Unident Brushes Ltd., Baroda V. Dy. CIT., Cicle-4, Baroda

CO 12/AHD/2008

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4800 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 11-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Keywords: Commercial expediency; Revised return
• Section: 80HHC

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, C-BENCH, AHMEDABAD. BEFORESH. MUKUL SHRAWAT,JM & SH. A.N. PAHUJA,AM. ITA NO.4185/AHD/2007 WITH CO NO.12/AHD/2008 (ASSESSMENT YEAR 2004-2005) DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-4, BARODA. M/S. UNIDENT BRUSHES LTD PLOT NO.209, VILLAGE LUNA TALUKA: PADRA, DISTRICT: BARODA. [PAN: AAACU 2382 A] (APPELLANT) VERSUS (RESPONDENT) FOR THE REVENUE: SHRI. M.C. PANDIT, . DR FOR THE ASSESSEE MS. URVASHI SHODHAN, AR ORDER A N PAHUJA : THIS APPEAL BY REVENUE AND THE CROSS- OBJECTION[CO] BY THE ASSESSEE AGAINST AN ORDER DAT ED 22-08- 2007 OF THE LD.CIT(APPEALS)-III, BARODA, RAISE THE FOLLOWING GROUNDS: ITA NO.4185/AHD/2007 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN DELETING THE INTEREST CHARGED ON IN TEREST FREE LOAN OF RS.7,89,45,000/- GIVEN TO AMIGO SECURITIES PVT. LTD ., RELYING UPON THE JUDGMENT IN THE CASE OF S A BUILDERS LIMITED (2 88 ITR 1), WHEN THE SAID DECISION IS SQUARELY DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DIRECTING THE AO TO ALLOW DEDUCTION U/S 80IA AFTER GIVING EFFECT TO HIS ORDER, WHEN THE ASSESSEE HAS N OT CLAIMED ANY DEDUCTION IN THE REVISED RETURN OF INCOME. 3 THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR AL TER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. CO NO.12/AHD/2008 1. THE LEARNED COMMISSIONER OF INCOME TAX (A) E RRED IN FACT AND IN LAW IN DISALLOWING INTEREST AMOUNTING TO RS.1,14,378/- ON THE GROUND THAT THE SAID AMOUNT PERTAINS TO INTEREST FREE ADVANCE NOT UTILIZED FOR THE PURPOSE OF BUSINESS. 2 ITA NO.4185/AHD/2007 WITH CO NO.12/AHD/2008 2. YOUR APPELLANT CRAVES RIGHT TO ADD TO OR ALTER, AMEND ,SUBSTITUTE, DELETE OR WITHDRAW ALL OR ANY OF THE ABOVE GROUNDS IN CROSS-OBJECTION. 2 ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL OF T HE REVENUE, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT R ETURN DECLARING INCOME OF RS.16,69,707/- FILED ON 1.11.2004 BY THE ASSESSEE, MANUFACTURING TOOTH BRUSHES, AFTER BEING PROCESSED ON 23.3.2005 U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT], WAS TAKEN UP FOR SCRUTINY WITH THE ISSU E OF NOTICE U/S 143(2) OF THE ACT ON 22.6.2005. SUBSEQUENTLY A REVI SED RETURN DECLARING INCOME OF RS.10,13,800/- WAS FILED ON 25. 2.2006 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE HAD ADVANCED INTEREST FREE LOAN OF RS.7,89,45,000/- TO M/S AMIGO SECURITIES PVT. LTD.