The ACIT, Baroda Circle- 4, Baroda V. Matsushita Lakhanpal Battery (I) Ltd., Baroda

ITA 982/AHD/2006

• Counselvise Citation: 98220514 RSA 2006
• Duration Of Justice: 5 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-11-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 21-04-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Keywords: Capital asset; Business income; Depreciation; Revenue expenditure; Capital expenditure
• Section: 80HHC; 234B; 80IB; 80G; 28

Judgement Text

, , . .. . . .. . , . ! ! ! ! ! ! ! ! , ' ' ' ' # # # # IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD BEFORE SHRI D.K.TYAGI, J.M. & HONBLE SHRI A.MOHA N ALANKAMONY, A.M.) . ITA NO. 982/AHD./2006 : ! $% - 2001-2002 ACIT, CIRCLE-4, BARODAVS- MATSUSHITA LAKHANPAL BAT TERY(I) LTD., BARODA (PAN : AAACL 3332K) ( &' /APPELLANT) ( (&' /RESPONDENT ) . ITA NO. 1001/AHD./2006 : ! $% - 2001-2002 MATSUSHITA LAKHANPAL BATTERY(I) LTD., BARODAVS- AC IT, CIRCLE-4, BARODA ( &' /APPELLANT) ( (&' /RESPONDENT ) . ITA NO. 1416/AHD./2006 : ! $% - 2002-2003 ACIT, CIRCLE-4, BARODAVS- MATSUSHITA LAKHANPAL BAT TERY(I) LTD., BARODA ( &' /APPELLANT) ( (&' /RESPONDENT ) . ITA NO. 1461/AHD./2006 : ! $% - 2001-2002 PANASONIC BATTERY INDIA CO.LTD., BARODA VS- ACIT, CIRCLE-4, BARODA (FORMERLY MATSUSHITA LAKHANPAL BATTERY(I) LTD.) ( &' /APPELLANT) ( (&' /RESPONDENT ) ) * + / DEPARTMENT BY : SHRI ALOK JOHRI, CIT(DR) !,- * + / ASSESSEE BY : SHRI MILIN MEHTA, A.R. .!/ * -' / DATE OF HEARING : 28/11/2011 0 $ * -' / DATE OF PRONOUNCEMENT : 16/02/2012 1 1 1 1 / ORDER PER SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER : THESE ARE FOUR APPEALS - (I) TWO APPEALS OF THE REVENUE; AND (II) ANOTHER TWO APPEALS OF THE ASSESSEE FOR THE IDENTIC AL ASSESSMENT YEARS OF 2001-02 AND 2002-03 ARE DIRECTED AGAINST THE IMPUGNED ORDERS OF ITA NOS.982, 1001, 1416 & 1461/AHD/2006 THE LD. CIT (A)-III, BARODA IN APPEAL NOS: CAB/III/ 147/2004-05 AND CAB/III/31/2005-06 DATED 15.2.2006 AND 31.3.2006 FO R THE AYS 2001-02 AND 2002-03 RESPECTIVELY. I. ITA NO.982/06 : A.Y. 2001- 2002 (BY THE DEP ARTMENT): 2. THE REVENUE HAD RAISED THE FOLLOWING GROUNDS: THE LD. CIT (A) ERRED IN - 1 & 2 ALLOWING THE INVESTMENT ALLOWANCE OF RS.37,23,126/ - ON RS.1,86,15,629/- PAID ON ACCOUNT OF D IFFERENCE IN RATE OF FOREIGN CURRENCY LOAN OBTAINED FOR PU RCHASE OF PLANT AND MACHINERY INSTALLED IN THE AY 1990-91 ; 3 & 4 DELETING THE DISALLOWANCE OF ROYALTY PAYMENT O F RS.1,99,85,687/-WITHOUT MAKING TAX DE DUCTED AT SOURCE (TDS); 5 & 6 HOLDING THAT SALES-TAX AND EXCISE DUTY SHOULD BE EX CLUDED FROM THE TOTAL TURNOVER FOR THE PURP OSE OF CALCULATION OF DEDUCTION U/S 80HHC OF THE ACT; 7 & 8 DIRECTING THAT THE SALE VALUE OF SCRAP DISCOU NT RECEIVED AGAINST RAW MATERIALS, INTE REST INCOME EARNED BY THE ASSESSEE FROM THE CLIENTS AND SA LE CONSIDERATION OF OLD NEWSPAPERS/SCRAP WERE BUSINESS INCOM E ELIGIBLE FOR DEDUCTION U/S 80HHC OF THE ACT; 9 & 10 ALLOWING DEDUCTION U/S 80-IB OF THE ACT IN RESPECT OF PITHAMPUR UNIT OF THE ASSESSEE; 11&12 HOLDING THAT SCRAP SALE WAS PART OF PROFIT FROM IND USTRIAL UNDER-TAKING AND, HENCE, ELIGIBLE FOR DEDUCTION U/S 80-IB OF THE ACT; & 13 GENERAL IN NATURE WHICH REQUIRES NO ADJUDICATION. II. ITA NO.1001/06 : A.Y. 2001-2002 (BY THE ASS ESSEE): 2.1. THE ASSESSEE HAD RAISED THE FOLLOWING GROU NDS: ITA NOS.982, 1001, 1416 & 1461/AHD/2006 THE LD. CIT (A) ERRED IN - 1 & 2 CONFIRMING THE AD-HOC DISALLOWANCE OF RS.58,860/- A ND RS.3,42,940/- OUT OF MISCELLANEOUS AND WELFARE EXPENSES BEING NON-BUSINESS USE; 3 CONFIRMING THE DISALLOWANCE OF RS.61,800/- BEING DO NATION; 4 CONFIRMING THE ADDITION OF RS.40,709/- REPRESENTING AMORTIZATION OF PREMIUM PAID FOR LAND TAKEN ON LEASE BEING CAPIT AL EXPENDITURE; 5 ERRED IN CONFIRMING THE AOS STAND IN ALLOCATING TH E EXPORT EXPENSES OF RS.26,73,000/- IN PROPORTION OF EXPORT TURNOVER OF TRADING GOODS TO EXPORT TURNOVER OF MANUFACTURED GO ODS FOR THE PURPOSE OF CALCULATING DEDUCTION U/S 80HHC OF THE A CT ON EXPORT OF TRADING GOODS; 6 CONFIRMING THE ACTION OF THE AO IN ALLOCATING THE I NDIRECT EXPENSES OF RS.11,51,103/- INSTEAD OF RS.1,73,639/- TO EXPORT OF TRADING GOODS FOR THE