TMI Blog2013 (2) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... ciples will apply equally. Expenditure towards sponsoring the Indian Science Congress - held that:- The expenditure is in the nature of advertisement of assessee business and is laid out and expended wholly and exclusively for the purpose of the business. - Expenditure allowed. Nature of exchange difference - held that:- Following the principles laid down by the Hon'ble Supreme Court in the case of Liberty India Vs Commissioner of Income-tax, [2009 (8) TMI 63 - SUPREME COURT] the income from premium relating to import license cannot be considered as income derived from the undertaking. - Decided in favor of revenue. - ITA Nos.7699/Mum/2004 & 2551/Mum/2011 - - - Dated:- 9-11-2012 - B. Ramakotaiah and Amit Shukla, JJ. Appellant Rep by: Shri Niraj Seth Respondent Rep by: Shri Ajeet Kumar Jain, DR ORDER Per: Bench: These two appeals are by assessee against the orders of the CIT (A)-XXI and CIT (A)-2 Mumbai respetively under section 143(3) and u/s 154 of AO. Since common issues are involved in these appeals, these were heard together and decided by this common order. 2. We have heard the learned Counsel and the learned DR in detail. 3. In the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0A(9) of the Act. 5. The CIT (A) erred in holding that the deduction under section 80-IB is to be restricted to the amount of income determined under the head Business Income and not the Gross Total Income notwithstanding the fact that the profits eligible for deduction under section 80-IB exceed the amount of Business Income . 6. The CIT (A) erred in upholding the action of AO in levying interest under section 234D of the Income Tax Act . 5. The Ground No.5 on the issue of allowing deduction under section 80IB to the extent of gross total income was also raised in the other appeal No.2551 as Ground No.1. If this issue is decided, other grounds become academic in nature as assessee s claim of 80IB is more than the gross total income available for set off. 6. The grievance of assessee arises as under. In the order under section 143(3) of the I.T. Act, AO made certain disallowances and arrived at the profit and gains of the business at Rs.8,33,80,662/-. However, this income from profits and gains of business was taken as gross total income and various deductions under section 80G and 80IB were allowed on this amount determining the business income at Nil. The eli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty) was at Rs.9,14,13,162/-. Instead of allowing the deduction under section 80IB invoking the provisions of section 80A(2), AO restricted the amount to Rs.8,33,80,662/- ie. Income from business only. Therefore, the computation made by AO is factually not correct. Assessee is entitled for deduction under section 80IB on the gross total income which should include income from house property and income from business and other incomes under other heads before allowing the deduction under Chapter VIA. Therefore, on facts assessee s contentions are correct. 8. Not only that, this issue was also decided by the Hon'ble Bombay High Court in the case of CIT vs. M/s Eskay K N IT (India) Ltd in ITA No.184 of 2007 dated 25th March, 2010 wherein on similar contentions the Hon'ble High Court held as under: 3. Section 80-IA as it stood at the material time provided that where the gross total income of assessee included any profits and gains derived from the eligible business, to which the section applies, he would in accordance with, but subject to the provisions of the section be allowed in computing the total income, a deduction from such profits and gains of an amount equal to the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, after setting off the losses from all other sources of income was Rs. 14,57,200, while the profit of the eligible unit was computed at Rs. 98.43 lakhs. The Tribunal has restricted the deduction to the extent of the gross total income, namely, Rs. 14,57,200. The decision of the Tribunal was in accordance with the provisions of the Act. 10. The above also followed the decision of the Hon'ble Bombay High Court in the case of Synco Industries Ltd vs. AO, 254 ITR 608 (Bom.). The provisions of 80IA and 80IB are pari materia and the principles will apply equally. In view of the above legal proposition according to the provisions of the act, assessee s contentions are to be allowed. AO is directed to allow section 80IB deduction to the extent of gross total income available worked out according to the law. The grounds on the issue (Ground No.5 in ITA No.7669 and Ground No.1 in ITA No.2551) are accordingly considered as allowed. 11. Since this issue is allowed, other disallowances made by AO and confirmed by the CIT (A) becomes academic in nature as allowing or disallowing the above amounts does not make any distinction to the ultimate determination of total income as asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted as there is no dispute with reference to the payment towards sponsoring the Indian Science Congress. The expenditure is in the nature of advertisement of assessee business and is laid out and expended wholly and exclusively for the purpose of the business. In view of this ground No.1 is allowed. 14. Ground No.2 is on the issue of adjusting the loss on export of manufactured goods from the amount of export incentives computed under the proviso to section 80HHC(3). The facts of the issue are that assessee had loss on export of manufactured goods which AO set off to the benefit derived by export, which the CIT (A) has confirmed. It was fairly conceded by the learned Counsel that the issue is against assessee and in favour of the Revenue by the order of the Hon'ble Supreme Court in the case of IPCA Laboratories Ltd vs. DCIT, 266 ITR 521 (SC) which was in turn followed by the Bombay High Court in the case of Rohan Dyes and Intermediates Ltd. Vs Commissioner of Income-tax, 270 ITR 350 (Bom.). Accordingly this ground is rejected. 15. Ground No.3 is on the issue of treating certain amounts claimed as eligible for deduction under section 80IB. AO treated them as miscellaneous incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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