[ASPL], IN TERMS OF AN AGREEMENT FOR CONSTRUCT ION OF A COMMERCIAL BUILDING AT PADRA ROAD. BARODA, WHEREUND ER THE ASSESSEE COMPANY WAS ENTITLED TO THE USAGE RIGHT O F 7000 SQ FT. SPACE FULLY FURNISHED WITH USAGE CHARGE@ RS.24/- PE R SQ.FT. IN THE BUILDING TO BE CONSTRUCTED BY M/S AMIGO SECURITIES PVT. LTD. BESIDES, THE ASSESSEE HAD ALSO ADVANCED INTEREST FR EE LOAN OF RS.20,00,000/- TO S & G MOULDERS PVT. LTD.[SGM]. O N PERUSAL OF THE BALANCE SHEET, THE AO NOTICED THAT THE ASSESSEE HAD RECEIVED SECURED LOAN OF RS.3,31,35,849/- FROM THE BANK BE SIDE UNSECURED LOANS OF RS.2,50,22,489/- AND HAD PAID I NTEREST OF RS.15,46,391/- ON TERM LOAN, RS.15,39,656/- TO BANK AND RS.17,39,853/- TO UNSECURED CREDITORS. IN RESPONSE TO A SHOW CAUSE NOTICE, PROPOSING TO DISALLOW INTEREST TO THE EXTENT NOTIONALLY CHARGEABLE ON INTEREST FREE LOANS GIVEN TO ABOVE PARTIES, THE ASSESSEE REPLIED THAT SINCE THE ASSES SEE COMPANY WAS IN NEED OF OFFICE PREMISES, THEY HAD ENTERED IN TO AN AGREEMENT WITH M/S AMIGO SECURITIES PVT. LTD.(ASPL) , WHEREUNDER INTEREST FREE FUNDS OF RS.7.00 CRORES TO GETHER WITH FLOAT OF RS.1.50 CRORES ( FOR VARYING PERIOD NOT E XCEEDING A CONTINUOUS PERIOD OF ONE YEAR) WAS PROVIDED FOR ENA BLING ASPL TO FINANCE CONSTRUCTION OF THE SAID PREMISES. THUS, TH E MONEY GIVEN 3 ITA NO.4185/AHD/2007 WITH CO NO.12/AHD/2008 AS ADVANCE WITH PRIMARY OBJECT OF TAKING THE PREMIS ES ON LEASE FOR BUSINESS PURPOSES, COULD NOT BE CONSIDERED TO H AVE BEEN DIVERTED FOR NON-BUSINESS PURPOSES, THE ASSESSEE SU BMITTED . THERE IS NOTHING IN THE ASSESSMENT ORDER AS TO WHET HER OR NOT THE ASSESEE REPLIED IN RELATION TO ADVANCE OF RS. 20 LA CS TO SGM. IN ANY CASE, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND DISTINGUISHING THE DECISIONS RELIED UPON, THE AO OB SERVED THAT THE BALANCE SHEET OF THE ASSESSEE REVEALED THAT THE SHARE CAPITAL & RESERVES & SURPLUS WERE RS.5,07,59,062/- WHILE LOAN FUNDS WE RE RS.5,81,58,338/-. SINCE FIXED ASSETS BLOCK WAS RS.3,56,75,121/- BESID ES INVESTMENT OF RS.38,50,000/- IN SHARES OF THE COMPANY TO WHOM THE INTEREST FREE FUNDS WERE GIVEN, INVENTORY-RS.1,23,70,449/- AND SUNDRY DEBTOR S- RS.1,66,24,857/-, THE AO DID NOT ACCEPT THE ASSESSEES PLEA THAT IT HAD S UFFICIENT INTEREST FREE FUNDS TO ADVANCE TO THE AFORESAID TWO COMPANIES .ACCORDIN GLY, THE AO DISALLOWED INTEREST OF RS.46,29,153/- ON THE GROUND THAT FU NDS WERE DIVERTED FOR NON- BUSINESS PURPOSES. 