PURPOSE OF CALCULATING DEDUCT ION U/S 80HHC OF THE ACT ON EXPORT OF TRADING GOODS; 7 CONFIRMING THE AOS ACTION IN REDUCING 90% OF RS.3, 22,45,505/- FROM THE PROFIT OF BUSINESS FOR THE PURPOSE OF COMP UTING DEDUCTION U/S 80HHC OF THE ACT ON THE GROUND THAT T HEY DID NOT CONSTITUTE BUSINESS INCOME; 8 CONFIRMING THE STAND OF THE AO THAT THE GROSS AMOUN T OF INTEREST AND OTHER INCOME WAS REQUIRED TO BE EXCLUDED FOR TH E PURPOSE OF COMPUTING DEDUCTION U/S 80 HHC OF THE ACT AND NO DE DUCTION SHOULD BE GRANTED FOR EXPENDITURE INCURRED FOR EARN ING THE SAID INCOME; 9 & 10 CONFIRMING THE ACTION OF THE AO IN REDUCING FROM IN COME ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT OF RS.62,24,820/- ON THE GROUND THAT, THAT INCOME WAS NOT D ERIVED FROM THE INDUSTRIAL UNDERTAKING; & 11 CHARGING OF INTEREST U/S 234B AND 234D OF THE ACT. III. ITA NO.1416/06 : A.Y. 2002-2003 (BY THE DE PARTMENT): 2.2. THE REVENUE HAD RAISED THE FOLLOWING GR OUNDS: ITA NOS.982, 1001, 1416 & 1461/AHD/2006 THE LD. CIT (A) ERRED IN - 1 & 2 DELETING THE DISALLOWANCE OF ROYALTY PAYMENT OF RS.4,28,40,319/- WITHOUT PAYMENT OF TDS ON THE ABOVE SUM AS REQUIRED U/S 40(A)(I); 3 & 4 HOLDING THAT SALES-TAX AND EXCISE DUTY SHOULD BE EX CLUDED FROM THE TOTAL TURNOVER FOR THE PURPOSE OF CALCULATION OF DEDUCTION U/S 80HHC OF THE ACT; 5 6 &7 DIRECTING THAT THE SALE VALUE OF SCRAP DISCOUNT REC EIVED AGAINST RAW MATERIALS, INTEREST INCOME EARNED B Y THE ASSESSEE FROM THE CLIENTS AND SALE CONSIDERATION OF O LD NEWSPAPERS/SCRAP WERE BUSINESS INCOME ELIGIBLE FOR DEDUC TION U/S 80HHC OF THE ACT; 8 & 9 ALLOWING DEDUCTION U/S 80-IB OF THE ACT IN RESPECT OF PITHAMPUR UNIT OF THE ASSESSEE; 10 & 11 HOLDING THAT THE SCRAP SALE WAS PART OF PROFIT FROM INDUSTRIAL UNDER-TAKING AND, HENCE, ELIGIBLE FOR DEDUCTION U/S 80-IB OF THE ACT; & 12 BEING GENERAL IN NATURE, IT DOES NOT QUALIFY FOR AD JUDICATION. IV. ITA NO.1461/06 : AY 2002-03 (BY THE A SSESSEE): 2.3. THE ASSESSEE HAD RAISED THE FOLLOWING GROUN DS: THE LD. CIT (A) ERRED IN - 1 CONFIRMING THE AD-HOC DISALLOWANCE OF RS.3,21,377/- MADE BY THE AO BY INVOKING THE PROVISIONS OF S.14A OF THE ACT O N THE GROUND THAT IT REPRESENTED EXPENDITURE INCURRED FOR EARNIN G INCOME WHICH DID NOT FORM PART OF TOTAL INCOME; 2 CONFIRMING THE DISALLOWANCE OF EMPLOYERS CONTRIBUT ION TO ESI FUND OF RS.6163/- MADE BY THE AO; 3 CONFIRMING THE ADDITION OF RS.40709/- REPRESENTING AMORTIZATION OF PREMIUM PAID FOR LAND TAKEN ON LEASE ON THE GROU ND THAT THE SAME REPRESENTS CAPITAL EXPENDITURE; ITA NOS.982, 1001, 1416 & 1461/AHD/2006 4&5 CONFIRMING THE AD-HOC DISALLOWANCE OF RS.71469/- & RS.2,63,290/- OUT OF MISCELLANEOUS AND WELFARE EXPENSES RESPECTIVELY ON THE GROUND OF NON-BUSIN ESS USE; 6 CONSIDERING RS.19,96,499/- UNDER SOFT-WARE EXPENSES , REPAIRS TO BUILDING/MACHINERY ETC., AS CAPITAL EXPEN DITURE; WITHOUT PREJUDICE, THE CIT (A) ERRED IN CONF IRMING THE STAND OF THE AO IN ALLOWING DEPRECIATION ON SOFT-WARE ONLY FOR HALF YEAR ON THE ASSUMPTION THAT SOFTWARE WAS PUT TO U SE FOR A PERIOD OF LESS THAN 180 DAYS; 7 ADJUSTMENT IN TOTAL TURNOVER: CONFIRMING THE STAND OF THE AO IN INCLUDING RS.57 ,89,392/- IN TOTAL TURNOVER FOR COMPUTING DEDUCTION U/S 80HHC OF THE ACT; 8 ADJUSTMENT IN PROFIT OF BUSINESS: CONFIRMING THE AOS ACTION IN REDUCING RS.2,70,92,9 99/- FROM THE PROFIT OF THE BUSINESS FOR COMPUTATION OF DEDUCTION U/S 80HHC OF THE ACT AS THEY DID NOT CONSTITUTE BUSINESS INCOME; 9 CONFIRMING THE AOS STAND THAT GROSS AMOUNT OF INTE REST AND OTHER INCOME WAS REQUIRED TO BE EXCLUDED FROM THE PROFITS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC OF THE ACT AND THAT NO DEDUCTION SHOULD BE GRANTED FOR EXPENSES INCURRED F OR EARNING THE SAID INCOME; 10 ADJUSTMENT IN DIRECT COST OF EXPORT OF TRADING GOOD S: CONFIRMING THE AOS STAND IN ALLOCATING EXPORT EXPE NSES OF RS.16.92 LAKHS IN PROPORTION OF EXPORT TURNOVER OF TRADING GOODS TO EXPORT TURNOVER OF MANUFACTURED GOODS FOR THE PURPO SE OF CALCULATING DEDUCTION U/S 80HHC OF THE ACT ON EXPOR T OF TRADING GOODS; 11 ADJUSTMENT IN INDIRECT COST OF EXPORT OF TRADING GO ODS: CONFORMING THE AOS ACTION IN ALLOCATING RS.16,89,8 39/- AS AGAINST