BHAVANI GEMS, MUMBAI V. ACIT CEN CIR-35, MUMBAI

CO 21/MUM/2009

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2213 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 1 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Next Hearing Date: 19-06-2013
• Assessment Year: misc
• Appeal Filed On: 21-01-2009
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Assessee Lawyers: REEPAL TRALSHAWALA
• Keywords: Search and seizure; Source of fund; Retrospective amendment; Block assessment
• Section: 80HHC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA , A M & SHRI RAM LAL NEGI , J M IT (SS) A NO . 84 /MUM /20 08 ( BLOCK ASSESSMENT PERIOD : 01 - 04 - 1996 TO 24 - 09 - 1997 ) ACIT, CE NTRAL CIRCLE - 35, MUMBAI VS. M/S BHAVANI GEMS, 117, SHREEJI CHAMBERS, TATA ROAD, OPERA HOUSE, MUMBAI - 400034 ./ ./ PAN/GIR NO. : A A AFB 2302 G ( / APPELLANT ) .. ( / RESPONDENT ) AND CROSS OBJECTION NO .21/MUM/200 9 (ARIS ING OUT OF IT(SS)A NO. 84 /MUM/200 8 ) ( BLOCK ASSESSMENT PERIOD : 01 - 04 - 1996 TO 24 - 09 - 1997 ) M/S BHAVANI GEMS, 117, SHREEJI CHAMBERS, TATA ROAD, OPERA HOUSE, MUMBAI - 400034 VS. ACIT, CENTRAL CIRCLE - 35, MUMBAI ./ ./ PAN/GIR NO. : A AAFB 2302 G ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI N.P.SINGH /ASSESSEE BY : SHRI REEPAL TRALSHAWALA / DATE OF HEARING : 16 /1 2/201 5 / DATE OF PRONOUNCEME NT 02/03 /201 6 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), MUMBAI , DATED 23 - 5 - 2008 , FOR THE BLOCK ASSESSMENT PERIOD 01 - 04 - 1996 TO 24 - 09 - 1997. THE ASSESSEE HAS ALSO FILED CROSS OBJECTI ON. 2. THE REVENUE IN ITS APPEAL HAS RAISED THE FOLLOWING GROUNDS : - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT HON'BLE ITAT HAD GIVEN A IT (SS) A NO. 84/08 & CO NO.21/09 2 CATEGORICAL DIRECTION TO ALLOW DEDUCTION U/S. 80HHC AND NO THING WAS LEFT TO THE INTERPRETATION BY THE LOWER AUTHORITIES. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) FAILED TO APPRECIATE THAT THE HON'BLE ITAT DIRECTED THE ASSESSING OFFICER ONLY TO CONSIDER THE ASSESSEE'S CLAIM AS PER RELEVANT PROVISIONS OF LAW AFTER ALLOWING AN OPPORTUNITY TO THE ASSESSEE WHICH CLEARLY INDICATES THAT THE ISSUE WAS REMITTED BACK TO THE ASSESSING OFFICER TO BE DECIDED AFRESH BASED ON FACTS OF THE CASE AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT CONSIDERING THE MERITS OF THE CASE IN THE LIGHT OF THE FACTUAL AND JUDICIAL POSITION AS DISCUSSED IN THE ASSESSMENT ORDER AND THE DECISION OF HON'BLE HIGH COUR T OF PUNJAB & HARYANA, IN THE CASES OF NATIONAL LEGGUARD WORKS VS. CIT(A) & ANOTHER (288 ITR 18) AND SARLA HANDICRAFTS P. LTD. VS. ADDL.CIT (296 ITR 94).' 4. THE APPELLANT PRAY THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT THE ORDER OF AO BE RESTORED. THE ASSESSEE IN ITS CROSS OBJECTION HAS RAISED THE FOLLOWING GROUNDS: - 1) IN LAW & AS PER THE FACTS & IN THE CIRCUMSTANCES IN THE APPELLANT'S CASE THE LD. I T.O. IS RAISING A FRIVOLOUS GROUND FOR DISALLOWAN CE OF CLAIM U/S 80HHC. THE HON'BLE MUMBAI ITAT HAD IN ITS ORDER DATED 21 SI FEBRUARY 2006, HAD SPECIFICALLY STATED IN PARA 36 PAGE NO. 23 THAT, THE A.O. IS DIRECTED TO COMPUTE & ALLOW DEDUCTION ADMISSIBLE U/S 80 HHC TO THE ASSESSEE & HENCE, THE HON'BLE C. I T. 2) IN LAW & AS PER THE FACTS & CIRCUMSTANCES IN THE APPELLANT'S CASE, THE SUBSEQUENT ORDER OF THE HON'BLE MUMBAI ITA T DATED IS' MAY 2007, HAD ONCE AGAIN CLARIFIED THE SAID POSITION FOR ALLOWANCE OF DEDUCTION U/S 80HHC TO THE APPELLANT & HENCE, ANY FU RTHER INFERENCE ON THIS OBSERVATION IS CLEAR CONTEMPT OF THE HON'BLE TRIBUNAL. 3) IN LAW & AS PER THE FACTS & CIRCUMSTANCES IN THE APPELLANTS CASE THE HON'BLE C.I.T.(A) HAD CATEGORICALLY ALLOWED THE DEDUCTION U/S 80HHC, BASED ON THE ORDER OF THE HON'BLE MUMBAI TRIBUNAL & ALSO AFTER THE CASE LAWS REFERRED/RELIED BY THE ID. I T.O. WAS DULY DISTINGUISHED BY THE APPELLANT. THE COPY OF THE APPELLATE ORDER PASSED BY THE HON'BLE C. I T.