TMI Blog2017 (1) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... hese circumstances, we find that the findings of Ld. CIT(A) are well reasoned and he has not erred in treating sales tax refund as eligible component for deduction under section 80HHC. See Topman Exports vs CIT (2012 (2) TMI 100 - SUPREME COURT OF INDIA). No contrary view was brought before us by the Ld. DR. Therefore, no justification to make interference in the well reasoned findings of the Ld. CIT(A). Therefore, his order is confirmed. - Decided in favour of assessee - I.T.A. No.2890/Mum/2015 - - - Dated:- 13-1-2017 - SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) For The Appellant : Shri Suman Kumar For The Respondent : Shri Vijay Mehta ORDER Per ASHWANI TANEJA, AM: This ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived by it. 3. The brief background is that in set aside proceedings, the AO observed that sales tax set off cannot be said to be related to exports. In the case of CIT v Dresser Rand India P Ltd, it was categorically held that recovery of freight, insurance, packing receipts, sales tax set off/refund and service income comprise of an independent income and have to be reduced from the gross total income to arrive at business profits. The AO distinguished the Bombay High Court decision in case of Alfa Laval India Ltd (186 ITR 390) as in that case the AO had treated income from sales tax set off as income under the head business or profession. However, in the case of the assessee the AO has held that the said income was distinct from inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts derived from such export shall be the amount which bears to the profits of the business, the same proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee; (b) where the export out of India is of trading goods, the profits derived from such export shall be the export turnover in respect of such trading goods as reduced by the direct costs and indirect costs attributable to such export; As per Explanation to Section 80HHC, the term profits of the business is defined as follows: (baa) profits of the business means the profits of the business as computed under the head Profits and gains of business or profession as reduced by- (1) ninety pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome having no nexus with exports to be reduced from business profits under clause (baa) so as to avoid distortion in the computation of export profits. This case is not relevant to those assessee's who are not manufactures and are not covered by Explanation (baa) to Section 80HHC of the Act. 4.10. In a recent decision in the case of CIT v Valiant Glass Works P Ltd 50 taxmann.com 268 (Bom), the Bombay High Court held that Cenvat credit was eligible for deduction under Section 80HHC of the Act. The Assessing Officer in its assessment order held that CENVAT incentives were not eligible profits for claiming a deduction under section 80HHC and, thus, had] to be excluded from the business income while calculating deductions under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, sales tax can be set off by a Trader Export only if such goods are exported outside the State and that too within specified time period. Thus, such set off has a direct nexus with the export and is eligible for deduction under Section 80HHC of the Act. Hence, all the grounds of appeal are allowed. 5. During the course of hearing before us, Ld. DR relied upon the order of the AO whereas the Ld. Counsel heavily relied upon the order of Ld. CIT(A) and reiterated the submissions made before Ld. CIT(A) and also submitted copy of judgment of Hon'ble Bombay High Court in the case of CIT vs Valiant Glass Works Pvt Ltd 110 DTR 281 (Bom) which was relied upon by the Ld. CIT(A) while allowing relief to the assessee. 6. We have gone t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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