TMI Blog2014 (4) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the Revenue receipts relating to business hence on these items the assessee should be allowed deduction. Sundry Balance written back - From details it is not clear whether these balances pertain to the Revenue account or capital account. Therefore we set aside the order of the Ld. CIT(A) and remit the matter back to the file of Assessing officer for re-examining of the issue. If the balance have been written back on account of Revenue receipts then deduction may be allowed otherwise in accordance with the provisions of the Act. Misc Receipts - As far as Duty Drawback is concerned the Ld. D.R. for the Revenue is right in pointing out that this item is not eligible for deduction in view of the decision of Hon'ble Supreme Court in case of Liberty India Vs. CIT [ 2009 (8) TMI 63 - SUPREME COURT] . In that case it was clearly held that Duty Drawback benefits did not form part of the profit for the purpose of deduction u/s 801A/801B, therefore following this decision we hold that no deduction is eligible on DDB Rebate and discount and sale of samples - both receipts are of the nature of Revenue and are related to normal business of the assessee, therefore on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be reduced from the aside the computing deduction u/s 80HHC, therefore we set profits for order of the Ld. CIT (A) and direct the Assessing officer to reduce net interest from the profits for computing deduction u/s 80HHC. Duty Drawback which has been reduced @ 90% of the profits should be again added back to the profits in terms of Sec 80HHC (3) - Assessing officer is directed to add written back amount of Duty Drawback as per Sec 80HHC(3) to the profits before computing deduction. - ITA No. 556/Chd/2008 - - - Dated:- 28-4-2014 - SHRI T.R. SOOD AND SHRI SANJAY GARG, JJ. Appellant by: Shri Subhash Aggarwal Respondent by: Shri Amar veer Singh ORDER T.R. SOOD, J. This appeal is directed against the order dated 16.4.2008 of the Ld CIT (A), Chandigarh 2. In this appeal the assessee has raised the following grounds: 1 That the L d. CIT (A) has erred in law and on the facts while treating interest amounting to As. 2237509/- under the head Income from other sources instead of Income from business and profession 2 That the L d. CIT (A) has err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned income from interest against the inter corporate deposit amounting to ₹ 22,37,509/-. This income was treated by the Assessing officer as income from other sources. 4 On appeal action of the Assessing officer was confirmed by the Ld. CIT(A). 5 Before us. the Ld. Counsel for the assessee submitted that giving surplus money on interest was one of the objects of the company and therefore this income should be treated as business income. 6 On the other hand, the L d. D.R. for the Revenue submitted that the issue is squarely covered by the decision of Hon'ble Delhi High Court in case of CIT vs. 289 ITR 475. 7 We have gone through the rival submissions carefully and find that giving the surplus money on interest has no relation with the business of the assessee. In any case the Hon'ble Delhi High Court in case of CIT Vs. Shri Ram Honda Power Equip (supra) (Delhi) has clearly observed that when the surplus funds are borrowed from the bank or other entity then interest earned thereon can only be categorized as income from other sources. Therefore we find nothing wrong with the order of the Ld. CIT (A) and confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 13.7.2012 (10B allowed on provisions w/back) (ii) CIT vs. Metalman Auto P. Ltd, 336 ITR 434 (PH) Misc income, discount received, sundry credit balance written back eligible for deduction u/s 80iB). 11 On the other hand, the L d. D.R. for the Revenue submitted that clear details of various items has not been provided. Further as far as interest and Duty Drawback is concerned, same is not part of income from the industrial undertaking. Therefore same cannot be allowed for deduction purposes. In this regard he relied on the decision of Hon'ble Supreme Court in case of Pandian Chemicals Ltd Vs. CIT, 262 ITR 278 (S.C) and Liberty India vs. CIT, 317 ITR 218 (S.C). 12 We have gone through the rival submissions carefully. We shall deal with individual items as under: (i) Interest Interest income is not eligible for deduction because Hon'ble Supreme Court in case of Pandian Chemicals Ltd Vs. CIT (supra) has clearly observed and held as under: The words derived from in section 80 HH of the Income-tax Act, 1961, must be understood as something which has a direct or immediate nexus with the assesses's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount (Rs) Barbour Campbell Trd Ltd 49, 76,051 Partap collection 1,07,358 Misc balances 49,323 Total 51,32,733 However, from the above details it is not clear whether these balances pertain to the Revenue account or capital account. Therefore we set aside the order of the Ld. CIT(A) and remit the matter back to the file of Assessing officer for re-examining of the issue. If the balance have been written back on account of Revenue receipts then deduction may be allowed otherwise in accordance with the provisions of the Act. (iv) Misc Receipts - Details of misc receipts is as under: Rebate discount ₹ 24,516 Duty Drawback ₹ 2, 87,513 Sale of samaples ₹ 7111 ₹ 86,85,134 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be computed on the eligible business profits only after reducing there from the portion of profit on which deduction has already been availed by the assessee under this Section i.e. 801B. In other words, if an assessee has claimed deduction of profit or gains under Section 801B, deduction to that extent is not to be allowed under Section 80HHC. Following the above we decide this issue against the assessee. 19 Ground No. 4- After hearing both the parties we find that sundry balances written back amounting to ₹ 5132733/ provision no longer required amounting to ₹ 995752/- and misc receipts were reduced from the profits @ 90% for the purpose of DDB u/s 80HHC. This action of the Assessing officer was confirmed by the Ld. CIT (A). 20 Before us. the Ld. Counsel for the assessee submitted that these items should not have been reduced from the profits and in this regard he relied on the decision of the Tribunal in following cases: (i) Tribunal's order dated 31. 1.2008 in case of DC/ T V. Mahavir Spinning Mills Ltd in ITA No. 737/2004 for Assessment year 2000- 01 where ITAT held that Misc income comprising of sundry b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the total turnover. Hon'ble High Court held that scrap is to be included in the total turnover. So this case has not relevance to the case of the see. However, at the same time we agree that various items can be included in the total turnover only if they have some sale element. Since nature of the items has not been discussed in the detail, we set aside the order of the Ld. CIT(A) and remit the matter back to the file of Assessing officer with a direction to first ascertain the nature of the items and then given appropriate treatment in accordance with law. 28 Ground No. 6- After hearing both the parties we find that the Assessing officer had excluded 90% of the gross interest from the profits for the purpose of computing deduction u/s 80HHC. This action of the Assessing officer was confirmed by the Ld. CIT(A). 29 Before us. the Ld. Counsel for the assessee submitted that only net interest should have been reduced from the profits and in this regard he relied on the decision of Hon'ble Supreme Court in case of ACG Associated Capsules Pvt Ltd vs. CIT, 343 ITR 89. 30 On the other hand, the Ld D.R. for the Revenue supported the or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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