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2016 (2) TMI 189 - ITAT CHENNAI

2016 (2) TMI 189 - ITAT CHENNAI - TMI - Deduction u/s 80HHC without reducing the deduction allowed u/s 80IB - Held that:- The material available on record. Sec. 80IA(9) is very clear that where any amount of profits and gains of an undertaking is claimed and allowed, deduction to the extent of such profits and gains shall not be allowed under any other provisions of Chapter VI of the Act. It further says that the deduction shall not exceed the profits and gains of such eligible business as the c .....

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t in Nima Specific Family Trust(supra) which was followed by the jurisdictional High court in MRF Ltd. (supra), this Tribunal do not find any reason to interfere with the order of the lower authority.

Sale proceeds of scrap - whether has to be included in the business profit as well as total turnover while computing deduction u/s 80HHC? - Held that:- The raw material which is not capable of being used for manufacturing the goods will have to be either sold as scrap or might have to b .....

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unjab Stainless Steel Industries (2014 (5) TMI 238 - SUPREME COURT ) and for the reasons stated therein, we set aside the orders of the lower authorities and the Assessing Officer is directed to exclude the sale proceeds of scrap from the total turnover.

Exclusion of freight and insurance from the total turnover - Held that:- Total turnover and export turnover shall be of the same factor. In other words, the denominator and numerator shall be of the same factor while computing the ded .....

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u/s 80HHC - Held that:- As rightly submitted by the ld. Counsel, 90% the miscellaneous incomes like, interest, agency commission, rent etc. which are included in the profit of the assessee has to be excluded while computing deduction u/s 80HHC of the Act. The profit of the business has to be computed under the provisions of the Income-tax Act, 1961, therefore, the expenditure incurred by the assessee has to be excluded and what is included is the net income and not the gross income. This Tribuna .....

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, ACCOUNTANT MEMBER For The Department : Dr. U. Anjaneyalu, CIT For The Assessee : Shri R. Vijayaraghavan, Advocate PER N.R.S.GANESAN, JUDICIAL MEMBER Both Revenue and assessee filed appeals against the order of the Commissioner of Income-tax (Appeals), Large Taxpayer Unit, Chennai, dated 31.10.2014 for assessment year 2002-03. Therefore, we heard both the appeals together and dispose of the same by this common order. 2. Let us first take up Revenue s appeal I.T.A.No. 250/Mds/2015. The only issu .....

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sion of this Tribunal in the case of M/s Rane Brake Lining Ltd in I.T.A.No. 104/Mds/2009, dated 21.4.2011. According to the ld. DR, this Tribunal has not considered the provisions of sec. 80IA(9)of the Act, therefore, the deduction allowed under any of the sections of Chapter VI has to be reduced while considering the deduction under any other provisions of Chapter VI. 4. On the contrary, Shri R. Vijayaraghavan, ld. Counsel for the assessee submitted that the Madras High Court had an occasion to .....

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d the rival submissions on either side and also perused the material available on record. Sec. 80IA(9) is very clear that where any amount of profits and gains of an undertaking is claimed and allowed, deduction to the extent of such profits and gains shall not be allowed under any other provisions of Chapter VI of the Act. It further says that the deduction shall not exceed the profits and gains of such eligible business as the case may. While interpreting sec. 80IA(9) of the Act, the Bombay Hi .....

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. (supra), this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the same is confirmed. 6. Now, coming to assessee s appeal I.T.A.No.298/Mds/2015, the first ground of appeal is with regard to inclusion of receipt from scrap sales in the total turnover. 7. Shri R. Vijayaraghavan, ld. Counsel for the assessee submitted that the Apex Court in CIT vs Punjab Stainless Steel Industries, 364 ITR 144, had an occasion to consider an identical issue. The Ape .....

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to the ld. DR, the CIT(A) has followed the order of this Tribunal in assessee s own case for assessment years 2001-02 and 2002-03, therefore, there is no infirmity in the order of the CIT(A). 9. We have considered the rival submissions on either side and also perused the material available on record. The CIT(A), by following the order of this Tribunal in assessee s own case for earlier assessment years, found that sale proceeds of scrap has to be included in the business profit as well as total .....

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not capable of being used for manufacturing the goods will have to be either sold as scrap or might have to be recycled. When such scrap is sold, the sale proceeds cannot be included in the total turnover. Therefore, the proceeds of the sale of such scrap would not be included in the sales in the Profit & Loss Account of the assessee. In the case before us, the assessee is admittedly a manufacturing company, therefore, the sale proceeds of the scrap cannot form part of the total turnover. T .....

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ssee submitted that freight and insurance charges are excluded from the export turnover. However, the Assessing Officer failed to exclude the same from the total turnover. Therefore, according to the ld. Counsel, the same has to be excluded from the total turnover also. 12. We heard Dr. U. Anjaneyalu, ld. DR also. According to the ld. DR,this issue is covered in favour of the assessee by the order of Special Bench of this Tribunal in ITO vs Saksoft Ltd. 121 TTJ 865. 13. We have considered the ri .....

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ng Officer is directed to exclude the insurance and freight charges from the total turnover also. 14. The next issue arises for consideration is exclusion of 90% of interest, agency commission, rent and miscellaneous income from the profits of business while computing deduction u/s 80HHC. 15. Shri R.Vijayaraghavan, ld. Counsel for the assessee submitted that the Assessing Officer has excluded 90% of the gross income while computing deduction u/s 80HHC. Referring to Explanation (baa) of sec. 80HH .....

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