RS.2,50,874/- TO EXPORT OF TRADING GOODS FOR THE PU RPOSE OF DEDUCTION U/S 80HHC OF THE ACT ON EXPORT TRADING GO ODS; ITA NOS.982, 1001, 1416 & 1461/AHD/2006 ALSO IN CONFIRMING THE STAND OF THE AO IN NOT REDUC ING INDIRECT EXPENSES BY 10% OF OTHER INCOME AND INTEREST INCOME FOR WORKING OUT DEDUCTION U/S 80HHC OF THE ACT ON EXPORT OF TRA DING GOODS; 12 DEDUCTION U/S 80-IB OF THE ACT : CONFIRMING THE AOS STAND IN REDUCING FROM INCOME E LIGIBLE FOR DEDUCTION U/S 80-IB OF THE ACT OF RS.52,67,300/- ON THE GROUND THAT THOSE INCOMES WERE NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING; WITHOUT PREJUDICE, THE CIT (A) ERRED IN SUSTAINING THE AOS ACTION IN EXCLUDING VARIOUS INCOMES FROM PROFITS DERIVED FROM INDUSTRIAL UNDERTAKING FOR COMPUTING THE DEDUCTION U/S 80-IB OF THE ACT ON THE BASIS OF GROSS RECEIPTS THEREOF AND IN NOT ALLOWING ANY EXPENDITURE INCURRED FOR EA RNING THE RESPECTIVE INCOMES; 13 CHARGING OF INTEREST U/S 234B AND 234D OF THE ACT ; 14 CONFIRMING THE INITIATION OF PENAL PROCEEDINGS U/ S 271(1)(C) OF THE ACT; & 15 GENERAL IN NATURE WHICH DOESNT SURVIVE FOR ADJU DICATION. 3. AS THE ISSUES RAISED BY THE RIVAL PARTIES WERE P ERTAINING TO THE SAME ASSESSEE, FOR THE SAKE OF CONVENIENCE AND CLAR ITY, THEY WERE HEARD, CONSIDERED TOGETHER AND DISPOSED OFF IN THIS COMMON ORDER. 4. THE SUBMISSIONS MADE BY THE EITHER PARTY WERE DU LY CONSIDERED, CAREFULLY PERUSED THE RELEVANT CASE RECORDS AS WELL AS THE CASE LAWS RELIED ON BY BOTH THE PARTIES. THE ISSUES AGITATED BY THE RESPECTIVE PARTIES ARE ADJUDICATED IN THE FOLLOWING MANNER: I. ITA NO.982/AHD/06 : A.Y. 2001-2002 (BY THE DEPARTMENT): 5. (I) WITH REGARD TO DISALLOWANCE OF THE ASSESSE ES CLAIM OF INVESTMENT ALLOWANCE AT 20% ON FOREIGN CURRENCY LOA N ON EXCHANGE RATE FLUCTUATION (GROUND NOS: 1 & 2); IT HAS BEEN OBSERVED THAT THE HONBLE ITA NOS.982, 1001, 1416 & 1461/AHD/2006 JURISDICTIONAL HIGH COURT IN THE ASSESSEES OWN CAS E FOR THE AY 1983-84 IN TAX APPEAL NO.279 OF 1999 [LAKHANPAL NATIONAL LT D V. ITO] ON 24.10.2002 HAD HELD THAT THE ASSESSEE IS ENTITLED T O INVESTMENT ALLOWANCE IN RESPECT OF ADDITIONAL COST SUFFERED BY IT DUE TO EXCHANGE RATE FLUCTUATION. 5.1 SINCE THE OUTCOME OF THE SLP APPEARS TO HAVE BE EN FILED BY THE REVENUE BEFORE THE HONBLE APEX COURT AGAINST THE R ULING OF THE HONBLE HIGH COURT IS NOT FORTH-COMING, WE ARE IN AGREEMENT WITH THE FINDING OF THE CIT (A) ON THIS ISSUE. (II) IN RESPECT OF DISALLOWANCE OF ROYALTY PAYMEN T OF RS.1,99,85,687/- [GROUND NOS: 3 & 4] IN THE ABSENCE OF EFFECTING TDS, OUR ATTENTION WAS DRAWN TO THE FACT THAT A SIMILAR ISSUE HAD CROPPED UP BEFORE THE EARLIER BENCH IN THE ASSESSEES OWN CASE FOR THE AYS 1997-9 8 AND 1998-99 WHEREIN THE HONBLE BENCH IN ITS FINDING [IN ITA NO S: 3945/A/2002 & 3949/A/2002 DATED: 21.11.2008] REMITTED BACK THE IS SUE TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH [PAR A 3 OF ITS ORDER]. 5.2 IN CONFORMITY WITH THE FINDING OF THE EARLIER B ENCH ON AN IDENTICAL ISSUE, WE REMIT BACK THE ISSUE TO THE FILE OF THE A O WITH A SPECIFIC DIRECTION TO LOOK INTO THE MATTER AFRESH AND TO TAK E APPROPRIATE ACTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. HE SHA LL, HOWEVER, KEEP IN VIEW THE DIRECTIONS OF THE EARLIER BENCH ON THE MAT TER WHILE DECIDING THE PRESENT ISSUE. (III) WITH REGARD TO INCLUSION OF EXCISE DUTY AND SALES-TAX (GROUND NOS.5 & 6) , IT APPEARS THAT FOLLOWING THE FINDINGS OF THE HON BLE EARLIER BENCH IN THE CASE OF GUJARAT ALKALIES & CHEMICALS L TD., [ITA NO.1188/AHD/2000 DATED 13.12.2001] AND THE HONBLE APEX COURT IN ITA NOS.982, 1001, 1416 & 1461/AHD/2006 CHOWRINGHEE SALES BUREAU [87 ITR 542 (SC)], THE AO, PERHAPS, INCLUDED THESE RECEIPTS IN THE TOTAL INCOME. 