(A) DEMONSTRATES THE UNDERLYING JUDICIAL ANALYSIS IN ALLOWING THE CLAIM OF DEDUC TION U/S 80HHC TO THE APPELLANT & HENCE, THE ORDER PASSED BY THE HON'BLE C. IT. (A) SHOULD NOT BE TEMPERED WITH. IT (SS) A NO. 84/08 & CO NO.21/09 3 3 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED ON THE APPELLANT I N SEPT., 1997. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE BLOCK PERIOD BY DECLARING UNDISCLOSED INCOME OF RS. 95 LACS U/S 158 B C AND THE ASSESSMENT WAS COMPLETED VIDE ORDER U/S 158BC(C) DATED 11 - 11 - 1999 DETERMINI NG THE UNDISCLOSED INCOME AT RS .5,60,34, 340/ - WITHOUT GRANTED BENEFIT OF DEDUCTION U/S 80HHC. THE ASSESSEE FILED AN APPEAL AGAINST THE ORDER TO THE CIT(A) AND THEN TO THE TRIBUNAL AND THE TRIBUNAL DETERMINED THE UNDISCLOSED INCOME AT RS. 45 LACS APPROX., HOWEVER IT WAS CONCLUDED THAT SINCE THE A SSESSEE HAD FILED THE RETURN OF INCOME DECLARING RS.95 LACS AS UNDISCLOSED INCOME, THE SAME MUST BE THE ASSESSED AS INCOME. THE ITAT HAS ALSO DIRECTED THE A.O. TO ALLOW THE DEDUCTION U/S. 80HHC WITH RESPECT TO ADDITIONAL INCOME SO OFFERED. PRECISE OBSERVATI ON OF THE TRIBUNAL IN IT(SS)A NO.110/MUM/2000, DATED 21 - 1 - 2006, ARE AS UNDER : - 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE RELEVANT PROVISIONS OF LAW IN THIS REGARD. IT MAY BE MENTIONED THAT THE LD. CIT(A) HAS REJECTED THE CLAI M OF THE ASSESSEE IN VIEW OF THE ITAT, CALCUTTA BENCH DECISION IN THE CASE OF BHAGCHAND JAIN VS. ACIT - 65 ITD 11. THE RELEVANT PART OF THE RATIO OF THIS DECISION MAY BE REPRODUCED BELOW FROM THE HEADNOTE : WHEN THE ASSESSEE HAS NEITHER RECORDED IN THE BOO KS OF ACCOUNT NOR DISCLOSED TO THE DEPARTMENT BY FILING THE RETURN OR OTHERWISE, THE LEGISLATURE SEEMS TO BE NOT INDULGENT TO ALLOW DEDUCTION UNDER CHAPTER VI - A OR REBATE UNDER SECTION 88 AGAINST THE UNDISCLOSED INCOME OF THE BLOCK PERIOD. IN VIEW OF THE S PECIFIC EXCLUSION OF THE OTHER CHAPTERS FOR THE PURPOSE OF COMPUTING THE UNDISCLOSED INCOME, DEDUCTIONS CONTEMPLATED UNDER CHAPTER VI - A CANNOT BE ALLOWED TO THE ASSESSEE. IN VIEW OF THE PLAIN LANGUAGE OF SEC.158BB(1) THE OTHER PROVISIONS OF THIS ACT SHALL NOT APPLY FOR THE PURPOSE OF COMPUTATION OF UNDISCLOSED INCOME. IT (SS) A NO. 84/08 & CO NO.21/09 4 FROM THE ABOVE, IT IS CLEAR THAT THE ITAT, CALCUTTA DECIDED THIS ISSUE ON THE BASIS OF PREAMENDED SECTION 158BB. AFTER THE AMENDMENT W.E.F.1.7.1995, THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHALL BE THE AGGREGATE OF THE TOTAL INCOME OF THE PREVIOUS YEARS FALLING WHICH THE BLOCK PERIOD COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE IT ACT. THUS, THE UNDISCLOSED INCOME HAS TO BE COMPUTED NOT MERELY HAVING REGARD TO THE PROVISIONS OF CHAPTER IV, WHICH WAS THE POSITION PRIOR TO THE AMENDMENT, BUT HAVING REGARD TO THE PROVISIONS OF THE IT ACT INCLUDING THE PROVISIONS CONTAINED IN CHAPTER VI - A. WE, THEREFORE, HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80HHC AS PER THE RELEVANT PROVISION S. THE AO, THEREFORE, DIRECTED TO COMPUTE AND ALLOW DEDUCTION ADMISSIBLE U/S.80HHC TO THE ASSESSEE. 4. WHILE PASSING AN ORDER GIVING EFFECT TO THE ITAT'S ORDER, THE A.O. DETERMINED THE UNDISCLOSED INCOME AT RS. 95 LACS I.E. SAME AS RETURNED INCOME AND AS HELD BY THE ITAT IN THE LAST PARA OF ITS ORDER. THE ASSESSEE MOVED A MISCELLANEOUS APPLICATION (NO.285/MUM/07) BEFORE THE ITAT FOR SEE K ING CLARIFICATION, WHEREIN THE TRIBUNAL, VIDE ITS ORDER DATED 15TH MAY, 2007, HELD THAT THE UNDISCLOSED IN COME WAS ENTIT LED TO DEDUCTION UNDER CHA P TER VI - A AS P ER THE AMENDED PROVISIONS OF SECTION 158BB AND ACCORDINGLY DIRECTED THE AO TO CONSIDER THE ASSSSEES CLAIM AS PER PROVISION OF SECTION 80 HHC. IN THE ORDER PASSED BY THE TRIBUNAL IN MA NO.285/MUM/2007, DATED 15 - 5 - 20 07, PRECISE OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER : - 2. FROM THE ABOVE, IT IS CLEAR THAT