3 ON APPEAL, THE ASSESSEE REITERATED THEIR SUBMISS IONS BEFORE THE AO AND CONTENDED THAT THE ADVANCE WAS G IVEN TO ASPL IN FURTHERANCE OF COMMERCIAL EXPEDIENCY OF THE ASSESSE E. REGARDING INTEREST FREE ADVANCE OF RS.20 LACS TO SGM, IT WAS SUBMITTED THAT M/S SGM WAS PROVIDING JOB WORK SERVICES TO THE ASSESSEE . DUE TO TECHNOLOGICAL ADVANCES, AND IN ORDER TO HELP SGM TO UPGRADE ITS MACHINERY S O AS TO ENABLE THEM TO PROVIDE BETTER QUALITY TOOTH BRUSH HANDLES, AN INTE REST FREE ADVANCE OF RS.20 LACS WAS PROVIDED. SINCE THE MONEY WAS ADVANCED FO R BUSINESS PURPOSES, NO DISALLOWANCE ON THIS ACCOUNT WAS CALLED FOR, THE ASSESSEE PLEADED. IN THE LIGHT OF THESE SUBMISSIONS, THE LD. CIT(A) WHILE RE LYING UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD. VS. CIT, 288 ITR 1, CONCLUDED AS UNDER: 3.2.1..IN THE CASE OF ASPL THE ASSESSEE APPEAR S TO HAVE DERIVED CONSIDERABLE BENEFIT UNDER THE TERMS OF AGR EEMENT, IN AS MUCH AS IT COULD OBTAIN OFFICE SPACE IN A PRESTIGIOUS LO CALITY, AT LOW RATES COMPRISING ONLY OF MAINTENANCE AND SERVICE CHARGES. THE USAGE OF THE PREMISES WAS, THEREFORE, VIRTUALLY RENT FREE. INSTEAD OF PAYING RENT MONTHLY, THE ASSESSEE HAS ALLOWED USE OF ITS FUNDS FOR EARNING INTEREST BY ASPL IN LIEU OF USAGE OF OFFICE SPACE. FURTHER, THE ASSESSEE 4 ITA NO.4185/AHD/2007 WITH CO NO.12/AHD/2008 RETAINED THE OPTION OF CONVERTING THE LEASE INTO PU RCHASE OF THE OFFICE PREMISES. IT THUS HAD THE RIGHT OF FIRST REFUSAL O N SALE OF THE IMPUGNED PROPERTY. THESE ARE CONSIDERABLE COMMERCIAL ADVANT AGES. IT MAY BE DISPUTED WHETHER THE COMMERCIAL ADVANTAGE DERIVED W AS COMMENSURATE TO THE LOSS ON ACCOUNT OF FOREGONE USA GE OF THE FUNDS IN QUESTION. IF, HOWEVER, SOME NEXUS OF BUSINESS EXPE DIENCY COULD BE SHOWN, THEN THE BUSINESS MAN SHOULD BE ALLOWED TO B E THE BEST JUDGE OF HIS OWN INTEREST. FOLLOWING THE RATIO OF THE SU PREME COURTS DECISION IN S.A. BUILDERS LTD., I AM OF THE OPINION THAT THE DISALLOWANCE OF INTEREST RELATABLE TO ADVANCE OF RS.7,89,45,000/- W AS NOT JUSTIFIED. HOWEVER, SO FAR AS THE OTHER AMOUNT OF RS.20 LACS I S CONCERNED, IT IS NOTE WORTHY THAT THE ADVANCE WAS MADE LONG BACK, I. E. F.Y 1997-98. NO INTEREST HAS BEEN CHARGED ON SUCH ADVANCE. NO B ENEFICIAL AGREEMENT HAS BEEN NEGOTIATED BY WHICH SOME ADVANTA GE IN THE COMMERCIAL SENSE COULD BE SAID TO HAVE BEEN DERIVED FROM THE ACT OF MAKING SUCH INTEREST FREE ADVANCE. IT IS ALSO PERT INENT TO NOTE THAT THE ADVANCE HAS STILL NOT BEEN REPAID AND USE OF THE FU NDS CONTINUED TO BE ENJOYED BY SGM. THIS APPEARS TO BE A ONE WAY FLOW OF BENEFIT FROM SGM. NO CORRESPONDING BENEFIT HAS BEEN SHOWN TO FL OW FROM SGM TO THE APPELLANT. HENCE, I AM OF THE OPINION THAT THI S TRANSACTION COULD NOT BE SAID TO HAVE BEEN IN FURTHERANCE OF ANY COMMERCI AL INTEREST ON THE PART OF THE APPELLANT. ACCORDINGLY, IT IS HELD THA T THE INTEREST DISALLOWED ATTRIBUTABLE TO THIS LOAN OF RS.20 LACS IS JUSTIFIE D AND IS UPHELD. 