5.3 HOWEVER, THE CIT (A), TAKING SHELTER IN THE FIN DINGS IN THE CASES OF (I) IFB AGRO INDUSTRIES LTD V. CIT [83 ITD 96 (CAL) (SB)] AND (II) CIT V. CHLORIDE INDIA LTD [256 ITR 625 (CAL)] DIRECTED THE AO NOT TO INCLUDE SALES-TAX AND EXCISE DUTY IN THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 80-HHC OF THE ACT. 5.4 THIS HAS, HOWEVER, BEEN HOTLY OBJECTED TO BY TH E REVENUE BEFORE US WITH THE SUBMISSION THAT (SUBMISSION DT:1.11.11) DEDUCTION U/S 80HHC : HONBLE SUPREME COURT ON ITS LAND MARK JUDGMENT IN THE CASE OF LAXM I MACHINE WORKS SAND K RAVINDRANATHAN NAIR HAS MADE CATEGORIC AL OBSERVATION THAT ON ACCOUNT OF FREQUENT AMENDMENT O F SECTION 80HHC OF THE ACT, IT IS NO MORE A CORD IN ITSELF AN D THE JUDGMENT IS RELATED TO THE LAWS AS APPLICABLE FOR THAT PARTICUL AR AY. THE ASSESSMENT YEAR IN THOSE TWO CASES IS AY 1993-94. FURTHER, IN THE CASE OF LAXMI MACHINE WORKS, IT WAS ARGUED THAT UNP AID CENTRAL EXCISE DUTY AND UNPAID SALES-TAX HAS TO BE TREATED AS REVENUE FOLLOWING THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF CHAURANGILANE. THIS IS CLEARLY REFLECTING THAT APP ELLANT WAS HAVING A SEPARATE ACCOUNT WHERE DUTIES COLLECTED IN THE FORM OF SALES-TAX AND CENTRAL EXCISE DUTY PAID ARE MAINTAINED WHICH WAS P RESCRIBED AT THAT PARTICULAR TIME. THIS ACCOUNT WAS NOT MANDATO RY TO BE PART OF TRADING OR P & L ACCOUNT EVEN BY ACCOUNTING STANDAR D. AFTER THE INTRODUCTION OF SECTION 145A OF THE ACT, WHERE BASIC ISSUE WAS SETTLED RELATED TO VALUE OF CLOSING STOCK ON ACCOUNT OF MODVAT CREDIT. IT WAS MADE COMPULSORY TO INCLUDE T HE DUTIES IN THE ITA NOS.982, 1001, 1416 & 1461/AHD/2006 FORM OF SALES-TAX, CENTRAL EXCISE, OCTROI ETC., NOT ONLY IN THE OPENING, PURCHASE OF RAW MATERIAL BUT ALSO IN THE C LOSING STOCK OF SUCH GOODS. IT IS, THEREFORE, WITH DUE REGARD TO R ATIO OF LAXMI MACHINE WORKS AND K RAVINDRANATHAN NAIR IN RESPECT OF EXCLUSION OF SUCH DUTIES THAT TO ONLY FROM TURNOVER IS NOT AP PLICABLE IN THE PRESENT CONTEXT. EITHER BOTH SIDE OF TRADING ACCOU NT AND P & L A/C SHOULD BE INCLUDED WITH SUCH DUTIES OR ELSE EXCLUDE D. THE ACCOUNT OF REDUCING CENTRAL EXCISE FROM TOTAL TURNOVER IS G IVEN DISTORTING PICTURE PARTICULAR WITH CONCEPT OF MODVAT CREDIT. THE PROFIT ELEMENT IS, THEREFORE, CREPT IN THE BUSINESS PROFIT OF THE APPELLANT ON ACCOUNT OF MODVAT CREDIT, IS BENEFIT G IVEN APPELLANT OUT OF THE TOTAL COLLECTION OF CENTRAL EXCISE FOR THE C ENTRAL EXCISE PAID ON RAW MATERIAL AND CAPITAL GOODS. THE RATIO OF LA XMI MACHINE WORKS AND R. NAIR IS SPECIFIED THAT SINCE IN THE YE AR OF CONSIDERATION OF THOSE CASES, NO ELEMENT OF BUSINES S PROFIT WAS INVOLVED BY COLLECTION OF SUCH DUTIES, THEREFORE, S AME WERE DIRECTLY TO BE EXCLUDED FROM TOTAL TURN OVER. NOW, THE APPE LLANT IS GETTING MORE DEDUCTION U/S 80HHC ON THE INFLATED PROFIT ON ACCOUNT OF MODVAT CREDIT WHICH NOT THE INTENTION OF LEGISLATUR E. 5.5 THE LD. AR PRESENT WAS HEARD. WE HAVE DULY CON SIDERED THE RIVAL SUBMISSIONS ON THE ISSUE. 5.6 AT THIS JUNCTURE, WE ARE INCLINED TO RECALL THE RULING OF THE HONBLE HIGHEST JUDICIARY OF THE LAND IN THE CASE OF CIT V. LAXMI MACHINE WORKS REPORTED IN 290 ITR 667(SC) AND THE RELEVANT PORTIO N OF ITS VERDICT IS EXTRACTED AS UNDER: 16. WE DO NOT FIND ANY MERIT IN THE ABOVE CONTENTIO NS ADVANCED ON BEHALF OF THE DEPARTMENT. IT IS IMPORT ANT TO NOTE THAT TAX UNDER THE ACT IS UPON INCOME, PROFITS AND GAINS. IT IS NOT ITA NOS.982, 1001, 1416 & 1461/AHD/2006 A TAX ON GROSS RECEIPTS. UNDER S. 2(24) OF THE AC T THE WORD INCOME INCLUDES PROFITS AND GAINS. THE CHARGE IS NOT ON GROSS RECEIPTS BUT ON PROFITS AND GAINS. THE CHARGE IS N OT ON GROSS RECEIPTS BUT ON PROFITS AND GAINS PROPERLY SO-CALLE D. GROSS RECEIPTS OR SALE PROCEEDS, HOWEVER, INCLUDE PROFITS . ACCORDING TO THE LAW AND PRACTICE OF INCOME-TAX, BY KANGA AND PALKHIVALA, THE WORD PROFITS IN S.28 SHOULD BE UNDERSTOOD IN NORMAL AND PROPER SENSE. HOWEVER, SUBJECT TO SPECIAL REQUIREM ENT OF INCOME-TAX, PROFITS HAVE GOT TO BE ASSESSED PROVIDE D THEY ARE REAL PROFITS. SUCH PROFITS HAVE TO BE GOT TO BE AS CERTAINED ON ORDINARY PRINCIPLES OF COMMERCIAL TRADING AND ACCOU NTING. HOWEVER, THE INCOME-TAX HAS LAID DOWN CERTAIN RULES TO BE APPLIED IN DECIDING HOW THE TAX SHOULD BE ASSESSED AND EVEN IF THE RESULT IS TO TAX AS PROFITS WHAT CANNOT BE CONS TRUED AS PROFITS, STILL THE REQUIREMENTS OF THE INCOME-TAX MUST BE CO MPLIED WITH. WHERE A DEDUCTION IS NECESSARY IN ORDER TO ASCERTAI N THE PROFITS AND GAINS, SUCH DEDUCTIONS SHOULD BE ALLOWED. PROF ITS SHOULD BE COMPUTED AFTER DEDUCTING THE EXPENSES INCURRED F OR BUSINESS THROUGH SUCH EXPENSES MAY NOT BE ADMISSIBLE EXPRESS LY UNDER THE ACT, UNLESS SUCH EXPENSES ARE EXPRESSLY DISALLO WED BY THE ACT.