THE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO COMPUTE AND ALLOW DEDUCTION ADMISSIBLE UNDER SECTION 80HHC TO THE ASSESSEE. HOWEVER, WHILE FINALLY DETERMINING THE UNDISCLOSED INCOME AT PARA 47, THE TRIBUNAL DID NOT MAKE ANY MENTION REGARDING ADMISSIBILITY OF DEDUCTION UNDER SECTION 80HHC, WITH THE RESULT THAT THE ASSESSING OFFICER HAS REFUSED TO CONSIDER THE ASSESSEES CLAIM. THEREFORE, FOR THE SAKE OF CLARITY AND C OMPLETENESS PARA 47 OF OUR ORDER REFERRED TO SUPRA IS AMENDED INASMUCH AS, AT THE END OF THE PARA, THE FOLLOWING LINES ARE ADDED : - THIS IS SUBJECT TO THE OBSERVATIONS MADE BY US AT THE END OF PARA 36 OF THE ORDER THAT THE ASSESSEE IS ENTITLED TO DEDUCTIO N UNDER SECTION 80HHC AS PER THE RELEVANT PROVISIONS. THE ASSESSING OFFICER SHALL, THEREFORE, CONSIDER THE ASSESSEES CLAIM FOR DEDUCTION IT (SS) A NO. 84/08 & CO NO.21/09 5 UNDER SECTION 80HHC, VIS - - VIS THE UNDISCLOSED INCOME DETERMINED, AS PER THE RELEVANT PROVISIONS OF LAW AFTER ALLOWING OPPORTUNITY TO THE ASSESSEE 3. IN THE RESULT THE M.A. STANDS ALLOWED. HOWEVER, WHILE GIVING EFFECT TO THE ORDER OF ITAT, THE AO DID NOT ALLOW DEDUCTION U/S.80HHC WITH RESPECT TO THIS INCOME. 5 . AGAINST THE AFORESAID ORDER OF AO, THE ASSESSEE APPROACHE D TO CIT(A) AND THE CIT(A) DIRECTED THE AO TO ALLOW DEDUCTION U/S.80HHC RELYING THE DIRECTION GIVEN BY THE TRIBUNAL IN IT(SS)A NO.110/MUM/2000, DATED 21.1.2006 AND M.A.NO.285/MUM/2007, DATED 15 - 5 - 2007 AFTER HAVING FOLLOWING OBSERVATIONS : - 8. I HAVE CONSI DERED THE FACTS OF THE ISSUE, THE OBSERVATIONS OF THE AO AS WELL AS THE SUBMISSIONS AND OTHER DOCUMENTS FILED BY THE AR IN SUPPORT OF HIS CONTENTIONS. I FIND MERIT IN THE SUBMISSIONS MADE BY THE AR THAT THE DECISION OF THE JURISDICTIONAL FACT FINDING AUTHO RITY/COURT IS BINDING ON ALL LOWER AUTHORITIES. I ALSO FIND MERIT IN THE SUBMISSIONS THAT NOT FOLLOWING THE ORDER OF THE ITAT WOULD RESULT IN CHAOS IN ADMINISTRATION OF TAX LAWS AND THAT THE ASSESSEE OFFICERS ARE BOUND TO FOLLOW THE DECISIONS OF THE TRIBUN AL. 8.1 THE HON'BLE ITAT IN IT(SS)A NO.110/MUM/2000 VIDE ORDERS DATED 21.0.1.2006 ON PAGE 23 IN PARA 36 HAS GIVEN A CATEGORICAL FINDING THAT' THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80HHC AS PER THE RELEVANT PROVISIONS. THE A.O IS THEREFORE, DIRECTED TO COMPUTE AND ALLOW DEDUCTION ADMISSIBLE U/S.80HHC TO THE ASSESSEE.' THE MATTER WAS FURTHER CLARIFIED BY THE HON'BLE TRIBUNAL III RESPONSE TO A MISCELLANEOUS APPLICATION MOVED BY THE APPELLANT IN MA NO.285/MUM/07 VIDE ORDERS DATED 15.05.2007. THE HONBLE TRI BUNAL IN PARAGRAPH 2 ON PAGE 3 OF THE ORDER HAS OBSERVED THAT' THE ASSESSING OFFICER, SHALL THEREFORE, CONSIDER THE ASSESSEE'S CLAIM FOR DEDUCTION U /S 80 HHC VIS - A - VIS A UNDISCLOSED INCOME DETERMINED, AS PER THE RELEVANT PROVISIONS OF LAW AFTER ALLOWING O PPORTUNITY TO THE ASSESSEE.' 8.2 IT IS CLEAR FROM A PERUSAL OF THE AFORESAID TWO ORDERS OF THE HON'BLE ITAT THAT THE CONTENTION OF THE A PPELLANT WAS ACCEPTED BY THE HONBLE TRIBUNAL BY SPECIFICALLY HOLDING THAT THE APPELLANT WAS ELIGIBLE FOR DE DUCTION U /S.80HHC ON ITS UNDISCLOSED INCOME. THE HON'BLE ITAT ACCORDINGLY DIRECTED THE A. O TO 'COMPUTE AND ALLOW' THE SAID DEDUCTION U/S.80 HHC TO THE APPELLANT. HENCE THE HON'BLE TRIBUNAL LEFT NOTHING TO IN TERPRETATION BY THE LOWER AUTHORITIES. THE A. O WAS THEREFOR E BOUND TO FOLLOW THE SPECIFIC DIRECTIONS OF THE HIGHEST FACT FINDING AUTHORITY WHILE GIVING EFFECT TO ITS ORDER. THIS IT (SS) A NO. 84/08 & CO NO.21/09 6 W AS ALSO ESSEN TIAL FOR THE A. O TO MAINTAIN JUDICIAL UNITY AND DISCIPLINE. THUS WITHOUT GOING INTO THE MERITS OF THE CASE LAWS ETC QUOTED BY EITHER OF THE TWO SIDES IT IS HELD THAT THE A. O HAD FAILED TO FOLLOW THE SPECIFIC DIRECTIONS OF THE HON'BLE TRIBUNAL. THE A. O COULD VALIDLY HAVE MADE USE OF THE CASE LAWS ETC., IN ARRIVING AT A DECISION FOR FURTHER CONTESTING THE ORDER OF THE HON'BIE B ENCH BEFORE HIGHER JUDICIAL FORA. IT WAS NOT OPEN FOR HIM TO USE THESE CASE LAWS IN HIS ORDER FOR GIVING EFFECT TO THE ITAT'S OR DER SPECIALLY WHEN THIS EFFECTIVELY MEANT A DEVIATION FROM THE SPECIFIC DIRECTIONS GIVEN BY THE HONB'LE TRIBUNAL. CONSEQUENTLY T HE APPEAL IS ALLOWED AND THE A.O IS DIRECTED TO ALLOW DEDUCTION U/S.80HHC VIS - - VIS THE UNDISCLOSED INCOME AT RS.94,81,243/ - . 