TMI Blog2018 (12) TMI 1623X X X X Extracts X X X X X X X X Extracts X X X X ..... her items do not constitute income derived from undertaking. Assessing officer is directed to consider the rebate on ocean freight as income of the undertaking of the assessee. Adjustment of Head office expenses for computation of deductions u/s 10B, 80IC and 80IB - HELD THAT:- CIT(A) while holding so above, however, has directed the Assessing officer to allocate the net Head office expenses and not the gross net expenditure. We do not find any infirmity in the order of the CIT(A) on the issue and the same is accordingly upheld. Taxing the amount received on sale tax exemption / subsidy - revenue or capital receipt - HELD THAT:- The issue is now covered by the various decisions of the Hon'ble High Courts including the decision of the Hon'ble Supreme Court in ‘CIT-I Vs. M/s Chaphalkar Brothers, Pune and Others’ [2017 (12) TMI 816 - SUPREME COURT] wherein, it has been held that the aforesaid receipt is a capital receipt and not exigible to taxation. We hold accordingly and the lower authorities are directed not to tax the aforesaid receipts. Disallowance u/s 14A - HELD THAT:- The assessment year involved admittedly is 2006-07. The Hon'ble Bombay High Court in the case of ‘ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading asset of the assessee. We therefore, restore this issue to the file of the assessee to bifurcate the items between capital assets and trading assets and to allow the claim in respect of insurance claim received on trading assets only. Allowability of foreign exchange fluctuation gain for deduction u/s 80IB and 80IC and exemption u/s 10B - assessee submitted the foreign exchange fluctuation gain is in respect of export receipts / receivable of the assessee and any gain in respect of receivable on account of foreign exchange fluctuation in fact contributes to the profits of the assessee from the sale/ export of the products - HELD THAT:- We find force in the aforesaid contention. We do not find any infirmity in the order of the CIT(A) in this respect also directing the Assessing officer not to reduce foreign exchange fluctuation gain from eligible profits of units eligible for deduction Allowbility of deduction u/s 80IB in respect of unit which has already claimed exemption u/s 10B - Double deduction - HELD THAT:- It is not a case of double deduction, hence we do not find any infirmity in the order of CIT(A) on this issue also. The order of the CIT(A)on this issue is acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rent 494567 249016 73301 38982 1032309 1072193 Misc. Receipts 238725 3482 1275 282989 696527 DEPB/Duty Drawback 370206 5820457 68903960 Commission 7141 1426 2771 Interest 93264 3. That the Ld. CIT(A) erred in law and on the facts while confirming the action of Ld.AO. for reducing profits of units eligible for deduction u/s 10B, 801B and 801C by allocating Head office expenses. 4. That without prejudice to ground No. 3, the Ld. CIT(A) erred in law and on facts while allocating gross head office expenses instead of expenses net of income. 5. That the Ld. C1T(A) erred in law and on the facts while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom bank and other sources as income from other sources is concerned. However, a contention has been raised by the Ld. Counsel for the assessee that where there is a direct nexus between the interest income earned and the interest expenditure incurred in this respect, the assessee should be allowed netting of the same before computing the same under the head income from other sources . We find merit in the above contention of the assessee and we order accordingly. 7. Ground No.2 : Vide ground No.2, the assessee has agitated the action of the CIT(A) in directing the Assessing officer to reduce the eligible profits of the undertaking for the purpose of deduction u/s 10B, 80IB and 80IC of the Income-tax Act, 1961 (in short 'the Act') in respect of other income received. 8. The Ld. Counsel for the assessee has given details of other income which is mentioned in the ground No. 2 itself. A perusal of the aforesaid details will reveal that the assessee claimed rent, Misc. receipts, DEPB, commission and interest income as other income and has claimed deductions in respect of the same u/s 10B, 80IB and 80IC etc., as applicable in respect of the respective unit. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdictional High Court in the case of the assessee in ITA No.141 of 2012 dated 31.7.2013 and has pointed out that in the year 2000-01, the assessee had earned dividend income of ₹ 2.16 crores whereupon the disallowance of ₹ 1 lac was affirmed by the Hon'ble High Court. The Ld. Counsel for the assessee has further submitted that for the year under consideration the assessee had earned dividend income of ₹ 1.59 crores. 15. The Ld. DR, on the other hand has, however, relied on the findings of the lower authorities. 