misc. income, and exchange fluctuation gain from Kadi Division can be reduce while calculating deduction 7 exemption U/s. 10B of the Act on Kadi Division. 13.5.1 Ld. A.R. submitted that this ground is not pressed because one part i.e. regarding exchange fluctuation gain was decided by Ld. CIT(A) in favour of the assessee and for the remaining aspect i.e. commission from ocean freight and miscellaneous income, there is no merit in the assessee s ground., accordingly, these two grounds i.e. grounds no.6 7 are rejected as not pressed. 13.6 Ground No.8 is as under: 8. The learned CIT (A) has erred in law and on facts in confirming the action of Id. AO in holding that while calculating deduction / exemption U/s. 10B of the Act on Kadi Division, unabsorbed depreciation has to be reduced from the eligible profits. 13.6.1 It was submitted by the Ld. A.R. that Ld. CIT(A) has followed his own order for assessment year 2004-05. He submitted that in the present year also, this issue should go back to the file of the A.O. for a fresh decision after finding as to wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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