6 . AGGRIEVED BY THIS ORDER THE DEPARTMENT FILED APPEAL TO THE ITAT WHICH HAS BEEN DECIDED VIDE THE IMPUGNED ORDER DATED 24 TH JU LY, 2009 IN IT(SS)A NO.84/MUM/2008. AT PARA - 6 OF THIS ORDER THE TRIBUNAL HELD THAT HAVING REGARD TO THE SPECIFIC DIRECTIONS OF THE ITAT A BENCH MUMBAI, THE ORDER PASSED BY THE CIT(A) DOES NOT SUFFER FROM ANY INFIRMITY AND ACCORDINGLY THE SAID ORDER CONFI RMS AND APPEAL FILED BY THE REVENUE DISMISSED. A GAINST THE ABOVE ORDER OF TRIBUNAL DATED 24 - 7 - 2009, THE REVENUE MOVED TO THE HIGH COURT AND THE HON BLE BOMBAY HIGH COURT VIDE ITS ORDER DATED 11 - 8 - 2011 RESTORED THE MATTER BACK TO THE FILE OF TRIBUNAL WITH T HE FOLLOWING DIRECTIONS : - ' IN THE PRESENT CASE, THE QUESTION THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION UNDER SECTION 80HHC ON THE UNDISCLOSED INCOME IS NOT IN DISPUTE. BUT THE QUESTION IS WHETHER THE UNDISCLOSED INCOME FULFILLS THE CRITERIA LAID DOW N UNDER SECTION 80HHC IS THE QUESTION. ACCORDING TO THE ASSESSING OFFICER, UNDISCLOSED INCOME OFFERED BY THE ASSESSEE DOES NOT FULFILL THE CRITERIA LAID DOWN UNDER SECTION 80HHC. VALIDITY OF THIS FINDING RECORDED BY THE ASSESSING OFFICER HAS NOT BEEN CONSI DERED EITHER BY CIT(A) OR BY THE ITAT. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE IS A 100% EXPORTER, THAT THE UNDISCLOSED INCOME WAS REFERABLE TO THE EXPORT ACTIVITIES AND, THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REFUSING TO GRANT DED UCTION UNDER SECTION 80HHC. AS NOTED ABOVE, THE FACT THAT THE UNDISCLOSED INCOME CAN BE CONSIDERED FOR DEDUCTION UNDER SECTION 80HHC, IT DOES NOT MEAN THAT THE UNDISCLOSED INCOME FULFILLS THE CRITERIA LAID DOWN UNDER SECTION 80 HHC. SINCE THIS ASPECT OF TH E MATTER HAS NOT BEEN CONSIDERED BY THE ITAT ON MERITS, BY CONSENT IT (SS) A NO. 84/08 & CO NO.21/09 7 OF THE PARTIES THE IMPUGNED ORDER OF THE IT AT DATED 24TH JULY, 2009 PASSED IN I.T.(SS) A. NO.84/MUML2008 IS QUASHED AND SET ASIDE. THE APPEAL IS RESTORED TO THE FILE OF ITAT FOR FRESH CONSI DERATION IN ACCORDANCE WITH LAW.' IN VIEW OF THE ABOVE DECISION OF THE HON BLE BOMBAY HIGH COURT THE MATTER CAME AGAIN BEFORE TRIBUNAL FOR ADJUDICATING AS TO WHETHER UNDISCLOSED INCOME FULFILLS THE CRITERIA LAID DOWN U/S.80HHC. THE HONBLE HIGH COURT OBS ERVED THAT THIS ASPECT OF THE MATTER HAS NOT BEEN CONSIDERED BY THE TRIBUNAL ON MERITS, THE MATTER WAS RESTORED BACK TO THE FILE OF TRIBUNAL FOR DECIDING THE SAME. NOW, WE HAVE TO EXAMINE AFRESH AS TO WHETHER THE INCOME SURRENDERED FULFILLS THE CONDITION OF SECTION 80HHC. AN ANALYSIS OF THE PROVISIONS OF SECTION 80HHC SHOWS THAT FOR THE PURPOSE OF ALLOWING DEDUCTION U/S.80HHC, THE FOLLOWING CONDITIONS SHOULD BE SATISFIED: (I) THE DEDUCTION IS ADMISSIBLE IN THE CASE OF AN INDIAN COMPANY OR ANY OTHER PERSO N RESIDENT IN INDIA. (II) SUCH PERSON SHOULD BE ENGAGED IN THE BUSINESS OF EXPORT OUT OF INDIA OF ANY GOODS OR MERCHANDISE. (III) THE DEDUCTION IS TO BE RESTRICTED TO THE EXTENT OF PROFITS DERIVED FROM THE EXPORT OF SUCH GOODS/MERCHANDISE. (IV) THE S ALE PROCEEDS OF SUCH GOODS/MERCHANDISE EXPORTED OUT OF INDIA ARE RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE WITHIN THE PRESCRIBED PERIOD AS SPECIFIED IN SUB - SECTION (2) OF SECTION 80HHE. (V) THE CLAIM UNDER THIS SECTION SHOULD BE ACCOMPANIED BY A CERTIFICAT E FROM THE CHARTERED ACCOUNTANTS IN THE PRESCRIBED FORM. 7 . NOW, WE WILL EXAMINE AS PER MATERIALS ON RECORD AS TO WHETHER THE ASSESSEE HAD SATISFIED ABOVE CONDITIONS WITH RESPECT TO THE INCOME