TMI Blog2010 (10) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee submitted that it was the investment made in the year 1997 and during the year four dividend warrants and two half yearly interest warrants were received and for encashing the same, there was no specific expenditure incurred during the year, further that similar disallowance made in the earlier year was allowed by the Learned Commissioner of Income Tax (Appeals)-VIII. The Learned Authorised Representative of the assessee also relied on the decision of Hon'ble ITAT Delhi Bench in the case of ACIT v. Eicher Limited 101 TTJ 369 wherein it was held that it was the duty of the Learned Assessing Officer to pin point such expenditure on the basis of material on record with an acceptable degree of accuracy and not i\on a notional basis. 5. The Learned Commissioner of Income Tax (Appeals) after considering the above submissions of the assessee observed that in this case, it is quite apparent that no specific expenditure is attributable for depositing just 2 interest warrants and 4 dividend warrants and as such the proportionate disallowance is purely on notional basis and hence the disallowance of ₹ 81,750/- on this account is directed to be deleted. 6. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the business income which may nullify the mandate of section 14A, cannot be accepted. Disallowance under section 14A requires finding of incurring of expenditure where it is found that for earning exempted income no expenditure has been incurred, disallowance under section 14A cannot stand. 11. In the instant case, we find that it is not in dispute that in respect of exempt income warrants the assessee had only received two interest warrants and four dividend warrants. No material was brought on record by the Revenue to show that any specific expenditure was incurred for earning exempt income therefore, in view of the above cited decisions we do not find any error in the order of the Learned Commissioner of Income Tax (Appeals). It is confirmed and the ground of appeal of the Revenue is dismissed. 12. Ground No.2 reads as under:- The Learned Commissioner of Income Tax (Appeals) has erred in law and on facts in directing to delete the disallowance of ₹ 1,63,620/- relating to bad debts written off. 13. The brief facts of the case are that the assessee has claimed bad debt claim of ₹ 1,63,620/-. The Assessing Officer has discussed the same in para-4 of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to the deficiency of the company and were claiming the amounts as price rebate and were not paying these sums although the amounts were pending for more than three years. Considering the facts and submissions of the counsel, as the amounts are small and time barred and the customers were not paying the said amounts and claiming the same as price rebate and similar disallowance has been deleted in the earlier two years by Learned Commissioner of Income Tax(Appeals)-VIII for Assessment Year 2001-02 and 2003-04, the disallowance is directed to be deleted. 16. We have heard the rival submissions and perused the materials available on record. In the instant case, the assessee claimed deduction for bad debts amounting to ₹ 1,63,620/- which was disallowed by the Learned Assessing Officer on the ground that the assessee has not justified how debts have become bad and has not shown about the recovery measures taken against the parties. While doing so the Learned Assessing Officer relied on the decision of Hon'ble Gujarat High Court in the case of Ahmedabad Electricity Co vs. CIT 262 ITR 97 (Guj.) 17. The Learned Commissioner of Income Tax (Appeals) vacated the disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and submitted that similar issue has been decided in favour of the assessee by the Learned Commissioner of Income Tax (Appeals)-VIII for the preceding year. 22. After considering the submissions of the Learned Authorised Representative of the assessee, the Learned Commissioner of Income Tax(Appeals) following the decision of the Hon'ble Supreme Court directed the Learned Assessing Officer to exclude excise duty and sales tax from the turnover in both numerator and denominator in calculating the deduction under section 80HHC. 23. We have heard the rival submissions and perused the materials available on record. In the instant case, the Learned Assessing Officer while computing deduction under section 80HHC included sales tax and excise duty in the total turnover. The Learned Commissioner of Income Tax (Appeals) following the decision of Hon'ble Supreme Court in the case of CIT Vs Laxmi Machine Works (2007) 290 ITR 667 (SC) has held that sales tax and excise duty will not form part of total turnover for the purposes of computing deduction allowable under section 80HHC. 24. Before us the Learned Departmental Representative submitted that decision of the Hon'ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, in our considered view the reliance placed on provisions of section 145A by the Learned Departmental Representative is out of context and misplaced. We do not find any error in the order of the Learned Commissioner of Income Tax (Appeals). It is confirmed and the ground of appeal of the Revenue is dismissed. 28. Ground No.4 reads as under:- The Learned Commissioner of Income Tax (Appeals) has erred in law and on facts in directing to delete the disallowance of 90% of bad debts recovered, discount earned from suppliers of goods, insurance claim received, sundry credit balances in the suppliers account written back, Miscellaneous charges recovered from the customers, scrap sold and kasar income, from the adjusted profits of the business for working out the deduction under section 80HHC. 29. The brief facts of the case are that the assessee has contested exclusion of miscellaneous income of ₹ 20,03,429/- from business profits under section 80HHC of the I.T. Act. Miscellaneous income included excess provision of diminution in value of investments of ₹ 7,30,736/- which is not income derived from export business. So the finding of the Assessing Officer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case, the Learned Commissioner of Income Tax (Appeals) directed to delete 90% of bad debts recovered, discount earned from suppliers of goods, insurance claim received, sundry credit balances in the suppliers account written back, Miscellaneous charges recovered from the customers, scrap sold and Kasar income from profits and gains of business or profession to compute eligible profits of business for the purpose of section80HHC of the Act. The Revenue contends before us that the above deduction should have been100% and not 90%. We find that it is not in dispute that the amounts under consideration were assessable under the head profits and gains of business or profession and was also so assessed by the Learned Assessing Officer. In the circumstances, in view of explanation (baa) to section 80HHC the Learned Commissioner of Income Tax (Appeals) was justified in holding that 90% of such receipts are to be excluded for arriving at eligible profits of business. No specific error in the order of the Learned Commissioner of Income Tax (Appeals) could be pointed out by the Learned Departmental Representative. We therefore, confirm the order of the Learned Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les and cannot be excluded from business profits. We find that Learned Departmental Representative could not controvert the finding of the Learned Commissioner of Income Tax (Appeals). We find that the assessee submitted before the Learned Assessing Officer as follows:- vi) As regards erection, commissioning and service charges income of ₹ 136.03 lacs, the said receipts relate to finishing portion of the sales contact, it is part of sales order and cannot be separated since without erection and commissioning, induction furnace etc. Sold cannot be put to use at works of the customers. Needless to add that the assessee consumes more than 6,000 number of components, parts, assemblies etc. which are being dispatched to the customers in required number of wooden boxes by road or rail and then technicians and engineers of the assessee would simultaneously reach works of the customers, erect the furnace at site and then the furnace is commissioned and put to operation for which the assessee collects separate erection, commissioning charges. This receipt is liable to service tax under the Excise rules and is a part of the sales price. Needless to add that the assessee earns erec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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