TMI Blog2020 (7) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... C - Whether the tribunal was correct in holding that the interest received on bank deposits, interest from employees and customers, commission income, rental income, commission income on technical services cannot be reduced by 90% when computing profits of business as per Explanation (baa) to Section 80HH - HELD THAT:- From close scrutiny of the order passed by the tribunal, it is axiomatic that 4th substantial question of law does not arise for consideration as it is held against the assessee by the tribunal. Deduction under Section 80HHC - Whether the tribunal was correct in holding that net interest income should be reduced by 90% when computing profits of business for the purpose of allowing deduction under Section 80HHC of the Act and not gross interest income ? - Whether the tribunal was correct in holding that order under Section 201(1) is mandatory for levying of compensatory interest under Section 201(1A) of the Act, for delay in remittance of TDS deducted? - HELD THAT:- substantial questions of law have been answered against the revenue by the Supreme Court in ACG ASSOCIATED CAPSULES (P) LTD. VS. CIT [ 2012 (2) TMI 101 - SUPREME COURT] and COMMISSIONER OF INCOME ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn exchange and every receipt is not an income and every income would not necessarily include element of export turnover. Similar view was taken by this bench in decision dated 11.03.2020 rendered in the case of INGERSOLL-RAND (INDIA) LIMITED [ 2020 (4) TMI 550 - KARNATAKA HIGH COURT]. This substantial question of law is also answered against the revenue and in favour of the assessee. Deduction under Section 43B - customs duty paid disallowability as the same was not verified by the assessing officer as it was not claimed in the return of income or in the revised return - HELD THAT:- This ground was taken with regard to deduction under Section 43B of the Act before Commissioner of Income Tax (Appeals) and the same was also taken before the Income Tax Appellate Tribunal. Therefore, it cannot be said that the assessee raised the aforesaid issue for the first time before the Income Tax Appellate Tribunal. The Supreme Court in BERGER PAINTS (INDIA) LTD [ 2004 (2) TMI 4 - SUPREME COURT] has quoted with approval the observation made by the special bench of Income Tax Appellate Tribunal in INDIAN COMMUNICATION P. LTD.[ 1994 (1) TMI 245 - ITAT DELHI] to the effect that whether f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this income having not been earned in the course of export and when the details of the same had not been furnished by the assessee? (v) Whether the tribunal was correct in holding that net interest income should be reduced by 90% when computing profits of business for the purpose of allowing deduction under Section 80HHC of the Act and not gross interest income? (vi) Whether the tribunal was correct in holding that the income from technical services cannot be reduced by 90% when computing profits of business as per Explanation (baa) to Section 80HHC of the Act, despite this income having not been earned in the course of export and when the details of the same had not been furnished by the assessee? (vii) Whether the tribunal was correct in holding that ₹ 8,84,75,000/- being customs duty paid and included in the closing stock is allowable in view of Section 43B of the Act, when the same was not verified by the assessing officer as it was not claimed in the return of income or in the revised return as held by the Apex Court in M /s Goetze India Ltd., vs. CIT (2006 204 CTR (SC) 182? (viii) Whether the tribunal was correct in holding that order under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 94,912/- as the expenses were not incurred trip wise as per Rule 6D of the Rules. The finding of the assessing officer that a sum of ₹ 1,59,99,078/- of a Cash Compensatory Assistance and duty drawback is liable for tax on accrual basis was also upheld. The disallowance of claim under Section 40(A)(3) of the Act was also upheld. The finding with regard to allowing deduction under Section 80HHC of the Act was upheld. In the result, the appeal was dismissed. 4. The assessee filed an appeal before the Income Tax Appellate Tribunal. The tribunal by an order dated 25.05.2012 inter alia held that travel expenses should be computed on average basis and not trip wise basis by placing reliance on a decision rendered by a bench of this court. It was also held that finding with regard to cash compensatory assistance and duty drawback is contrary to the view expressed by the tribunal in case of assessee for Previous year 1994-95. It was also held that payment of cash exceeding ₹ 10,000/- were made in exceptional circumstances and the same were admissible. It was also held that no part of income for technical services be excluded for computing deduction under Section 80HHC o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TH NAIR (2007) 295 ITR 228 (SC) does not deal with the issue of business profits but with total turnover. It is further submitted that a receipt for rendering technical services does not fall within the scope of exclusion contemplated by clause (baa) of the explanation to Section 80HHC and the aforesaid position was conceded in case of assessee for the subsequent year i.e., 1997-98 by the revenue. In this connection, attention has been invited to order dated 05.04.2017 passed by the Income Tax Appellate Tribunal in I.T.A.No.2714/Mum/2003. It is also pointed out that claim with regard to deduction in view of Section 43B of the Act was made before the assessing officer as well as Commissioner of Income Tax (Appeals), which was rejected by Commissioner of Income Tax (Appeals) in paragraph 4 of the order passed by it. Therefore, the contention of the revenue that the aforesaid claim was raised for the first time before the Income Tax Appellate Tribunal is factually incorrect. It is further submitted that in any case no loss has been caused to the revenue. In support of aforesaid submissions, reliance has been placed on decisions in CIT VS. EXCEL INDUSTRIES LTD , (2013) 38 TAXMANN. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receive the income. It has further been held that assessee would get a right to receive the amount only when it is sanctioned to the assessee by the custom authorities and not when the assessee makes a claim of the same. It was also held that since, the amount of cash compensatory assistance and duty drawback during the relevant year was not sanctioned to the assessee therefore, the income has not accrued to the assessee. Thus, in fact the tribunal has allowed the deduction on accrual basis only. Therefore, the 2nd substantial question of law is answered against the revenue and in favour of the assessee. 9. So far as 6th substantial question of law is concerned, this court in COMMISSIONER OF INCOME TAX VS. MOTOR INDUSTRIES CO. LTD., , (2011) 331 ITR 79 (KARNATAKA) as well as in COMMISSIONER OF INCOME TAX VS. M/S ROBERT BOSCH (INDIA) LTD., , DATED 10.10.2013 RENDERED IN ITA NO.507/2007 while taking into account the decision of the Supreme Court in RAVINDRANATHAN NAIR supra as well as decision of the Bombay High Court in COMMISSIONER OF INCOME TAX VS. PFIZER LTD. , (2011) 330 ITR 62 (Bom.) has held that if any income is derived from the export by way of foreign ..... 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