SO SURRENDERED. FROM THE RECORD WE FOUND THAT THE ASSESSEE - FI RM IS RESIDENT IN INDIA AND IS ENGAGED IN THE BUSINESS OF EXPORT OUT OF INDIA OF CUT AND POLISHED DIAMONDS. THE ASSESSEE IS A 100% EXPORTER. DEDUCTION HAS IT (SS) A NO. 84/08 & CO NO.21/09 8 BEEN CLAIMED U/S.80HHC TO THE EXTENT OF PROFITS DERIVED FROM THE EXPORT OF CUT AND POLISHED DIAMONDS, AS PER THE AUDITED TRADING AND PROFIT AND LOSS ACCOUNT. THE ASSESSEE - FIRM COMMENCED ITS B USINESS WITH EFFECT FROM 1 ST APRIL, 1996 . IT IS MATTER OF RECORD THAT THE ASSESSEE IS NOT ENGAGED IN ANY BUSINESS ACTIVITY WHATSOEVER, OTHER THAN EXPORT OF CUT AND POLISHED DIAMONDS. EVEN D URING THE COURSE OF INTENSIVE SEARCH, NO OTHER SOURCE OF INCOME WAS FOUND OR DETECTED BY THE SEARCH PARTY AND NO UNACCOUNTED PURCHASES OR SALES WERE FOUND. FURTHER, NO MATERIAL OR EVIDENCE WAS FOUND TO SHOW THAT THE ASSESSEE - FIRM W AS ALSO ENGAGED IN ANY LOCAL SALES. THE ADDITIONAL INCOME DECLARED DURING THE COURSE OF SEARCH AND ALSO REFLECTED IN THE RETURN OF INCOME WAS ENTIRELY ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SEARCH WHICH WAS CALCULATED BY ADOPTING AVERAGE PER CENTAGE OF YIELD OF CUT AND POLISHED DIAMONDS FROM OUT OF ROUGH DIAMONDS. THESE FACTS ENTIRELY ESTABLISH THAT WHATEVER UNDISCLOSED INCOME WAS DECLARED, THE SAME GENERATED ONLY FROM THE EXISTING BUSINESS OF MANUFACTURING OF CUT AND POLISHED DIAMONDS TO BE E XPORTED. FROM THE RECORD WE ALSO FOUND THAT T HE ADDITIONAL INCOME OF RS.95 LACS HAS BEEN CREDITED BY THE ASSESSEE FIRM TO THE AUDITED PROFIT AND LOSS ACCOUNT AND IT HAS NOT BEEN DEBITED BY WAY OF PURCHASES. THE EXCESS STOCK FORMS PART OF THE CLOSING STOCK AND THUS SUCH CLOSING STOCK IS EITHER EXPORTED DURING THE YEAR ITSELF OR IN SUBSEQUENT YEARS RESULTING INTO ACCRUAL OF PROFITS ONLY FROM EXPORTS. ALL THE SALE PROCEEDS HAVE BEEN RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE WITHIN THE PRESCRIBED PERIOD AS PER S ECTION 80HHC(2) AND THE CLAIM FOR DEDUCTION IS SUPPORTED BY THE IT (SS) A NO. 84/08 & CO NO.21/09 9 CERTIFICATE OF THE CHARTERED ACCOUNTANTS IN THE PRESCRIBED FORM. D EDUCTION HAS ALSO BEEN CALCULATED AS PER THE FORMULA PRESCRIBED U/S.80HHC. THE ASSESSING OFFICER HAS ACCEPTED THE TOTAL TURNOV ER AND THE EXPORT TURNOVER AS ALSO THE EXPORT PROFITS. ALL THESE FACTS CLEARLY ESTABLISH THAT THE INCOME SO DECLARED IS IN THE NATURE OF PROFITS DERIVED FROM THE EXPORT OF CUT AND POLISHED DIAMONDS AND THERE CAN BE NO PRESUMPTION THAT SUCH ADDITIONAL INCOM E IS IN THE NATURE OF INCOME FROM OTHER SOURCES OR ANY OTHER UNDISCLOSED SOURCES. THUS, T HE DISCLOSED INCOME IS INTEGRAL PART OF THE EXPORT BUSINESS CARRIED ON BY THE ASSESSEE. 8 . I SSUE AS TO W HETHER THE ADDITIONAL INCOME OFFERED DURING THE YEAR IS ELIGIB LE FOR DEDUCTION U/S.80HHC, HAS BEEN EXAMINED BY HON BLE MADRAS HIGH COURT IN THE CASE OF ANBU TEXTILES VS. ACIT, 262 ITR 684. IT WAS HELD BY THE HON'BLE COURT THAT SECTION 158BB WAS AMENDED BY THE FINANCE ACT, 2002 WITH RETROSPECTIVE EFFECT FROM 1 ST JUL Y, 1995 AND UNDER THE AMENDED PROVISION, THE UNDISCLOSED INCOME OF THE BLOCK PERIOD HAS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE I T.ACT AND, THEREFORE, THE PROVISIONS CONTAINED IN CHAPTER- VIA SHOULD BE TAKEN INTO CONSIDERATION IN DETERMININ G THE UNDISCLOSED INCOME OF THE BLOCK PERIOD. RELEVANT OBSERVATIONS OF THE HON'BLE COURT MAY BE REPRODUCED BELOW FROM PAGE 686 OF THE REPORT: 'WE FIND FORCE IN THE SUBMISSION OF MRS. ANITHA SUMANTH, LEARNED COUNSEL FOR THE APPELLANT. IT IS CLEAR THAT SECT ION 158BB OF THE ACT WAS AMENDED WITH FULL RETROSPECTIVE EFFECT, FROM JULY 1,1995, AND UNDER THE AMENDED PROVISION, THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHALL BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, AND, THEREFORE, THE PROVISIONS CO NTAINED IN CHAPTER VI - A OF THE ACT SHOULD ALSO BE TAKEN INTO CONSIDERATION IN DETERMINING