[SEE : PAGE P. 455 OF THE LAW AND PRACTICE OF INCOME-TAX BY KANGA AND PALKHIVALA]. THEREFORE, SCHEMATIC INT ERPRETATION FOR MAKING THE FORMULA IN S. 80HHC WORKABLE CANNOT BE RULED OUT. SIMILARLY, PURPOSEFUL INTERPRETATION OF S. 80 HHC WHICH HAS UNDERGONE SO MANY CHANGES CANNOT BE RULED OUT, PART ICULARLY, WHEN THOSE LEGISLATIVE CHANGES INDICATE THAT THE LE GISLATURE INTENDED TO EXCLUDE ITEMS LIKE COMMISSION AND INTER EST FROM DEDUCTION ON THE GROUND THAT THEY DID NOT POSSESS A NY ELEMENT OF TURNOVER EVEN THOUGH COMMISSION AND INTEREST E MANATED FROM EXPORTS. WE HAVE TO READ THE WORKS TOTAL TUR NOVER IN S. 80HHC AS PART OF THE FORMULA WHICH SOUGHT TO SEGREG ATE THE EXPORT PROFIT FROM THE BUSINESS PROFITS. THERE FORE, WE HAVE TO READ THE FORMULA IN ENTIRETY. IN THAT FORMULA, THE ENTIRE BUSINESS PROFITS IS NOT GIVEN DEDUCTION. IT IS THE BUSINESS PROFIT WHICH IS PROPORTIONATELY REDUCED BY THE ABOVE FRACTION/RATIO OF EXPORT TURNOVER + TOTAL TURNOVER WHICH CONSTITUTE 80HHC CO NCESSION (DEDUCTION). INCOME IN THE NATURE OF BUSINESS PROF ITS WAS, THEREFORE, APPORTIONED. THE ABOVE FORMULA FIXED A RATIO IN WHICH BUSINESS PROFITS UNDER S.28 OF THE ACT HAD TO BE APPORTIONED. THEREFORE, ONE HAS TO GIVE WEIGHT-AGE NOT ONLY TO T HE WORDS TOTAL TURNOVER BUT ALSO TO THE WORDS EXPORT TURN OVER, TOTAL EXPORT TURNOVER AND BUSINESS PROFITS. THAT IS THE REASON WHYC WE HAVE QUOTED HEREINABOVE EXTENSIVELY THE ILLUSTRA TION FROM THE DIRECT TAXES (INCOME-TAX) READY RECKONER OF THE REL EVANT WORD. ITA NOS.982, 1001, 1416 & 1461/AHD/2006 IN THE CIRCUMSTANCES, WE CANNOT INTERPRET THE WORDS TOTAL TURNOVER IN THE ABOVE FORMULA WITH REFERENCE TO TH E DEFINITION OF THE WORD TURNOVER IN OTHER LAWS LIKE CENTRAL SALE S-TAX OR AS DEFINED IN ACCOUNTING PRINCIPLES. GOODS FOR EXPORT DO NOT INCUR EXCISE DUTY LIABILITY. AS STATED ABOVE, EVEN COMM ISSION AND INTEREST FORMED A PART OF THE P & L A/C., HOWEVER, THEY WERE NOT ELIGIBLE FOR DEDUCTION UNDER S. 80HHC. THEY WERE N OT ELIGIBLE EVEN WITHOUT THE CLARIFICATION INTRODUCED BY THE LE GISLATURE BY VARIOUS AMENDMENTS BECAUSE THEY DID NOT INVOLVE ANY ELEMENT OF TURNOVER. FURTHER, IN ALL OTHER PROVISIONS OF THE INCOME-TAX, PROFITS AND GAINS WERE REQUIRED TO BE COMPUTED WITH REFERENCE TO THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HOWEVER, AS CAN BE SEEN FROM THE IT RULES AND FROM THE ABOVE FORM NO.1 0CCAC IN THE CASE OF DEDUCTION UNDER S. 80HHC A REPORT OF TH E AUDITOR CERTIFYING DEDUCTION BASED ON EXPORT TURNOVER WAS S UFFICIENT. THIS IS BECAUSE THE VERY BASIS FOR COMPUTING S. 80H HC DEDUCTION WAS BUSINESS PROFITS AS COMPUTED UNDER S.28, A PORTION OF WHICH HAD TO BE APPORTIONED IN TERMS OF THE ABOVE RATIO OF EXPORT TURNOVER TO TOTAL TURNOVER. SEC.8 0HHC(3) WAS A BENEFICIAL SECTION. IT WAS INTENDED TO PROVIDE INC ENTIVES TO PROMOTE EXPORTS. THE INCENTIVE WAS TO EXEMPT PROF ITS RELATABLE TO EXPORTS. IN THE CASE OF COMBINED BUSINESS OF AN ASSESSEE HAVING EXPORT BUSINESS AND DOMESTIC BUSINESS THE LE GISLATURE INTENDED TO HAVE A FORMULA TO ASCERTAIN EXPORT PROF ITS BY APPORTIONING THE TOTAL BUSINESS PROFITS ON THE BASI S OF TURNOVERS. APPORTIONMENT OF PROFITS ON THE BASIS OF TURNOVER W AS ACCEPTED AS A METHOD OF ARRIVING AT EXPORT PROFITS. THIS ME THOD EARLIER EXISTED UNDER EXCESS PROFITS TAX ACT; IT EXISTED IN THE BUSINESS PROFITS TAX ACT. THEREFORE, JUST AS COMMISSION REC EIVED BY AN ASSESSEE IS RELATABLE TO EXPORTS AND YET IT CANNOT FORM PART OF TURNOVER, EXCISE DUTY AND SALES-TAX ALSO CANNOT F ORM PART OF THE TURNOVER. SIMILARLY, INTEREST EMANATES FROM EX PORTS AND YET INTEREST DOES NOT INVOLVE AN ELEMENT OF TURNOVER. THE OBJECT OF THE LEGISLATURE IN ENACTING S.80HHC OF THE ACT WAS TO CONFER A BENEFIT ON PROFITS ACCRUING WITH REFERENCE TO EXPOR T TURNOVER. THEREFORE, TURNOVER WAS THE REQUIREMENT, COMMISSI ON, RENT, INTEREST ETC., DID NOT INVOLVE ANY TURNOVER. THEREF ORE, 90 PER CENT OF SUCH COMMISSION, INTEREST ETC., WAS EXCLUDED FRO M THE PROFITS DERIVED FROM THE EXPORT. THEREFORE, EVEN WITHOUT T HE CLARIFICATION SUCH ITEMS DID NOT