TMI Blog2016 (6) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... se the issue is restored to the file of the A.O. to re-examine the nature of purchase of car, source thereof and claim of expenditure, etc. Commission of export to Iraq - Held that:- The commission on export activity had been fully disclosed in all correspondences and an activity in relation to export, the commission was paid through banking channel of RBI approval and it was paid pursuant to an agreement approved by Government of India and UN. The payment of commission was for business consideration and there was apparently no illegality in making payment of commission. Besides this, nothing has brought on record to show that the transactions relating to payment of commission are non-genuine or are excessive and unreasonable. The Volker Commission report had discussed about the utilization of money by the recipient of the commission in parting some of the fund so received as commission with the Government of Iraq and such parting of commission with the Government of Iraq was objected to by the Volker Commission report which was a pact between the Iraq Government and the UN wherein, as it appears, neither the appellant company is involved nor Government of India is involved. See ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent or their nominee since payment of commission neither an offence nor it is prohibited by any law enacted by the State or Central Government of India; 6. Deduction u/s 80HHC 6.1 Determination of profit of the business e rred in upholding the reduction the commission disallowed u/s. 37(1) from profit of the business for the purpose of section 80HHC. 6.2 DEPB I DFRC i. erred in confirming the denial of deduction u/s.80HHC in respect of DEPB of ₹ 3,24,52,813/-, DFRC of ₹ 93,38,463/- by applying the amended provisions of sec.80HHC(3) of the Act, without appreciating that as per the amendment to sec.28, DEPB licenses are treated at par with other export incentives received by the exporter as per the Export- Import Policy of the Govt. 6.3 10% of the Indirect Expenses erred in not accepting the appellant claim for expenses deemed to be incurred for earning income which has been reduced to arrive at profit of the business @ 10%; 6.4 Supporting Manufacturer erred in reducing the claim for 80 HHC by reducing the deduction U/s 80HHC subsection 3 for Export incentive for the export turnover declared i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to exclude 90% of sundry credit balances written back amounting to ₹ 50,50,083/- and provision for doubtful debts written back amounting to ₹ 27,23,780/- from profits of business within the meaning of clause (baa) of explanation u/s. 80HHC of the Income Tax Act. 4. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 5. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 2. First we shall take up the appeal filed by the assessee being ITA No. 2026/Mum/2008. We have heard Ld. Representatives of the parties and perused the material on record. Ld. Authorised Representative (AR) of the assessee made the statement that assessee is not pressing the ground no.1, 3, 6.3, 6.4, 6.5(iv) and 6.6. As these grounds are not pressed by assessee, the same are dismissed as not pressed. 3. Ground No.2, raised in the present appeal in respect to prior period expenses of ₹ 61,874/-. The AR of the assessee argued that this ground of appeal is covered in favour of assessee in assessee s own case for AY 2004-05. Copy of which is filed on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the A.O. has disallowed only the net amount after accepting the prior period income in A.Y. 2003-04 and the assessee has no objection for similar treatment in this year, we direct the A.O. to disallow the amount of ₹ 12,891/- only, which is the net debit made to the P L Account. With this direction the ground is considered partly allowed. 4. Keeping in view the order of Co-ordinate Bench and principle of consistency, we direct the AO to allow prior period expenses in accordance with the order of Co-ordinate Bench in assessee s case for AY 2004-05 (supra), hence, this ground of appeal is allowed. 5. Ground No.4 raised in the present appeal is for our consideration is depreciation on Cars of ₹ 2,00,565/-. AR of the assessee further argued that this Ground of appeal is also covered in favour of assessee in assessee s own case for AY 2004-05 in ITA No. 2027/Mum/2008 and in Mysore Minerals Ltd. vs. CIT (239 ITR 775). We have seen the order of Co-ordinate Bench in assessee s own case for Ay 2004-05, the similar ground was raised vide Ground No.3 in the said appeal about the issue of disallowance of depreciation on Cars and claimed depreciation of Rs. 6,47,794/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export to Iraq. AR of assessee argued that this ground of appeal is also covered in favour of assessee by the order Hon ble Calcutta High Court in CIT vs. Rajrani Export (AIT 2013-75- High Court) and Co-ordinate Bench of ITAT, Mumbai in NSIL Exports Ltd. vs. DCIT [2014] 44.taxman.com. 246, and Air Pac Exports Vs. ACIT (152 ITD 634), Mumbai. On the other hand, ld. DR for the revenue argued that this ground of appeal is covered against the assessee by the order of ITAT Mumbai vide ITA No. 7285 to 7286/M/2007 in case titled as M/s Cipla Ltd. Vs. DCIT. We have considered the rival contention of AR as well as DR of the parties and gone through the