THE IT (SS) A NO. 84/08 & CO NO.21/09 10 UNDISCLOSED INCOME OF THE BLOCK PERIOD. IT IS TRUE THAT THE APPELLATE TRIBUNAL DECIDED THE MATTER ON THE BASIS OF LAW THEN EXISTING. THE AMENDMENT CAME INTO FORCE ONLY BY THE FINANCE ACT, 2002, WITH RETROSPECTIVE EFFECT FROM JULY 1, 1995. SINCE THE AMENDMENT HAS BEEN GIVEN RETROSPECTIVE EFFECT, WE ARE OF THE VIEW, THE PROVISION, AS AMENDED, WOULD BE THE PROPER PROVISION FOR DETERMINING THE UNDISCLOSED INCOME OF THE BLOCK PERIOD .... ' 9 . SIMILAR QUESTION AROSE BEFORE THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. R. PAPER AND BOARD LTD., 313 ITR 359. IN THIS CASE, THE FOLLOWING QUESTION WAS REFERRED TO THE HON'BLE HIGH COURT FOR ADJUDICATION: 'WHETHER, O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND PROPER INTERPRETATION OF THE PROVISIONS OF SECTION 158BB AND PART IL, PART III OF THE FORM O. 28 FOR THE BLOCK ASSESSMENT, THE INCOME - TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE ASSES SEE IS ELIGIBLE TO DEDUCTION UNDER SECTION 80 - I OR 80 - LA WITH REFERENCE TO 'TOTAL UNDISCLOSED INCOME' OF THE BLOCK PERIOD ?' 10 . THE HON'BLE HIGH COURT RECORDED THE FOLLOWING FINDING IN THE LAST PARA OF THE JUDGEMENT: 'HENCE, IN THE LIGHT OF THE AMEND ED PROVISIONS, WHICH HAVE BEEN MADE RETROSPECTIVELY APPLICABLE, NO FAULT CAN BE FOUND WITH THE IMPUGNED ORDER OF THE TRIBUNAL HOLDING THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80 - 1 OR 80 - LA OF THE ACT. THE QUESTION REFERRED FOR THE OP INION OF THIS COURT IS, THEREFORE, ANSWERED IN THE AFFIRMATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE REFERENCE STANDS DISPOSED OF ACCORDINGLY WITH NO ORDER AS TO COSTS. 1 1. IDENTICAL QUESTION WAS ALSO REFERRED FOR THE ADJUDICATION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SUMAN PAPER AND BOARD LTD., 314 ITR 119, WHICH WAS ANS WERED IN FAVOUR OF THE ASSESSEE HOLDING THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION. 12 . NOW, COMING TO THE DECISION RELIED ON BY LD. DR IN THE CASE OF NATIONAL LEGGUARD WORKS VS. CIT, 288 ITR 18 (P&H) AND SARLA HANDICRAFTS P. LTD. V S. ADDL. CIT, 296 ITR 94 (P&H). IT (SS) A NO. 84/08 & CO NO.21/09 11 1 3 . WE HAD CAREFULLY GONE THROUGH THE ABOVE ORDERS AND FOUND THAT T HE FACTS AND CIRCUMSTANCES IN THE ABOVE CASE S WERE ENTIRELY DIFFERENT FR OM THE FACTS OF THE ASSESSEE'S CASE. IN THE CASE OF NATIONAL LEGGUARD WORKS (SUPRA) , THE ASSESSEE WAS MANUFACTURER AND EXPORTER OF SPORTS GOODS. DURING THE COURSE OF SURVEY EXCESS STOCK OF SPORTS GOODS WAS FOUND AND IN ORDER TO COVER THE DISCREPANCY THE AS SESSEE DISCLOSED ADDITIONAL INCOME OF RS.12 LACS. THE ASSESSING OFFICER HELD THAT ON MERE SURRENDER BY THE ASSESSEE AT THE TIME OF SURVEY, THE ADDITIONAL INCOME WAS NOT ENTITLED TO DEDUCTION U/S.80HHC. THERE WAS NO EVIDENCE THAT THE AFORESAID ADDITIONAL IN COME WAS DERIVED FROM EXPORT OF GOODS. IN THESE CIRCUMSTANCES THE HON'BLE COURT OBSERVED THAT THE ASSESSEE WAS NOT ABLE TO PROVE THAT THE DISCLOSED INCOME WAS DERIVED FROM EXPORT OF GOODS AND THERE COULD BE NO PRESUMPTION THAT THE AMOUNTS SURRENDERED REPRE SENTED INCOME FROM EXPORT. IN THE CASE OF SARLA HANDICRAFT P. LTD. (SUPRA) , IT WAS HELD BY THE HON'BLE PUNJAB AND HARYANA HIGH COURT THAT DEDUCTION U/S.80HHC IS AVAILABLE ON FULFILLMENT OF CERTAIN CONDITIONS SPECIFIED IN THAT SECTION. IN THAT CASE, DURING T HE COURSE OF SURVEY STOCK VALUED AT RS.12,77,906 WAS FOUND SHORT AND HAVING REGARD TO THIS DISCREPANCY THE ASSESSEE DISCLOSED ADDITIONAL INCOME OF RS.13 LACS. THE ASSESSEE COULD NOT BRING ANY EVIDENCE OR MATERIAL TO SHOW THAT THE AFORESAID INCOME REPRESENT ED EXPORT PROFITS. OBVIOUSLY IF GOODS ARE FOUND TO BE SHORT THE PRESUMPTION WOULD BE THAT SUCH GOODS WERE SOLD IN THE DOMESTIC MARKET. HOWEVER, T HE FACTS IN THE CASE OF THE ASSESSEE FIRM ARE TOTALLY DIFFERENT AND CONSIDERING THE TOTALITY OF THE FACTS AND C IRCUMSTANCES OF THE CASE , THE IT (SS) A NO. 84/08 & CO NO.21/09 12 ASSESSEE HAS BEEN ABLE TO BRING SUFFICIENT MATERIAL ON RECORD, AS DISCUSSED ABOVE, TO SHOW THAT THERE IS NO OTHER SOURCES OF INCOME AND THE EXCESS STOCK WAS ON ACCOUNT OF PERCENTAGE OF YIELD APPLIED AND THUS THIS ADDITIONAL IN COME HAS DIRECT NEXUS WITH THE BUSINESS OF MANUFACTURING OF CUT AND POLISHED DI AMONDS WHICH ARE 100% EXPORTED. 