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The Asstt. Commissioner of Income-tax Versus M/s Carborandum Universal Ltd & VICE VERSA

2016 (1) TMI 1088 - ITAT CHENNAI

Deduction u/s 80HHC without reducing the deduction allowed u/s 80IB - Held that:- 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 High Court .....

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h is 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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the same factor. In other words, the denominator and numerator shall be of the same factor while computing the deduction u/s 80HHC. Therefore, once the Assessing Officer excluded the freight and insurance charges from the export turnover the same shall also be excluded from the total turnover. Therefore, the orders of the lower authorities are set aside and the Assessing Officer is directed to exclude the insurance and freight charges from the total turnover also.

Exclusion of 90% of .....

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d in the profit. Therefore, the orders of the lower authorities are modified and the Assessing Officer is directed to exclude 90% of the net receipt like interest, agency commission, rent etc from the profit of the assessee while computing deduction u/s 80HHC of the Act. - I.T.A.No.250/Mds/2015, I.T.A.No.298/Mds/2015 - Dated:- 1-1-2016 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER Appellant by : Dr. U. Anjaneyalu, CIT Respondent by : Shri R. Vijayaraghava .....

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d u/s 80IB of the Act. 3. Dr.U.Anjaneyulu, ld. Departmental Representative submitted that the assessee claimed deductions u/s 80HHC and 80IB of the Act. The Assessing Officer found that in view of sec. 80IA(9) of the Act, the deduction granted u/s 80HHC shall be reduced while considering the deduction u/s 80IB of the Act. However, the CIT(A) has allowed the claim of the assessee on the basis of decision of this Tribunal in the case of M/s Rane Brake Lining Ltd in I.T.A.No. 104/Mds/2009, dated 21 .....

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ld. Counsel, the Madras High Court by following its earlier order in DCIT vs Chola Textiles P. Ltd [2008] 304 ITR 256, found that while computing deduction u/s 80HHC the deduction allowed u/s 80IA need not be reduced. In fact, according to the ld. Counsel, the Madras High Court followed the judgment of the Bombay High Court in CIT vs Nima Specific Family Trust [2001] 248 ITR 29. 5. We have considered the rival submissions on either side and also perused the material available on record. Sec. 80I .....

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Tobacco Products P. Ltd vs CIT [1998] 229 ITR 123 and Apex Court in Jt. CIT vs Mandideep Engineering and Packaging Industries P. Ltd [2007] 292 ITR 1, found that deduction allowed u/s 80HHC need not be reduced while computing deduction u/s 80IA of the Act. In view of the judgment of Bombay High Court 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 .....

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A), by following the order of this Tribunal in assessee s own case for assessment years 2001-02 and 2002-03 in I.T.A.Nos.1240 & 1241/Mds/2006 dated 28.12.2007, disallowed the claim of the assessee. The judgment of the Apex Court in Punjab Stainless Steel Industries(supra) was not available before the lower authorities. 8. We heard Dr.U. Anjaneyalu, ld. Departmental Representative also. According to the ld. DR, the CIT(A) has followed the order of this Tribunal in assessee s own case for asse .....

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Steel Industries(supra) found that things like old furniture are sold, the sale proceeds therefrom would not be included in sales but would be shown separately. The sale proceeds from scrap may either be shown separately in the Profit & Loss Account or may be deducted from the amount spent by the manufacturing unit on the raw material from which goods are manufactured. The raw material which is not capable of being used for manufacturing the goods will have to be either sold as scrap or mig .....

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Apex Court in Punjab Stainless Steel Industries(supra) 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. 10. The next ground of appeal is with regard to exclusion of freight and insurance from the total turnover. 11. Shri R. Vijayaraghavan, ld. Counsel for the assessee submitted that freight and insurance charges are excluded from the export turnover. However, .....

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nd export turnover shall be of the same factor. In other words, the denominator and numerator shall be of the same factor while computing the deduction u/s 80HHC. Therefore, once the Assessing Officer excluded the freight and insurance charges from the export turnover the same shall also be excluded from the total turnover. Therefore, the orders of the lower authorities are set aside and the Assessing Officer is directed to exclude the insurance and freight charges from the total turnover also. .....

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n case it forms part of the profit of the assessee. According to the ld. Counsel, what is included in the profit of the business is net receipt of the assessee and not the entire receipt. Therefore, the Assessing Officer has to confine himself only to the net receipt and not the gross receipt. The ld. Counsel placed his reliance on the judgment of the Apex Court in ACG Associated Capsules Pvt. Ltd vs CIT, 2012] 243 ITR 89. 16. On the contrary, Dr.U.Anjaneyalu, ld. DR submitted that Explanation ( .....

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