TMI Blog2010 (2) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... ock of raw material at net of excise duty. The A.O. held that the provisions of section 145A were mandatory, hence, such closing stock should have been valued after including excise duty. The A.O., accordingly, made an addition of ₹ 45,89,259/-. In the appeal, before the Ld. CIT(A), the assessee submitted that it was recording purchases, sales as per net method consistently. Hence, no adjustment was required in the valuation of closing stock. It was also submitted that if adjustments were required, then the value of opening stock, purchases and sales should have also been adjusted and in that situation, there would not be any impact on the profits of the assessee for the year under consideration. The assessee also relied on various judicial decision in this regard. The Ld. CIT(A), however, held that it was a one time addition for the assessment year 1999-2000 and in subsequent years no adjustment would be required as both the opening and closing stocks would be in tune with the provisions of section 145A of the Act. In this regard, the Ld. CIT(A) placed reliance on the decision of the Tribunal in the case of Waste Paper Mills as reported in 286 ITR 252 ( A.T.). Accordingly, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k to give effect to such provisions. Accordingly, this ground of the assessee stands allowed. 10. In ground no.2, the assessee is aggrieved by the decision of Ld. CIT(A) in computing the disallowance of ₹ 1,38,850/- made by the Assessing Officer u/s 40A(2)(b) of the Act towards excess payment of interest to specified persons. 11. The facts, in brief, are that the A.O. found that the assessee was paying interest on bank loan @ 13.25 % per annum, whereas on the loan taken from the Director on whom the provisions of section 40A(2)(b) were applicable, the interest @ 15% had been paid. The A.O. considered it unreasonable/excessive. Hence, he disallowed a sum of ₹ 1,38,850/- by holding that the interest to the Director should have also been paid @ 13.25 % per annum. Aggrieved by this, the assessee preferred an appeal before the Ld. CIT(A), wherein detailed submissions were made so as to justify the rate of interest. It was also submitted that such deposits were unsecured ask compared to bank loan facility and bank was debiting interest on quarterly basis as against flat 15% per annum being charged from the assessee by the Director on annual basis. The Ld. CIT(A), how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 674/- (2) Insurance Claim ₹ 3,74,165/- (3) Sale of empty drums ₹ 43,310/- (4) Reimbursement of I.S.O. fee. ₹ 75,000/- ₹ 9,63,149/- 19. The facts, in brief, are that the A.O. while computing the quantum of deduction u/s 80HHC excluded impugned items from the profit of business. The Ld. CIT(A), on appeal by the assessee, held that insurance moneys received in respect of goods, the cost of which had been earlier allowed had to be treated as profits and gains of business. Similarly, sale of by product was also to be included in the business profits. He, however, confirmed the action of A.O. in regard to interest received by the assessee and reimbursement of I. S.O. fee. Aggrieved by this, the assessee is in appeal before us. 20. The Learned counsel for the assessee narrated the facts and contended that the interest received comprised of interest received from customers to the tune of ₹ 1,71,757/- for delayed payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. As regard to reimbursement of I. S. O. Fee, we are of the view that if the I. S. O. fee had been debited as expenditure in computing the export profits of industrial undertaking, then the reimbursement of any part thereof should also be treated as profits of business in computing the deduction u/s 80HHC. Having stated so, we find some merit in the contention of the ld. Departmental Representative that the fact that such expenses had been deducted in computing the export profits at the instance need be examined and if that is found correct, then only such reimbursement could be considered as part of profit of business. Accordingly, we restore this aspect to the file of A.O. for verification of this fact and found to be correct, then to consider the reimbursement of I. S. O. fee as part of profits of business. 23. As regard to insurance claim received on plant and machinery, repairs and vehicle repairs, the assessee is entitled for consideration thereof as part of business profits as the insurance premium as well as expenditure on such repairs have been debited in the profit and loss account in computing the export profits. Hence, we accept this part of this ground of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in the nature derived from industrial activities, hence, the same is eligible for consideration in computing deduction u/s 80-IB. 31. Thus, this ground of the assessee stands partly allowed. 32. In the result, the appeal filed by the assessee stands partly allowed. 33. Now, we shall take up the assessee s appeal in I.T.A.No. 350/Ind/2008. 34. The issue raised in ground no.1 is identical to issue raised in ground no.1 of I.T.A.No. 768/Ind/2006, hence, accepted, following the same reasons. 35. The issue raised in ground no.2 is regarding disallowance u/s 40A(2)(b) out of interest, which was not pressed by the Learned counsel for the assessee, as he had got the due relief, hence, the same is dismissed as not pressed. 36. In ground no. 3, the issue involved is regarding consideration of interest received, insurance claims and sale of empty drums for computing deduction u/s 80HHC, which has been adjudicated by us in ground no.3 of assessee s appeal in I.T.A.No. 768/Ind/2006. hence, these issues are decided in identical manner. Thus, this ground of the assessee stands partly allowed. 37. In ground no.3, the issue is regarding consideration of export incentive, sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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