1 4 . FURTHERMORE, THE CA SE OF THE ASSESSEE - FIRM IS SQUARELY COVERED BY THE ORDER OF THE MUMBAI ITA T DATED 23RD OCTOBER, 2003 IN THE CASE OF M/S. MINE STONES VS. ACIT IN ITA 0.150/MURNL1999 FOR THE A.Y. 1995 - 96. IN THAT CASE ALSO THE FIRM WAS ENGAGED IN EXPORT OF CUT AND POLISHED DIAMONDS. SEARCH AND SEIZURE WAS CARRIED OUT AT SURAT ACCOMPANIED BY SURVEY AT BOMBAY. DURING THE COURSE OF THE AFORESAID OPERATIONS EXCESS CASH AND EXCESS STOCK OF DIAMONDS WERE FOUND AND THE PARTNER DISCLOSED ADDITIONAL INCOME OF RS.20 LACS WHICH WAS COMPRISED OF THE FOLLOWING: UNEXPLAINED CASH 75,000 EXCESS DIAMOND STOCK 13,93,130 OTHER ASSETS TO BE SPECIFIED 5,3 1,870 20,00,000 THE AFORESAID DISCLOSURE WAS LATER REVISED TO RS.25 LACS, BREAK - UP OF WHICH IS GIVEN AT PAGES 2 & 3 OF THE TRIBUNAL'S ORDER WHICH IS AS UNDER: 'UNEXPLAINED CASH RS. 75,000/ - EXCESS DIAMONDS STOCK TOTAL 381.23 CTS RS.13,93, 130/ - DIAMONDS (ROUGH) GIVEN TO LABOURERS IN SURAT FOR PROCESSING 180.85 CTS. @ RS.2,800 / - PER CTS. RS.5,03,380 / - RS. 19,74,510/ - ROUGH DIAMONDS GIVEN TO LABOURERS IN BARDOLI FOR PROCESSING 232 CTS. VALUED @ RS.2,265 PER CT. RS.5,25,490/ - RS. 25,00,000 / - IT (SS) A NO. 84/08 & CO NO.21/09 13 WHEN THE RETURN OF INCOME WAS FILED ONLY EXCESS CASH OF RS.75,000 WAS DISCLOSED AND REMAINING ADDITIONAL INCOME OF RS.24,25,000 WAS WIPED OUT BY DEDUCTION CLAIMED U/S.80HHC. FOLLOWING NOTE WAS GIVEN IN THE RETURN OF INCOME WHICH HAS BEEN REPR ODUCED AT PARA - 3 OF THE ITAT'S ORDER: 'PROFIT OF RS.L,34,71,086/ - SHOWN IN ITEM NO.5 IS INCLUSIVE OF STOCK - IN - TRADE RS.24,25, 000/ - IN FORM OF CUT AND POLISHED AND .ROUGH DIAMONDS EARNED DURING THE COURSE OF BUSINESS AND VOLUNTARILY DECLARED U/S.132(4) AT THE TIME OF ACTION U/S.132 ON 31.3.1995 IS CONSIDERED FOR DEDUCTION U/S.80HHC. ' 15 . THE ASSESSEE ALSO CLAIMED THAT THE UNACCOUNTED STOCK WAS ULTIMATELY REFLECTED IN THE CLOSING STOCK AND THERE WAS NO CORRESPONDING DEBIT TO THE PURCHASES. IN THAT CASE AL SO THERE WAS NO OTHER BUSINESS AND THE EXCESS STOCK WAS GENERATED ONLY FROM ACCOUNTED PURCHASES AS DURING THE COURSE OF SEARCH NO UNACCOUNTED PURCHASES WERE FOUND. IN THESE FACTS THE TRIBUNAL HELD THAT THE ADDITIONAL INCOME OF RS.24.25 LACS WAS ELIGIBLE FO R DEDUCTION U/S.80HHC. THE TRIBUNAL CAREFULLY CONSIDERED THE FACTS AND RECORDED A FINDING BASED THEREON . PRECISE OBSERVATION OF THE TRIBUNAL'S ORDER FROM PAGES 7 AND 8 READS AS UNDER : - '8. . THE ONLY SOURCE OF INCOME OF THE ASSESSEE IS THE BUSINESS CARRI ED ON IN THE EXPORT OF DIAMONDS. THERE IS NO OTHER SOURCE OF INCOME. THE STATEMENTS MADE BY THE PARTNERS OF THE ASSESSEE FIRM AT THE TIME OF SEARCH IN SURAT ALSO REFER TO EXCESS DIAMONDS BEING FOUND AND IT CANNOT BE DISPUTED THAT SUCH EXCESS DIAMONDS RELAT E TO THE ASSESSEE'S BUSINESS ONLY. IN PARTICULAR, THE QUANTITATIVE RECONCILIATION FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, A COPY OF WHICH HAS BEEN FILED AT PAGE 6 OF THE PAPERBOOK SHOWS THAT THE ROUGH DIAMONDS OF 717.45 CARATS AND POLISHED DIAM ONDS OF 76.63 CARATS HAVE BEEN DISCLOSED AS PART OF THE CLOSING STOCK AS ON 31.3.95 THE VALUE OF WHICH HAS BEEN DISCLOSED IN THE FINANCIAL STATEMENTS. THE TENTATIVE RECONCILIATION HAS NOT BEEN CHALLENGED BY THE DEPARTMENTAL AUTHORITIES. NOR HAVE THEY POINT ED OUT TO ANY PURCHASES BEING MADE OUTSIDE THE BOOKS OF ACCOUNTS. THERE WAS NO EVIDENCE COLLECTED IN THE COURSE OF THE SEARCH TO THIS EFFECT. THE ASSESSEE HAS ALSO NOT CLAIMED ANY CREDIT FOR SUCH PURCHASES BY