order passed by the Hon ble Calcutta High Court and various Tribunals on the issue of payment of commission to Government of Iraq. The Hon ble Calcutta High Court while dealing with the Grounds of appeal raised by Revenue held as under: The commission on export activity had been fully disclosed in all correspondences and an activity in relation to export, the commission was paid through banking channel of RBI approval and it was paid pursuant to an agreement approved by Government of India and UN. The payment of commission was for busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 27.09.2009, relied by Ld. DR for Revenue, wherein this Tribunal has taken a contrary view. We have noticed that the order passed in M/s Cipla Ltd. was differentiated by coordinate bench of this Tribunal in NSIL Exports Ltd. (supra) holding that, Cipla was involved in illicit payment made to Iraq Government as per Volker Committee Report holding as under: 35. It is seen that the revenue authorities as well as the DR placed heavy reliance on the decision of Cipla Ltd. vs. ACIT, ITA No. 7284 to 7286/Mum/2007, wherein the coordinate Bench at Mumbai, came to the conclusion that, Cipla was involved in illicit payment made to Iraq Government, as per Volcker Report. It has been held by the coordinate Bench in Para 7.1 that the assessee has not denied payment of ASSF. In para 3 of the order, the order mentions about the payments towards ASSF and on which basis, the cases were reopened. 36. However, in the instant case, the facts are different. The dispute is with regard to payment made to Dalala Company, from where, the alleged illicit payment may have been paid. In such a situation, when the facts themselves are at variance, the decision of Cipla (supra) cannot be relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income Tax Appellate is set aside on the fourth question and the said issue is restored to the file of the assessing officer for fresh consideration and in accordance with law. While passing fresh order, the assessing officer shall also take into consideration, the decision of this Court in the case of Commissioner of Income Tax V/s Pfizer Limited reported in (2011) 330 ITR 62 (Bom). Hence, keeping in view the judgment of Hon ble Apex Court, this ground of appeal is restored to the file of the CIT(A) for fresh consideration and to pass order in accordance with observation of Hon ble Apex Court in Topman Exports (supra) and in accordance with law. Thus this Ground of appeal is allowed for statistical purpose. 11. Next ground(s) for our consideration are Ground No. 6.5(i),(ii) (iii) (iv) (vi). Ld AR of the assessee argued that all these grounds of appeal were not adjudicated by CIT (A). It is further argued that for AY2004-05 in ITA 2027/M/2008, the similar grounds of appeal were not adjudicated by CIT(A) and thus all grounds were restored to the file of CIT(A). We have seen that the Co-ordinate Bench of this Tribunal, while considering the similar grounds in ITA No2027/M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeds has to be taken as part of export turnover and profit of business of the year in which the export was made. In this case the Learned AR submitted that the foreign exchange gain was in respect of export of relevant year only and such claim has not been contraverted before us by the Learned DR. We therefore respectfully following the decision of the Special Bench (supra) see no infirmity in the order of CIT(A) and the same is therefore upheld. 3.3 The third dispute is regarding treatment of write back of expenditure of ₹ 6,53,961/- and purchases of ₹ 31,491/- while computing deduction under section 80HHC. The AO had deducted 90% of such income as per Explanation (baa). CIT(A) has held that such income is very much part of business income eligible for deduction under section 80HHC. Aggrieved by the said decision the revenue is in appeal before the tribunal. 3.3.1 Before us the Learned DR for the revenue supported the order of AO and placed reliance on the judgment of Hon'ble High Court of Mumbai in case of CIT Vs Dresser Rand India Pvt. Ltd. (320 ITR 429). The Learned AR on the other hand supported the order of CIT(A). 3.3.2 We have perused the records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the above, we see no reason to entertain question (a). 3. In so far as question (b) is concerned, counsel for the parries state that this, issue is covered in favour of the assessee and against the Revenue by the decision of this Court in the matter of Commissioner of Income Tax V/so Gem Plus Jewellery India Limited reported in (2011) 330 ITR 175 (see page 183). In that view of the matter, we see no reason to entertain question (b) Thus, keeping in view the order of jurisdictional High Court, in assessee s case for AY 2003-04, grounds of appeal raised by Revenue have no merit, hence, the same are dismissed. 14. Next ground of appeal i.e. Ground No.3 is in respect of deduction from profit from business. (a) Sundry credit, balance of ₹ 5050083/- (b) Provision for doubtful debt Rs.27,23780/- 15. AR of the assessee argued that Ground No. 3(a) of appeal is covered in favour of assessee by the order of Hon ble jurisdictional High Court in assessee s own case in ITA No. 838/11 wherein Hon ble High Court followed the case of CIT vs. Pfizer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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