FORM PART OF THE FORMULA IN S. 8 0HHC (3) FOR THE SIMPLE REASON THAT IT DID NOT EMANATE FROM THE EXPORT TURNOVER, MUCH LESS ANY TURNOVER. EVEN IF THE AS SESSEE WAS AN EXCLUSIVE DEALER IN EXPORTS, THE SAID COMMISSION WA S NOT INCLUDIBLE AS IT DID NOT SPRING FROM THE TURNOVER . JUST AS ITA NOS.982, 1001, 1416 & 1461/AHD/2006 INTEREST, COMMISSION ETC., DID NOT EMANATE FROM THE TURNOVER, SO ALSO EXCISE DUTY SAND SALES-TAX DID NOT EMANATE FROM SUCH TURNOVER. SINCE EXCISE DUTY AND SALES-TAX DID NOT INVOLVE ANY SUCH TURNOVER, SUCH TAXES HAD TO BE EXCLUDED. COMM ISSION, INTEREST, RENT ETC., DO YIELD PROFITS, BUT, THEY DO NOT PARTAKE OF THE CHARACTER OF TURNOVER AND, THEREFORE, THEY WERE NOT INCLUDIBLE IN THE TOTAL TURNOVER. THE ABOVE DISCUSSION SHOWS T HAT INCOME FROM RENT, COMMISSION ETC., CANNOT BE CONSIDERED AS PART OF BUSINESS PROFITS AND, THEREFORE, THEY CANNOT BE HEL D AS PART OF THE TURNOVER ALSO. IN FACT, IN CIVIL APPEAL NO.440 9 OF 2005, THE ABOVE PROPOSITION HAS BEEN ACCEPTED BY THE AO [SEE: PAGE NO.24 OF THE PAPER BOOK], IF SO, THEN EXCISE DUTY A ND SALES-TAX ALSO CANNOT BE FORM PART OF THE TOTAL TURNOVER UN DER S.80HHC(3), OTHERWISE, THE FORMULA BECOMES UNWORKAB LE. IN OUR VIEW, SALES-TAX AND EXCISE DUTY ALSO DO NOT HAV E ANY ELEMENT OF TURNOVER WHICH IS THE POSITION EVEN IN THE CASE OF RENT, COMMISSION, INTEREST ETC., IT IS IMPORTANT T O BEAR IN MIND THAT EXCISE DUTY AND SALES-TAX ARE INDIRECT TAXES. THEY ARE RECOVERED BY THE ASSESSEE ON BEHALF OF THE GOVERNME NT. THEREFORE, IF THEY ARE MADE RELATABLE TO EXPORTS, T HE FORMULA UNDER S. 80HHC WOULD BECOME UNWORKABLE. THE VIEW W HICH WE HAVE TAKEN IS IN THE LIGHT OF AMENDMENTS MADE TO S. 80HHC FROM TIME TO TIME. 17. BEFORE CONCLUDING, WE MAY STATE THAT PROFITS AR E OF THREE TYPES, NAMELY, BOOK-PROFITS, STATUTORY PROFITS AND ACTUAL PROFITS. THE AMENDMENTS TO S.80HHC (3) INDICATE EXCLUSION OF BOOKS PROFITS. FOR EXAMPLE, COMMISSION, INTEREST ETC., D O FORM PART OF THE P & L A/C BUT FOR THE PURPOSES OF CALCULATION O F PROFITS DERIVED FROM LOCAL SALES AND EXPORTS, THEY STAND EX CLUDED. THE DIFFICULTY ARISES BECAUSE THE FORMULA IS BASED ON T HE HYBRID SYSTEM OF PROFITS, NAMELY, ACTUAL AND STATUTORY PRO FITS. THEREFORE, THIS JUDGMENT SHOULD BE READS IN THE CON TEXT OF THE ABOVE PARAMETERS. OUR REASONING IN THIS JUDGMENT I S CONFINED TO THE WORKABILITY OF THE FORMULA IN S.80HHC (3) OF THE ACT AS IT STOOD AT THE MATERIAL TIME . 5.7 IN CONFORMITY WITH THE RULING OF THE HONBLE SU PREME COURT CITED SUPRA AND ALSO THERE WAS NO CHANGE IN FORMULA BEING ADOPTED, WE ARE INCLINED TO AGREE WITH THE STAND OF THE CIT (A) ON THIS ISSUE. IT IS ORDERED ACCORDINGLY. ITA NOS.982, 1001, 1416 & 1461/AHD/2006 (IV) WITH REGARD OF 90% OF INTEREST AND OTHER INCOME FROM PRO FITS OF BUSINESS FOR DEDUCTION U/S 80HHC OF THE ACT (GROUND NO.7 & 8) , THE SAME ARE DEALT WITH AS UNDER: (A) SALE VALUE OF SCRAP OF RS.17,26,860/ - : A SIMILAR ISSUE CAME UP FOR ADJUDICATION BEFORE THE EARLIER BENCH IN THE ASSESSEES OWN CASE FOR THE AYS 1998-99 (SUPRA) AND AFTER CONSIDERING RIVAL SUBMISSIONS, THE BENCH HAD OBSERVED THUS: 5IT IS NOTICED THAT SCRAP SALE FORM PART OF SAL E OF SCRAP GENERATED DURING THE MANUFACTURING PROCESS OF THE A SSESSEE AND THIS BEING AN INTEGRAL PART OF THE MANUFACTURI NG ACTIVITY, THE INCOME THERE-FROM IS TO BE CONSIDERED FOR THE PURPO SE OF WORKING OUT DEDUCTION U/S 80HH OF THE ACT. HOWEVER, AS REG ARDS TO THE CLAIM OF DEDUCTION U/S 80HHC, THIS INCOME DOES NOT COME WITHIN THE PURVIEW OF EXPORT INCOME. HENCE, IN VIEW OF TH E LATEST DECISION OF THE HONBLE APEX COURT IN THE CASE OF C IT V. K. RAVINDRANATHAN NAIR (2007) 295 ITR 228 (SC), THE AS SESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80HHC OF THE ACT. H OWEVER, THIS WILL BE INCLUDED IN THE FORMULA FOR THE PURPOSES OF COMPUTATION OF DEDUCTION U/S 80HHC OF THE ACT AS PROFIT OF THE BUS INESS. IN VIEW OF THESE DIRECTIONS, THE ASSESSING OFFICER WILL RE- COMPUTE THE INCOME WITH REGARD TO DEDUCTION U/S 80HH AND 80HHC OF THE ACT . IN CONFORMITY WITH OBSERVATION OF THE EARLIER BENCH , THE AO IS DIRECTED TO RE-COMPUTE THE INCOME WITH REGARD TO DE DUCTION U/S 80HH AND 