DEBITING THE SAME IN THE FINANCIAL STATEMENTS A ND BY CLAIMING A SET OFF AGAINST THE CLOSING STOCK VALUE. IT (SS) A NO. 84/08 & CO NO.21/09 14 THE RESULTANT, POSITION IS THAT THE VALUE OF THE STOCK AMOUNTING TO RS.24.25 LAKHS HAS BEEN INCLUDED IN THE VALUE OF THE CLOSING STOCK IN THE TRADING AND PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAS STATED BEFORE THE CITCAPPEALS) THAT IT WAS ABLE TO GET MORE YIELD FROM THE ROUGH DIAMONDS AND SUCH EXTRA YIELD WAS KEPT OUTSIDE THE BOOKS OF ACCOUNT AS DIAMOND STOCK AND THE SAME WAS DISCLOSED DURING THE SEARCH. BUT THIS EXPLANATION COULD NO T BE SUPPORTED BY CONCRETE EVIDENCE. BE THAT AS IT MAY, WHEN THE ASSESSEE IS A PARTNERSHIP FIRM WHOSE ONLY SOURCE OF INCOME IS THE DIAMOND BUSINESS AND WHOSE PARTNERS HAVE AT THE EARLIEST POINT OF TIME STATED THAT THE INCOME REPRESENTED THE UNDISCLOSED STO CK OF ROUGH AND POLISHED DIAMONDS AND THE SAME HAVE BEEN DISCLOSED AS PART OF THE CLOSING STOCK IN THE FINANCIAL STATEMENTS, IT IS POSSIBLE TO RAISE AN INFERENCE, WHICH APPEARS TO US, TO BE REASONABLE, APPLYING THE PRINCIPLES LAID DOWN IN THE JUDGEMENTS CI TED ABOVE AND HOLD THAT THE DISCLOSED INCOME HAS TO BE ASSESSED UNDER THE HEAD 'BUSINESS' AND NOT UNDER THE HEAD 'OTHER SOURCES'. THE CIRCUMSTANCES NARRATED ABOVE POINT TO SUCH A CONCLUSION WHICH IN OUR OPINION IS REASONABLE. WE ACCORDINGLY ACCEPT THE ASSE SSEE'S CASE. 16 . FACTS AND CIRCUMSTANCES OF THE INSTANT CASE ARE PARI MATERIAL TO THE DECISION OF THE ITAT MUMBAI BENCH AS NARRATED ABOVE, ACCORDINGLY WE HOLD THAT DECLARED INCOME HAS FULFILLED ALL THE CONDITIONS LAID DOWN U/S.80HHC FOR CLAIM OF DEDUCTIO N. 1 7 . WE ALSO FOUND THAT T HE RAJASTHAN HIGH COURT IN CIT V. HASWANI ARTS [2013] 352 ITR 574 (RAJ.) HAS HELD THAT THE INCOME SURRENDERED ON ACCOUNT OF EXCESS VALUATION OF CLOSING STOCK IN THE COURSE OF SURVEY ACTION IS ENTITLED FOR DEDUCTION U/S.80HHC OF THE ACT. THIS DECISION HAS DISTINGUISHED THE DECISION IN NATIONAL LEGGUARD WORKS V. CIT [2007] 288 ITR 18 (P&H).) 1 8 . IN VIEW OF THE ABOVE DISCUSSION, WE CAN SAFELY CONCLUDE THAT THE HON BLE BOMBAY HIGH COURT WHILE SETTING ASIDE THE ISSUE TO THE TRIBUNAL FOR RECONSIDERATION AT PARA - 4 HAS CLEARLY OBSERVED THAT THERE WAS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80HHC ON THE UNDISCLOSED INCOME AND THE ONLY QUESTION WAS AS TO IT (SS) A NO. 84/08 & CO NO.21/09 15 WHETHER THE REQUIREMENTS OF SECTION 80HHC ARE FULFILL ED. FROM THE DETAILED DISCUSSION GIVEN ABOVE, IT IS CLEAR THAT IN THE PRESENT CASE ALL THE CONDITIONS AND REQUIREMENTS OF SECTION 80HHC ARE FULLY SATISFIED AND FURTHER THE CASE OF THE ASSESSEE - FIRM IS SQUARELY COVERED BY THE ORDER OF THE MUMBAI TRIBUNAL IN THE CASE OF M/S. MINE STONES REFERRED TO ABOV E. WE THEREFORE, DIRECT THE AO TO ALLOW CLAIM OF DEDUCTION U/S.80HHC WITH REGARD TO ADDITION ON INCOME OF RS. 95 LACS. 1 9 . BEFORE PARTING WITH THE ISSUE IT IS PERTINENT TO MENTION THAT THE HON BLE SUPREME COURT IN THE CASE OF VEGITABLES PRODUCTS, 88 ITR 192 HAS HELD THAT WHEN THERE ARE TWO VIEW IN RESPECT OF POINT UNDER CONSIDERATION, THEN THE VIEW IN FAVOUR OF THE ASSESSEE NEEDS TO BE ADOPTED. THEREFORE, THE HON BLE RAJASTHAN HIGH COURTS DECISION IN THE CASE O F HASWANI ARTS (SUPRA) IS FULLY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, WHEREIN DECISION IN THE CASE OF NATIONAL LEGGUARD WORKS 288 ITR 18 WAS DISTINGUISHED. 20 . IN VIEW OF THE ABOVE DISCUSSION, WE DIRECT THE AO TO ALLOW DEDUCTION U/ S.80HHC IN RESPECT OF ADDITIONAL INCOME OF RS. 95 LACS OFFERED BY THE ASSESSEE. 18. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED, WHEREAS CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 02/03 / 201 6 . SD/ - SD/ - ( RAM LAL NEGI ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 02/03 /201 6 . . /PKM , . / PS IT (SS) A NO. 84/08 & CO NO.21/09 16 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//