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MKJ. Corporation Versus The Commissioner of Income Tax

2015 (3) TMI 541 - ALLAHABAD HIGH COURT

Admissibility of relief under Section 80 HHC - whether recovery of cost of material by way of sale of scrap generated in its manufacturing process, could be treated as local sale - assessee's unit was a 100% Export Oriented Unit (EOU) - Held that:- From the record, it appears that the assessee's firm was 100% export unit, it had maintained the books of account subject to Audit under Section 44(A)(B) of the Income Tax Act. The cutting of the leather resulting into scrap which either will .....

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ctice profits. The income derived from the sale of scrap would not be included in the total turnover and the same will have to be reduced from the cost of the raw material.See Commissioner of Income Tax Vs. Punjab Stainless Steel industries (2014 (5) TMI 238 - SUPREME COURT)

Reopening of assessment - Held that:- The proceedings under section 148/147 of the Act were not required as no fresh material was brought on record. This is a case of merely accounting principle. Therefore, we set .....

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. K. Garg,A. Shukla,A.Bansal,S. Pathak For the Respondent : Bharat Ji Agrawal,C.S.C.,R.K. Upadhaya ORDER (Delivered By:-Dr. Satish Chandra, J.) 1. All the appeals have been filed by the assessee against the consolidated order dated 1.12.2001, passed by the Income Tax Appellate Tribunal, Lucknow in I.T.A. Nos.169, 170, 171, 264 and 172/Alld/2000 for the Assessment Years 1989-90, 1990-91, 1991-92, 1992-93 & 1993-94. 2. On 15.11.2011, a coordinate Bench has admitted the Appeals on the following .....

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rcumstances of the case, particularly that a period of 4 years had passed, after the regular assessment had been made in the instant case under Section 143(3) of the Act, (after full examination of all related facts as had been fully and truly disclosed by the assessee), notice under Section 147 could have been validly issued without having any regard to the proviso thereto." 4. The brief facts of the case are that during the assessment year under consideration, assessee's firm was enga .....

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ofit and he made addition of this amount. So, he has disallowed the profit derived from the export business, details of which are as under:- Asst. Years Sales of Waste Profit of sale of waste 1989-90 Rs.4,60,099/- Rs.89,041/- 1990-91 Rs.6,93,750/- Rs.89,934/- 1991-92 Rs.6,78,163/- Rs.56,282/- 1992-93 Rs.10,35,963/- Rs.65,358/- 1993-94 Rs.74,716/- Rs.12,512/- 5. The CIT (A) as well as the Tribunal have confirmed the order passed by the A.O.. Still not being satisfied, the assessee has filed the p .....

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ale of self-generated scrap, had duly been followed by the assessee year after year and the Department had accepted the same. The entire proceeds on account of sale of scrap, stood duly reflected in the related Profit & Loss account. It is also the submission of the learned counsel that there was no occasion to initiate proceedings under Sections 148/147 of the Act by the A.O.. Finally, it is submitted by the learned counsel that the cost of the sale proceeds of scrap will have to be reduced .....

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ld have added the entire sale proceeds because the assessee has already claimed expenses in respect of manufacturing of 'shoe uppers' and no cost could be attributed to production of leather scraps and waste material. 8. We have heard the learned counsel for the parties at length and gone through the material available on record. We also perused the written submission filed by Sri R.K. Upadhyay, learned counsel for the department. 9. From the record, it appears that the assessee's fi .....

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entioned that the Hon'ble Apex Court in the case of Commissioner of Income Tax Vs. Punjab Stainless Steel industries (2014) 364 ITR 144 SC has observed that:- "28. The intention behind the enactment of section 80HHC of the Act was to encourage export so as to earn more foreign exchange. For the said purpose, the Government wanted to encourage businessmen, traders and manufacturers to increase the export so as to bring more foreign exchange in our country. If the purpose is to bring more .....

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