80HHC OF THE ACT. ACCORDINGLY, THIS ISSUE GOES IN FAVOUR OF THE ASSESSEE (B) DISCOUNT RECEIVED AGAINST THE RAW MATERIAL : INCIDENTALLY, THE EARLIER BENCH IN ITS FI NDING FOR THE AY 1998-99 (SUPRA) IN AN IDENTICAL ISSUE HAD OBSERVED THUS: 6..AFTER HEARING THE RIVAL CONTENTIONS, IT IS O BSERVED THAT THE DISCOUNT RECEIVED ON EARLY PAYMENT TO SUPP LIERS AND THE LD COUNSEL FOR THE ASSESSEE ADMITTED THAT I T IS IN FACT DOES NOT AMOUNT TO INCOME AND IT ONLY REDUCES THE COSTS, THEREFORE, THE SAME CANNOT BE REDUCED FOR CO MPUTING ITA NOS.982, 1001, 1416 & 1461/AHD/2006 PROFIT OF BUSINESS. BUT, WE ARE OF THE VIEW THAT W HEN THIS DOES NOT AMOUNT TO INCOME AND IT ONLY REDUCES THE C OST, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80HHC OF THE ACT ON THIS AMOUNT AND, ACCORDINGLY, IN VIEW OF THIS DI RECTION, THE ASSESSING OFFICER WILL RE-COMPUTE THE DEDUCTION U/S 80HHC OF THE ACT. THUS, THIS ISSUE GOES AGAINST THE ASSESSEE. (C) INTEREST INCOME EARNED FROM CUSTOMER OF RS.9,57 5/- THE ASSESSEE DURING THE COURSE OF HEARING CONCEDED THAT THIS ISSUE GOES AGAINST THE ASSESSEE [REFER: APPENDIX II I OF ITS BRIEF]. ON HIS PART, THE CIT (A) HAD STATED THAT FOR THE REASONS R ECORDED IN HIS IMPUGNED ORDER UNDER THE HEAD INTEREST RECEIVED FR OM DEBTORS, HE HAD DIRECTED THE AO NOT TO EXCLUDE THIS INCOME FROM PRO FITS OF BUSINESS. ACCORDINGLY, WE CONFIRM THE CIT(A)S STAND ON THIS ISSUE. (D) SALE CONSIDERATION OF OLD NEWSPAPER/SCRAP OF R S.1,89,585/- FOLLOWING THE FINDINGS OF VARIOUS TRIBUNALS AS LIST ED OUT IN HIS FINDINGS, THE CIT (A) SUSTAINED THE AOS ACTION OF INCLUDING THOSE RECEIPTS IN THE TOTAL TURNOVER AS THE ASSESSEE ITSE LF INCLUDED THOSE RECEIPTS IN ITS BUSINESS INCOME. ON PERUSAL OF THE OBSERVATIONS OF THE CIT (A) AS WELL THE CONTENTIONS OF THE ASSESSEE, WE FIND FORCE IN THE CIT (A)S OBSERVATION WHICH REQUIRES NO INTERVENTION BY THIS BENCH AT THIS STAGE V) GROUND NOS.9 & 10 PERTAIN TO THE REVENUES STAND THAT THE CIT (A) ERRED IN ALLOWING DEDUCTION U/S 80-IB OF THE AC T IN RESPECT OF PITHAMPUR UNIT OF THE ASSESSEE. THE ORIGIN OF THE ISSUE WAS THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80-IB OF THE ACT OF RS.1,03,08,002/- IN RESPECT OF ITS NEW 3D LINE UNIT AT PITHAMPUR ON THE PLEA THAT THE SAID UNIT WAS ESTABLISHED DURING THE AY 1995-96 AND COMM ENCED COMMERCIAL PRODUCTION IN FEBRUARY, 1995; THAT IN TH E ABSENCE OF PROFIT, ITA NOS.982, 1001, 1416 & 1461/AHD/2006 NO DEDUCTION U/S 80-IA WAS CLAIMED TILL THE AY 1997 -98; AND WHEN SUCH A CLAIM WAS PUT-FORTH FOR THE AY 1998-99, THE SAME WAS TURNED DOWN BY THE REVENUE ON THE GROUND THAT THE ASSESSEE HAD NOT ESTABLISHED ANY NEW INDUSTRIAL UNDERTAKING, BUT, ONLY EXPANDED ITS EXISTING PLANT. THE ASSESSEE GOT A BREATHER IN THE FIRST APPEAL; HOWEVE R, THE REVENUE HAD CHALLENGED THE ISSUE IN THE SECOND APPEAL. AT THE TIME OF CONCLUDING THE ASSESSMENT PROCEEDINGS THE ISSUE WAS STILL UNDECIDE D AT THE APPELLATE STAGE, THE AO TOOK A STAND THAT THE ASSESSEE WAS NO T ELIGIBLE TO CLAIM DEDUCTION OF RS.1,03 CRORES U/S 80IB OF THE ACT FOR ITS PITHAMPUR UNIT. 5.8 AFTER DUE CONSIDERATION OF THE ASSESSEES CONTE NTIONS AS RECORDED IN HIS IMPUGNED ORDER UNDER CHALLENGE, THE CIT (A) HAD DIRECTED THE AO TO ALLOW THE CLAIM FOR THE AY UNDER CONSIDERATION A S SIMILAR CLAIMS OF THE ASSESSEE WERE ALLOWED IN THE EARLIER YEARS. 5.9 DURING THE COURSE OF HEARING BEFORE US, IT WAS CONTENDED BY THE REVENUE THAT THE AO HAD RIGHTLY DISALLOWED THE CLAI M OF THE ASSESSEE U/S 80-IB OF THE ACT AS THE ASSESSEE HAD NOT ESTABL ISHED ANY NEW UNIT IN PITHAMPUR, BUT, ONLY EXPANDED ITS EXISTING PLANT FO R WHICH THE PROVISIONS OF S.80-IB HAVE NO APPLICATION. 5.10 INCIDENTALLY, ALMOST SIMILAR ISSUES IN THE ASS ESSEES OWN CASE FOR THE AYS 1998-99 AND 1997-98 CAME UP FOR ADJUDICATIO N BEFORE THE EARLIER BENCH. AFTER DUE CONSIDERATION OF THE ASS ESSEES SUBMISSIONS AS WELL AS THE REASONING OF THE CIT (A) IN ACCEDING TO THE ASSESSEES CLAIM AS RECORDED IN ITS FINDING, THE HONBLE BENCH HAD CONCLUDED AS UNDER: 7 WE FIND FROM THE FINDING OF CIT(A) THAT THE ASSESSE E HAS DOUBLE THE CAPACITY AFTER INSTALLATION OF NEW PLANT AND MA CHINERY. AS AGAINST THE TOTAL CAPACITY OF MANUFACTURING 120 MIL LION BATTERIES, THE CAPACITY DOUBLED TO 240 MILLION BATTERIES. THE RE IS ITA NOS.982, 1001, 1416 & 1461/AHD/2006 SUBSTANTIAL RISE IN THE ADDITION TO PLANT AND MACHI NERY AND ACCORDINGLY, IT CAN BE SAFELY SAID THAT NEW UNIT HA VE COME INTO EXISTENCE. WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA AND THE CIT (A) HAS RIGHTLY ALLO WED THE CLAIM OF THE ASSESSEE. . 