TMI Blog2014 (10) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... rage cost of borrowings to the assessee was also 15.5 per cent – Decided against revenue. Deduction u/s 80HHC - Whether deduction u/s 80HHC of the Act is to be restricted in view of section 80-IB(13) read with section 80-IA(9) – Held that:- Following the decision in Commissioner of Income-tax (Central), Ludhiana Versus M/s Davinder Exports, Guru Nanak Dev Nagar, Rahon Road, Ludhiana [2011 (4) TMI 96 - PUNJAB AND HARYANA HIGH COURT] - if deduction u/s 80-IA has been taken, deduction u/s 80HHC was not admissible in view of section 80-IB(13) read with section 80-IA(9) of the Act – Decided in favour of revenue. Computation of deduction u/s 80HHC - Exclusion of export turnover – Held that:- The Tribunal rightly held that the plea of the assessee is that it has realised certain portion within the period extended by the competent authority - out of the total outstanding export invoices the assessee realized a sum within the extended period - the competent authority has allowed the assessee to realise the outstanding export invoices - there is no justification for excluding a sum from the export turnover for computing the deduction u/s 80HHC of the Act – th matter is rightly remitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hon'ble Income-tax Appellate Tribunal was correct in law in directing the Assessing Officer to compute the relief under section 80HHC without reducing the deduction eligible under section 80-IA/ 80-IB disregarding the provisions of section 80-IA(9) read with sec- tion 80-IB(13) ? (iv) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was correct in law in directing the Assessing Officer for not excluding a sum of ₹ 2,10,99,228 from the export turnover for computing the deduction under section 80HHC ? (v) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was correct in law in directing the Assessing Officer to compute the indirect costs of the Barnala unit in proportion of the export of trading goods to the total turnover of the Barnala unit disregarding Explanation (e) to sub-section (3) of section 80HHC of the Income-tax Act, 1961 ? Mr. Sethi, learned counsel for the Revenue, has fairly conceded that question No. 1 stands answered against the Revenue and in favour of the assessee by the Division Bench judgment of this court in I. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated May 12, 2010, in respect of questions Nos. i, ii, v and iv. Let the matter be listed for motion hearing as per roster. (Sd.) . . . M. M. Kumar, Judge (Sd.) . . . . Jitendra Chauhan, Judge March 18, 2011 4. On August 3, 2011, it was noticed that since the appeal has been admit- ted, therefore, all the issues will be considered at the time of final hearing. Now, we take up all the questions for adjudication. 5. Before examining the questions, the facts necessary for adjudication of the controversy involved, as narrated in the appeal may be noticed. The respondent-a company derives income from manufacturing of various types of yarns. The return declaring loss of ₹ 19,40,69,964 for the assess- ment year 2000-01 was filed on October 22, 2001. While completing the assessment, apart from other disallowances, the Assessing Officer also made certain additions/disallowances and framed the assessment under section 143(3) of the Act on March 31, 2003, annexure A.1 at an income of ₹ 2,32,77,971. The details of additions/disallowances relevant for adjudi- cation of the present appeal are as under : (i) Disallowance of ₹ 1,42,52,223 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal had recorded the following finding : The plea of the assessee before the Assessing Officer was that no disallowance is called for since the assessee is recovering interest from its sister concern at the same rate, which it has paid on the borrow- ings. It is submitted that the interest at 15.5 per cent. is charged from the sister concern, on this aspect there is no dispute. Simultaneously, the assessee canvassed that the average cost of borrowings to the assessee for the year was 15.5 per cent. and, therefore, there did not remain any difference between the amount charged from the sister concern and the amount incurred by way of expenditure. The Assess- ing Officer has considered the rate of 18.5 per cent. as interest paid by the assessee on its borrowings. It is evident from the reply of the assessee that the basis for the Assessing Officer to adopt the rate of 18.5 per cent. is devoid of any factual support. The reply of the asses- see was available to the Assessing Officer yet the Assessing Officer in paragraph 5 of the order observes that the interest paid by the asses- see to the banks and financial institutions is 18.5 per cent. We are unable to appreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the Assessing Officer by invoking section 36(1)(iii) of the Act. We do not find any justification to take a different view from the one taken by the Tribunal in the facts and circumstances of the case. This question is, thus, also answered against the Revenue. Re : Question (iii) 10. This question relates to whether deduction under section 80HHC of the Act is to be restricted in view of section 80-IB(13) read with section 80-IA(9) of the Act. 11. It was not disputed between the parties that the issue stands concluded in favour of the Revenue by the order dated April 21, 2011, passed by this court in I. T. A. No. 371 of 2007 (CIT v. Davinder Exports) wherein it was held as under : Learned counsel for the appellant fairly states that the matter is covered against the assessee by order of this court dated April 18, 2011, in I. T. A. No. 469 of 2010 Asin Exim International v. CIT, wherein it was held that if deduction under section 80-IA has been taken, deduction under section 80HHC was not admissible in view of section 80-IB(13) read with section 80-IA(9) of the Act, following ear- lier judgment of this court in Friends Casting (P.) Ltd. v. CIT [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding export invoices of ₹ 2,13,86,870 the assessee realized a sum of ₹ 2,10,99,228 within the extended period. In view of the aforesaid in our view on facts it is evident that the com- petent authority has allowed the assessee to realise the outstanding export invoices. Therefore, in our view, there is no justification for excluding a sum of ₹ 2,10,99,228 from the export turnover for com- puting the deduction under section 80HHC of the Act. In the result we set aside the order of the Commissioner of Income-tax (Appeals) and direct the Assessing Officer to recompute the deduction under section 80HHC accordingly. In the result on this ground the assessee partly succeeds. 13. From the perusal of the aforesaid, it comes out that the Tribunal had remanded the issue to the Assessing Officer for recomputing the amount which remained unrealised on account of export invoices even during the extended period from the export turnover for computing the deduction under section 80HHC of the Act. Thus, no error could be found in the deci- sion of the Tribunal. Re : Question (v) 14. Taking up the last question, the matter herein relates to whether the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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