3.2.2 THE PROPORTIONATE DISALLOWANCE OF THE INTERE ST ATTRIBUTABLE TO THE LOAN OF SGM IS WORKED OUT AS UNDER: 46,29,156 X 20,00,000 = 45,14,778 8,09,45,000 HENCE, DISALLOWANCE OF INTEREST OF RS.1,14,378/- IS UPHELD AND ADDITION OF THE REMAINING AMOUNT OF RS.45,14,778/- IS DIRECT ED TO BE DELETED. 4 THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LD. CIT(A) IN DELETING D ISALLOWANCE OF INTEREST IN RELATION TO ADVANCE TO M/S AMIGO SECURI TIES PVT. LTD. WHILE THE ASSESSEE IN THEIR CO DISPUTED THE DISAL LOWANCE OF RS.1,14,378/- UPHELD BY THE LD. CIT(A). THE LEARNED DR SUPPORTED THE FINDINGS OF THE LD. CIT(A) IN RESPEC T OF DISALLOWANCE OF INTEREST IN RELATION TO ADVANCE TO M/S AMIGO SECURITIES PVT. LTD. ON THE OTHER HAND , THE LD. AR ON BEHALF OF THE ASSESSEE REITERATED THEIR SUBMISSIONS BEFORE THE LE ARNED CIT(A) WHILE RELYING UPON THE DECISION IN THE CASE OF S.A. BUILDERS LTD. (SUPRA) AND CONTENDED THAT ISSUE RELATING TO DISAL LOWANCE OF 5 ITA NO.4185/AHD/2007 WITH CO NO.12/AHD/2008 INTEREST ON ACCOUNT OF ADVANCE TO M/S AMIGO SECURIT IES PVT. LTD. IS SQUARELY COVERED BY THE DECISION DATED 14-05-201 0 OF THE ITAT IN THE CASE OF DCIT VS. ANIGO BRUSHES PVT. LTD. IN ITA NOS.134 AND 158/AHD/2008. AS REGARDS DISALLOWANCE OF INTER EST OF RS.1,14,378/- UPHELD BY THE LD. CIT(A), THE LD. AR WHILE RELYING UPON THE DECISION OF THE ITAT IN THEIR OWN CASE FO R THE PRECEDING YEARS CONTENDED THAT MATTER NEEDS TO BE RESTORED T O THE FILE OF THE AO FOR READJUDICATION IN THE LIGHT OF DECISIONS IN THE CASE OF SA BUILDERS LTD.(SUPRA) AND CIT VS. RELIANCE UTILI TIES AND POWER LTD.,313 ITR 340(BOM.) . 5 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. UNDI SPUTEDLY, THE THE ASSESSEE ADVANCED THE MONEY TO ASPL WITHOUT CH ARGING ANY INTEREST IN TERMS OF AN AGREEMENT, SO AS TO ENABLE THE LATTER T O CONSTRUCT A BUILDING AND PROVIDE USAGE RIGHT OF 7000 SQ FT. SPACE FULLY FURN ISHED @ RS.24/- PER SQ.FT. . INTER ALIA, THE ASSESSEE RETAINED THE OPTION OF CONVERTING THE LEASE INTO PURCHASE OF THE OFFICE PREMISES. THUS, THE ASSESSEE DERIVED COMMERCIAL ADVANTAGE AND ACCORDINGLY, THE LD. CIT( A) DELETED THE INTEREST IN RELATION TO FUNDS ADVANCED TO ASPL. SINCE THE REVEN UE HAVE NOT PLACED BEFORE US ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFERE. THIS VI EW OF OURS IS SUPPORTED BY A DECISION DATED 14-05-2010 OF A CO-ORDINATE B ENCH IN THE CASE OF DCIT VS. ANIGO BRUSHES PVT. LTD. IN ITA NOS .134 AND 158/AHD/2008, WHEREIN AFTER ANALYZING SIMILAR TERMS & CONDITIONS OF AN MOU, THE ITAT RELYING, INTER ALIA, ON THE DE CISION OF HONBLE APEX COURT IN THE CASE OF S.A. BUILDERS (SUPRA) CONCLUDE D THAT THE AMOUNT ADVANCED FOR OBTAINING THE PREMISES ON LEASE WAS FO R THE BUSINESS EXPEDIENCY. IN VIEW OF THE FOREGOING, WE HAVE NO AL TERNATIVE BUT TO UPHOLD THE FINDINGS OF THE LD. CIT(A). THEREFORE, GROUND NO.1 IN THE APPEAL OF THE REVENUE IS DISMISSED. 