16. We have considered the rival submissions. The assessment year involved admittedly is 2006-07. The Hon'ble Bombay High Court in the case of Godrej Boyce Manufacturing Co. Ltd. 234 CTR 1 (Bom.) held that Rule 8D of the Income Tax Rules is applicable from the assessment year 2008-09 onwards and that for the year prior to assessment year 2008-09, the disallowance u/s 14A is to be made on some reasonable basis. Considering the overall facts and circumstances of the case and the respective submissions of the Ld. representatives of the parties, we confirm the disallowance of ₹ 2 lacs u/s s 14A of the Act on this issue for the year under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / interest paid to debenture holders was to be allowed as Revenue expenditure in the year of payment itself. Admittedly, in the year under consideration, the assessee has booked the aforesaid expenses payable which was paid in the assessment year 2011-12. In view of this, the said expenditure is to be allowed in the year of payment. Subject to the above observation, this ground of the assessee s appeal for the year under consideration is hereby dismissed. 22. Apart from the above, the assessee has raised an additional ground of appeal which reads as under:- That the authorities below have erred in treating the interest reimbursement of ₹ 24,64,44,644/- under Technology Upgradation Fund Scheme (TUFS) as Revenue receipt instead of capital receipt. 23. The assessee has claimed that interest reimbursement of ₹ 24,64,44,644/- received under Technology Upgradation Fund Scheme (TUFS) should be treated as capital receipt instead of Revenue receipt as treated by the lower authorities. Admittedly, this ground has been taken as addition ground which has not been examined by the lower authorities. The Ld. Counsel for the assessee submitted that in the earlier years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instead of income from speculative Business as considered by the Assessing Officer in view of explanation to section 73. 7 That the order of the Id. CIT(A) be set aside and that of the A.O. be restored. 8 That the appellate craves leave to add or amend any ground of appeal before it is finally disposed off. 26. Ground No.1 :The Revenue vide ground No.1 of the appeal has agitated the action of CIT(A) in deleting the interest received on account of delayed payment from customer s and suppliers as business income instead of income from other sources. In view of our findings given above awhile deciding ground No.1 of the assessee s appeal in ITA No. 1429/Chd/2010, we do not find any infirmity in the order of the CIT(A) on this issue. Ground No.1 of the Revenue s appeal is accordingly dismissed 27. Ground No.2 : Ground No.2 raised by the Revenue is in three parts. The Revenue in the Ist part has agitated the action of the CIT(A) in directing the Assessing officer to treat the interest received from the customers and suppliers to be income derived from industrial undertaking and eligible for exemption u/s 10B and deduction u/s 80IB and 80IC of the Act. Since we have al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein we have upheld the order of the CIT(A) on this issue. In view of this, ground No.3 of the Revenue s appeals is hereby dismissed. 31. Ground No.4 : Vide ground No.4, the Revenue has agitated the action of the CIT(A) in allowing deduction u/s 80IB in respect of unit which has already claimed exemption u/s 10B of the Act. The Ld. Counsel for the assessee has submitted that the assessee has claimed deduction u/s 80IB in respect of unit Vardhman Spinning General Mills on the balance amount, after excluding the amount upon which the exemption u/s 10B of the Act has been claimed. In view of this, it is not a case of double deduction, hence we do not find any infirmity in the order of CIT(A) on this issue also. The order of the CIT(A)on this issue is accordingly upheld. 32. Ground No.5 : The Revenue vide this ground has agitated the action of the CIT(A) in reducing / deleting the addition made by the Assessing officer u/s 14A of the Act on account of expenditure incurred for earning of tax exempt dividend income. This ground has already been dealt with while adjudicating ground No.7 of the assessee s appeal wherein after considering the over facts and circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1627 DEPB 142386 97833 134407 769738 2056766 Duty Drawback 2447280 2755000 293032 201342 13696283 8894379 11284064 Rent 471200 235503 80710 43397 12359452 1 593793 636884 Misc. Receipts 1406002 978 51888 1 586025 53682 Commission 603 1996 1083 94395 Total 4429243 2993477 516128 342 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. That the Ld. C1T( A) erred in law and on the facts while confirming the action of Ld.AO for not allowing premium payable on redemption of optionally onvertible foreign currency bonds as revenue expenditure. 12. That the appellant craves leave to add/alter/amend any ground of appeal on or before the due date of hearing of appeal. Hence the appeal may kindly be allowed, necessary reliefs as per aforesaid grounds may kindly be granted and/or other reliefs deemed fit and proper under the circumstances of the case may kindly be granted. 37. Apart from the above grounds, the assessee has also taken as additional ground of appeal, which reads as under:- That the authorities below have erred in treating the interest reimbursement of ₹ 37,77,75,988/- under Technology Upgradation Fund Scheme (TUFS) as Revenue receipt instead of capital receipt. 38. The Revenue in its appeal, in ITA No.286/Chd/2011 has taken following grounds of appeal:- 1. That the Id. CIT(A) has erred in Law and facts in directing the A.O. to consider interest income received by the assessee on delayed payments from customers as 'Business Income, instead of Income from Other Sources' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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