TMI Blog2021 (3) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the interest bearing borrowed funds. Thus, the advances were exclusively for the purposes of business of the assessee and the Assessing Officer has not taken cognizance of the same. Further while disallowing the claim of the assessee, the Assessing Officer failed to establish the nexus between the amount not given and the advances. Thus, the CIT(A) was not correct in confirming this addition. Allowability of deduction u/s 80HHC by the Assessing Officer only after reducing the amount of deduction u/s 80IB from the amount of business profit - HELD THAT:-We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Hon ble Delhi High Court in case of Great Eastern Exports Ltd. [ 2010 (11) TMI 91 - DELHI HIGH COURT] held that the deduction allowed u/s 80-IA had to be reduced from the profits for computing deduction u/s 80HHC. The same principle will be applicable in the present case, hence, Ground No. 8 is dismissed. Depreciation @ 50% on machinery purchased under TUF Scheme - HELD THAT:- As assessee is in the business of manufacturing and export of handloom goods, floor coverings and made ups which are covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed the expenditure incurred on repair and maintenance but held the same as capital expenditure. The assessee s factory is on rented premises and there is no new structure created by the assessee. These facts were also not disputed by the Assessing Officer. Hence, there is no need to interfere with the finding of the CIT(A). Ground No. 5 of the Revenue s appeal is dismissed. Disallowing export promotion expenses - HELD THAT:- It is pertinent to note that the AO has allowed the export promotion expenses to the extent of 9/10th of the expenses claimed by the assessee. AO never disputed that there is export promotion expenses. In fact, there is no observation by the AO that certain portion of these expenses were utilized for personal use.The disallowance is only on the basis of presumption and assumptions.Therefore, the CIT(A) rightly deleted this addition. - I.T.A. No. 3075/DEL/2008, I.T.A. No. 2958/DEL/2008 - - - Dated:- 30-3-2021 - Shri G. S. Pannu, Vice President And Ms Suchitra Kamble, Judicial Member For the Appellant : Dr. Rakesh Gupta, Advocate For the Respondent : Sh. H. K. Choudhary, CIT(DR) ORDER PER SUCHITRA KAMBLE, JM These two a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of 80IB from the amount of business profit. 9. That in any view of matter and in any case, action of Ld. CIT (A) in not reversing the action of Ld. AO in disallowing the claim of deduction u/s 80HHC and 80 IB is illegal, void ab-initio, arbitrary, unjustified, against the principles of natural justice and contrary to the law and facts and has further erred in not quashing the impugned assessment framed by Ld. A.O being illegal void ab initio, in violation of principles of natural justice. I.T.A. No. 2958/DEL/2008 (A.Y 2004-05) Revenue s appeal 1. The Ld. CTI' (A) has erred both in law and on facts of the case in al lowing depreciation (a) 50% on machinery purchased for ₹ 23,70,949/- under TUF Scheme as against depreciation @ 25% allowed by the A.O. 2. The Ld. CIT(A) has erred both in law and on facts of the Case in deleting an addition of ₹ 5,51,19,865/- made by the A.O. on account of difference in the value of stock as per stock statement submitted to the Bank and as declared in the trading results of the assessee. 3. The Ld. CIT(A) has erred both in law and on facts of the Case in al lowing deduction u/s 80HHC to the assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is a supporting manufacturer. The Assessing Officer further notice that the assessee claimed deduction u/s 80IB of the Act for which the assessee filed its explanation. The Assessing Officer after taking into account the submissions of the assessee held that deduction u/s 80IB is not allowable on the amount of export incentives and the assessee wrongly claimed deduction u/s 80IB on export incentives and, therefore, disallowed the same. The Assessing Officer in respect of computation u/s 80HHC and 80IB notice that the assessee has computed deduction u/s 80HHC and 80IB ignoring the provisions of Section 80IB (13) read with 80IA (9). The assessee was asked to justify its claim for which the assessee filed its submissions. After taking into account the submissions, the Assessing Officer held that deduction u/s 80HHC and 80IB is to be allowed as per the provisions of Section 80IB (13) read with Section 80IA (9) of the Act. The Assessing Officer further made an observation that as the export proceeds of ₹ 77,413/- received from M/s R D Martin Inc. USA as on 31/03/2004 could not be realized till 30/09/2004, the same should be deducted from export turnover for computation of ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as claimed by the assessee in his return of income. The Ld. AR submitted that the issue is settled by the various decisions of the Hon ble High Courts and Apex Court, hence the issue may be remanded back to the file of the Assessing Officer for fresh adjudication in light of the law laid down by the various decisions of the Hon ble High Court and Supreme Court. As regards to Ground No. 3, the Ld. AR submitted that the CIT(A) erred in not allowing the deduction under Section 80IB on the account of DEPB and duty draw back in full as claimed by the assessee in his return of income, as the assessee is supporting manufacturer and the Tribunal in earlier years had allowed this claim. Thus, the Ld. AR submitted that the issue may be remanded back to the file of the Assessing Officer for fresh adjudication on merit and on the law laid down by various decisions of the Hon ble High Court and Supreme Court especially in case of CIT vs. Avani Export [2005] 232 Taxman 357 (SC) and CIT vs. Carpet India (2020) 424 ITR 316 (SC). 8. The Ld. DR relied upon the order of the CIT(A) and Assessment Order, but submitted that in light of the decisions of the Hon ble High Court and Supreme Court, both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 5 of the assessee s appeal is allowed. 13. As regards to Ground No. 8, relating to allowability of deduction u/s 80HHC by the Assessing Officer only after reducing the amount of deduction u/s 80IB from the amount of business profit, the Ld. AR submitted that this issue is decided against the assessee as per the decision of the Hon ble Delhi High Court in case of Great Eastern Exports Ltd. vs. CIT order dated 04.12.2010. 14. The Ld. DR relied upon the assessment order and the order of the CIT(A). 15. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Hon ble Delhi High Court in case of Great Eastern Exports Ltd. (Supra) held that the deduction allowed u/s 80-IA had to be reduced from the profits for computing deduction u/s 80HHC. The same principle will be applicable in the present case, hence, Ground No. 8 is dismissed. 16. Thus, the appeal filed by the assessee being ITA No. 3075/Del/2008 is partly allowed for statistical purpose. 17. Now we are taking up Revenue s appeal being ITA No. 2958/DEL/2008. 18. As regards to Ground No. 1 of the Revenue s appeal relating to depreciation @ 50% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 5,51,19,865/- made by the Assessing Officer on account of difference in the value of stock as per stock statement submitted to the Bank and as declared in the trading results of the assessee, the Ld. DR submitted that the Assessing Officer has clearly observed that as per the manufacturing cum trading account for the period 01.03.2004 to 31.03.2004, the closing stock as on 31.03.2004 would have been ₹ 6,40,91,216/- while the assessee has shown the closing stock of only ₹ 89,71,351/- in its balance sheet as on 31.03.2004. Therefore, the Assessing Officer rightly made addition of ₹ 4,41,19,865/- as deemed income under Section 69 of the Income Tax Act, 1961. 22. The Ld. AR relied upon the order of the CIT(A) and also that of the order of the CIT(A) for subsequent year. The Ld. AR further submitted that the assessee received purchased goods worth ₹ 4,66,94,618/- before 01.03.2004 which is clearly set out from the books of accounts. The Ld. AR further submitted that the Assessing Officer has not rejected the books of accounts. 23. We have heard both the parties and perused all the relevant material available on record. It is undisputed fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other evidence to establish that these expenses have been wholly and exclusively for the business purposes. 28. The Ld. AR relied upon the order of the CIT(A). 29. We have heard both the parties and perused all the relevant material available on record. From the perusal of the order of the CIT(A) as well as the Assessment Order, it can be seen that the evidences/documents were produced by the Assessee during the assessment proceedings to establish the claim of the assessee that the foreign travel was exclusively for the business purpose only. Hence, there is no need to interfere the findings of the CIT(A). Therefore, Ground No. 4 of the Revenue s appeal is dismissed. 30. As regards to Ground No. 5 of the Revenue s appeal relating to addition of ₹ 17,56,508/- on account of building repair and maintenance expenses, the Ld. DR relied upon the assessment order. 31. The Ld. AR relied upon the order of the CIT(A). 32. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Assessing Officer has not disputed the expenditure incurred on repair and maintenance but held the same as capital expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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