6. AS REGARDS GROUND RAISED BY THE ASSESSEE IN TH EIR CO, WE FIND THAT THOUGH THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT AN INTEREST FREE ADVANCE OF RS.20 LACS WAS GI VEN TO M/S SGM IN THE 6 ITA NO.4185/AHD/2007 WITH CO NO.12/AHD/2008 FY 1997-98 IN ORDER TO HELP THEM TO UPGRADE THE IR MACHINERY SO THAT QUALITY OF THE TOOTH BRUSH HANDLES SUPPLIED TO THE ASSESSE E COULD BE IMPROVED, THE LD. CIT(A) WITHOUT RECORDING ANY FINDINGS ON THIS A SPECT,UPHELD THE DISALLOWANCE OF INTEREST ON THE GROUND THAT THE SA ID TRANSACTION WAS NOT FOR FURTHERANCE OF ANY COMMERCIAL INTEREST. MOREOVER , WE FIND THAT A SIMILAR ISSUE IN THE PRECEDING ASSESSMENT YEARS 2001-02 ,2002-03 &2003-04 HAD BEEN RESTORED BY THE ITAT TO THE FILE OF THE AO WITH THE DIRECTIONS TO RE-EXAMINE THE ISSUE IN THE LIGHT OF DECISIONS OF THE HONBLE APEX COURT IN THE CASE OF SA BUILDERS LTD.(SUPRA) AND RELIANCE UTILITIES AND POW ER LTD.(SUPRA). IN THESE CIRCUMSTANCES AND IN THE LIGHT OF VIEW TAK EN BY CO- ORDINATE BENCHES IN THE PRECEDING ASSESSMENT YEARS, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDERS OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE AO WITH TH E DIRECTIONS TO READJUDICATE THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE ASSESSEE, KEEPING IN MIND THE AF ORESAID DECISIONS OF THE HONBLE APEX COURT IN THE CASE OF SA BUILDERS LTD.( SUPRA) AND RELIANCE UTILITIES AND POWER LTD.(SUPRA). NEEDLESS TO SAY THAT WHILE REDECIDING THE ISSUE, THE AO SHALL PASS A SPEAKING ORDER, BRINGING OUT CLEARLY AS TO WHETHER OR NOT ANY MACHINERY WAS PURCHASED BY M/S SGM WITH THE ADVANCE PROVIDED BY THE ASSESSEE AND IF SO, WHETHER QUALITY OF TOOTH BRUSH HANDLES SUPPLIED TO THE ASSESSEE AND THEIR PRODUCTI ON IMPROVED . WITH THESE OBSERVATIONS, GROUND RAISED IN THE CO IS DISPOSED OF. 7 AS REGARDS GROUND NO.2 IN THE APPEAL OF THE REVEN UE RELATING TO CLAIM FOR DEDUCTION U/S 80IA OF THE ACT , THERE IS NO DISCUSSION ON THIS ISSUE IN THE ASSESSMENT ORDER. ON APPEAL, THE LD. CIT(A) FOUND THAT THE AO COMPUTED THE DEDUCTIO N BASED ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME. ACCORDINGLY, THE LEARNED CIT(A) DIRECTED THE AO TO ALLOW DEDUCTION U/S 80IA AFTER GIVING EFFECT TO HIS ORDER. 