TMI Blog2011 (6) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... HC of the Act. The AO has reduced the deduction u/s. 90IA and 80G from the profit and computed the deduction u/s. 80HHC thereafter. The appellant has submitted that these deductions have to be given independently and both these deductions u/s. 80IA and 80G should not be reduced from the profit while computing deduction u/s. 80HHC. I have considered the facts of the case and the submissions of the appellant. By following the case law (ITA No.347/Ahd/2005 dated 25-8-06) in the case of M/s. Atul Intermediates, Ahmedabad vs. ITO (OSD)-1, Ahmedabad for A.Y. 2001-02, I hold that both the deductions have to be calculated independently. The appellant gets relief on this point. 5. The Ld. D.R. of the Revenue supported the Assessment Order whereas the Ld. A.R. of the assessee supported the order of the CIT (A). Reliance was placed by him on the Tribunal decision rendered in the case of ACIT vs. Rajoo Engineers Ltd., (100 ITD 555) (Rajkot). 6. He further submitted that the Ld. CIT (A) has also referred to the Tribunal decision in the case of M/s. Atul Intermediates vs. ITO (ITA No.347/Ahd/2005 dated 25-8-2006). The Ld. D.R. of the Revenue could not point out any difference in facts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., (supra). Accordingly, we decline to interfere in the order of the Ld. CIT (A). Ground No.1 of the Revenue is rejected. 8. Ground No.2 of the Revenue is as under:- 2. The Ld. CIT(A) has further erred in law and on facts in directing the A.O. to exclude Sales Tax and Excise Duty from the total turnover for the purpose of calculating deduction u/s. 80HHC of the Act. 9. The Ld. D.R. of the Revenue supported the assessment order, whereas it is submitted by the Ld. A.R. of the assessee that the issue is covered in favour of the assessee by the judgment of Hon ble Apex Court rendered in the case of C.I.T. vs. Lakshmi Machine Works (2007) (290 ITR 667). 10. We have considered the rival submissions and perused the material on record and have gone through the orders of the authorities below. We find that this issue is squarely covered in favour of the assessee by the Judgment of Hon ble apex court in the case of CIT vs. Lakshmi Machine Works (supra) wherein it was held that sales tax and excise duty can not be included in the total turnover for the purpose of section 80HHC of the Act. Respectfully following this judgment of the Hon ble Apex Court, we decline to inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the nature of expenses comprised in common Head-quarter expenses of ₹ 461.79 lakhs, we feel that the same were rightly allocated by the A.O. to CPP unit because Directors and Head-quarter also have important role in the working of CPP unit and hence these expenses are to be apportioned to CPP unit also and hence, we decline to interfere in the order of the Ld. CIT (A) on this issue and accordingly this part of ground No.1 and 1.1 of C.O. are rejected. The remaining part of this issue is raised by the assessee in Ground No.1.2, as under. 17. Ground No.1.2 of the C.O. is as under:- 1.2. Ld. CIT (A) has erred in holding that deduction u/s.80IA for CPP unit is computed after setting off loss computed by assessing officer for Daman and Baddi Unit. It is submitted that in the facts and circumstances of the case, deduction to be allowed for the profit earned from the industrial undertaking and no set off of loss of other unit is required to be made. It is submitted that it be so held now. 18. Regarding this issue, it is submitted by the Ld. A.R. of the assessee that losses were computed by the A.O. for Daman and Baddi unit after allocating certain interest expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the authorities below. 21. We have considered the rival submissions and perused the material on record and gone through the orders of the authorities below. We find that we have to decide only regarding allocation of salary expenses and administrative/general expenses to two units i.e. Daman and Baddi units for the purpose of computation of deduction allowable u/s. 80IB. The submission of the assessee is this that since direct expenses has been directly allocated to these two units, no part of common expenses should be further allocated. We do not find any merit in this contention because actual direct expenses are to be allocated directly and the common expenses has to be apportioned on a reasonable basis, which has been done by the A.O. in the present case and hence, no interference is called for. 22. Ground No.2 and 2.1 of the cross objection are also rejected. 23. Ground No.3 of the cross objection is as under:- 3. The Ld. CIT (A) has erred in confirming the disallowance made for ₹ 42,218 u/s. 43B in respect of unpaid superannuation fund in the year of payment. In the facts and circumstances of the case, it ought to have been allowed. It is sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s. 80HHC ought to have been accepted. It is submitted that it be so held now. 5.1. The Ld. CIT (A) has erred in not allowing deduction u/s. 80HHC on the sale of DEPB Licenses for ₹ 1,42,63,649. It is submitted that in the facts and circumstances of the case deduction u/s. 80HHC is required to be allowed on the sale of DEPB Licenses. It is submitted that it be so held now. 30. It is submitted by the Ld. A.R. of the assessee that this issue should go back to the file of A.O. for a fresh decision in the light of recent decision of Hon ble Bombay High Court rendered in the case of C.I.T. vs. Kalpataru Colours Chemicals as reported in (2010) 328 ITR 451 (Bom.). The Ld. D.R. of the Revenue supported the orders of the authorities below. 31. We have considered the rival submissions, perused the material on record. We find that this issue should go back to the file of the A.O. for a fresh decision in the line of the decision of Hon ble Bombay High Court rendered in the case of Kalpatru (supra). Accordingly, we set aside the order of Ld. CIT (A) on this issue. The A.O. should pass fresh order after considering this judgment of Hon ble Bombay High Court (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the Bench regarding the details of interest subsidy, it was submitted that the full details is not readily available. He submitted that a part of interest subsidy is for the present year and the balance is for earlier years but the entire amount of such interest subsidy should be reduced from interest cost only. 35. The Ld. D.R. of the Revenue supported the orders of the authorities below. 36. We have heard the rival submissions and perused the material on record and gone through the orders of the authorities blow. Regarding the first part i.e. exclusion of 90% from business profit out of service charges ₹ 7.77 lakhs, Miscellaneous income of ₹ 86.84 lakhs and Misc. balance written off of ₹ 8.09 lakhs, we find that as per the decision of Hon ble apex court rendered in the case of Ravindranathan Nayar (supra), such exclusion is justified because it is in the nature of independent source of income like salary, commission, brokerage etc., and it was held by Hon ble apex court that those incomes which are in the nature of independent income should be excluded from business profit to the extent of 90%. The Ld. A.R. of the assessee could not satisfy us th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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