8 THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LD. CIT(A),CONTENDING ,IN TER ALIA THAT NO SUCH CLAIM WAS MADE IN THE REVISED RETURN. THE LEA RNED AR ON BEHALF OF THE ASSESSEE DID NOT THROW LIGHT ON THI S ASPECT AS TO 7 ITA NO.4185/AHD/2007 WITH CO NO.12/AHD/2008 WHY NO SUCH CLAIM WAS MADE IN THE REVISED RETURN. O N THE OTHER HAND, THE LD. CIT(A) FOUND THAT THE DEDUCTION WAS C OMPUTED BY THE AO ON THE BASIS OF RETURNED INCOME. SINCE RELE VANT FACTS ON THIS ISSUE ARE NOT CLEAR, WE HAVE NO ALTERNATIVE BU T TO VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTIONS TO READJUDICATE THE ISSUE OF DEDUCTION U/S 80IA OF THE ACT IN ACCORDANCE WITH LAW AFTER ALLOWI NG SUFFICIENT TO THE ASSESSEE. IN THE EVENT THE ASSESSEE FOUND ELIG IBLE FOR DEDUCTION U/S 80IA OF THE ACT, THE DEDUCTION SHOULD BE COMPUTED ON THE BASIS OF ASSESSED ELIGIBLE PROFITS OF THE R ELEVANT INDUSTRIAL UNDERTAKING. THIS VIEW OF OURS IS SUPPORTED BY THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. HMT LTD., 203 ITR 811(KAR), WHERE IN IT WAS HELD THAT FOR THE PURPO SES OF SECTIONS 80J AND 80HH OF THE ACT, PROFITS AND GAINS OF NEW UNDERTAKI NGS ARE NOT COMMERCIAL PROFITS BUT ONLY SUCH PROFITS AS ARE COMPUTED IN TH E MANNER LAID DOWN UNDER THE ACT IN PURSUANCE OF SECTION 80AB, AS IF EACH UN DERTAKING WAS A SEPARATE ASSESSEE . SIMILARLY,DELHI BENCH OF THE TRIBUNAL IN THE CASE KOMAL EXPORTS VS ACIT, 19 SOT 602 (DEL.)) IN THE CONTEXT OF PROVISIO NS OF SEC 80HHC OF THE ACT DIRECTED TO ALLOW THE DEDUCTION WITH REFERENCE TO T HE FINALLY ASSESSED INCOME. SIMILAR VIEW WAS TAKEN BY THE ITAT, MUMBAI BENCH I N THE CASE OF M/S. ZENITH RUBBER & PLASTIC WORK, 35 TTJ 259. LIKEWISE, HONBL E PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. BAWA SKIN COMPANY , 294 ITR 537(PUNJAB & HARYANA) HELD THAT IF THE PROFITS SO ARRIVED AT B Y THE ASSESSING OFFICER ARE RELATED TO THE BUSINESS OF THE ASSESSEE WHICH IS EN GAGED IN THE BUSINESS OF EXPORT OUT OF INDIA OF ANY GOODS OR MERCHANDISE TO WHICH SECTION 80HHC IS APPLICABLE, THEN THE ASSESSEE WOULD BE COMPLETELY J USTIFIED TO MAKE THE CLAIM OF DEDUCTION OF SUCH PROFITS AS DETERMINED BY THE A SSESSING OFFICER. WITH THESE OBSERVATIONS, GROUND NO. 2 IN THE APPEAL OF T HE REVENUE IS DISPOSED OF. 9. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERMS OF RESIDUARY GROUND IN THE APPEAL OF THE REVENUE OR IN THE CO, THESE GROUNDS ARE DISMISSED. 8 ITA NO.4185/AHD/2007 WITH CO NO.12/AHD/2008 10. IN THE RESULT, THE APPEAL OF THE REVENUE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES WHILE CROSS OBJECTION IS A LLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 4TH JU NE, 2010. SD/- SD/- 88888 SS 88888888 D/- (MUKUL SHRAWAT) ( A.N. PAHUJA) JUDICIAL MEMBER ACCOUNT ANT MEMBER AHMEDABAD; DATED:4/06/2010 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE 2.DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-4,BARODA 3. THE CIT(A)-III,BARODA 4. THE CIT CONCERNED. 5. THE DR,C BENCH, AHMEDABAD 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.