5.11 IN CONFORMITY WITH THE RATIO LAID DOWN BY THE EARLIER BENCH CITED SUPRA, WE ARE OF THE CONSIDERED VIEW THAT SIMILARLY THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 80-IB OF THE ACT FO R ITS PRITHAMPUR NEW PLANT TOO. IT IS ORDERED ACCORDINGLY. (VI) SCRAPS SALE (GROUND NO.11 & 12) : THE AO IN HIS IMPUGNED ORDER HAD STATED THAT - 12.1. WITHOUT PREJUDICE TO THE ABOVE, IT IS TO BE M ENTIONED THAT IN ITS COMPUTATION OF DEDUCTION UNDER SECTION 80IB, TH E ASSESSEE HAS NOT EXCLUDED INTEREST AND SIMILAR INCOME, WHICH ARE NOT DERIVED FROM INDUSTRIAL UNDERTAKING. AS SUCH, DEDUCTION UNDER S ECTION 80IB IS AVAILABLE ONLY IN RESPECT OF INCOME DERIVED FROM IN DUSTRIAL UNDERTAKING. THEREFORE, INTEREST AND OTHER INCOME IS TO BE EXCLUDED FOR THIS PURPOSE. RELIANCE IS PLACED IN THIS REGAR D A DECISION OF SUPREME COURT IN THE CASE OF STERLING FOODS LTD. (2 37 ITR 579) AND ITAT, AHMEDABAD IN THE CASE OF MIRA INDUSTRIES (ITA NO.4085/AHD/1996) AND OTHERS. THEREFORE, IF AT THE APPELLATE STAGE, THE ASSESSEE IS FOUND TO BE ENTITLED FOR DEDUCTION UNDER SECTION 80IB, THE SAME IS TO BE ALLOWED ONLY AFTER EXCLUDIN G INTEREST AND OTHER INCOME ETC., 5.12 THE CIT (A) OBSERVED BRIEFLY THAT [PARA 15.3.(IV) THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT IN EARLIER YEARS. I AM INCLINED TO FOLLOW THE SAME FINDING . ITA NOS.982, 1001, 1416 & 1461/AHD/2006 5.13 DURING THE COURSE OF HEARING, THE REVENUE HAD NOT CONTESTED THE FINDING OF THE CIT (A), BUT, MERELY SUBMITTED THAT THE CIT (A) OUGHT TO HAVE UPHELD THAT SCRAP SALE IS NOT PROFIT DERIVED F ROM INDUSTRIAL UNDERTAKING AND, AS SUCH, NOT ELIGIBLE FOR DEDUCTIO N U/S 80-IB OF THE ACT. 5.14 ON THE OTHER HAND, THE LD A R SUBMITTED THAT T HE SCRAP SALES WERE INTEGRAL PART OF THE BUSINESS AS THE SAME WERE GENE RATED FROM MANUFACTURING ACTIVITIES. 5.15 WE HAVE GIVEN DUE WEIGHT-AGE TO THE RIVAL SUBM ISSIONS. AS COULD BE SEEN FROM THE REVENUES CONTENTION, IT WAS BEING GENERAL WITHOUT PIN- POINTING ANY SPECIFIC REASON AS TO WHY THE SCRAP SA LE WAS NOT A PROFIT DERIVED FROM THE INDUSTRIAL UNDER-TAKING. ON THE OTHER HAND, THERE IS A CONSIDERABLE FORCE IN THE CLAIM OF THE ASSESSEE THA T THE SCRAP SCALE WAS AN INTEGRAL PART OF ITS BUSINESS SINCE SCRAPS ARE B OUND TO ARISE WHILE INDULGING IN MANUFACTURING ACTIVITIES. 5.16 AS NO CONCRETE EVIDENCE WAS FORTH-COMING TO RE FUTE THE STAND OF THE CIT (A), WE SUSTAIN THE FINDING OF THE FIRST AP PELLATE AUTHORITY ON THIS ISSUE. 5.17 NO SPECIFIC ISSUE IS INVOLVED IN GROUND NO.13 AND, THUS, IT BECOMES INCONSEQUENTIAL. II. ITA NO.1001/06 AY 2001-02 (BY THE ASSESSE E) : 6. GROUND NOS. 1 & 2 : THE CIT (A) HAD CONFIRMED THE DISALLOWANCE OF MISCELLANEOUS EXPENSES OF RS.58,860/- AND WELFAR E EXPENSES OF RS.3,42,940/- ON THE PREMISE THAT THE ASSESSEE ITS ELF CONCEDED THAT BOTH THE ISSUES HAVE BEEN DECIDED AGAINST IT FOR TH E AYS 1999-00 AND 2000-01 FOR THE REASONS RECORDED THEREIN. ITA NOS.982, 1001, 1416 & 1461/AHD/2006 6.1 WITH REGARD TO WELFARE EXPENSES CLAIM OF RS.34 ,29,400/- , THE AO OBSERVED THAT NO FULL DETAILS OF BREAK-UP OF EXPENS ES WERE FURNISHED FOR VERIFICATION AND, THEREFORE, HE RESORTED TO TREAT 1 /10 TH OF TOTAL EXPENSES AMOUNTING TO RS.3,42,940/- AS NON-VERIFIABLE EXPENS ES. 6.2 IN CONSISTENCE WITH THE FINDING OF HIS PREDECES SOR, THE CIT (A) CONFIRMED THE TWIN DISALLOWANCE MADE BY THE AO. 6.3 DURING THE COURSE OF HEARING BEFORE US, THOUGH IT WAS CLAIMED BY THE LD. A R THAT COMPLETE DETAILS WERE PROVIDED TO THE AO, NO SUCH DETAILS WERE FURNISHED EVEN THIS STAGE FOR VERIFICA TION. IN THE ABSENCE OF SUCH DETAILS, WE ARE UNABLE TO JUSTIFY THE ASSESSEE S CLAIM. ACCORDINGLY, BOTH THE GROUNDS ARE DECIDED AGAINST THE ASSESSEE. 7. GROUND NO.3 : THE ASSESSEE WAS ALLOWED DEDUCTION U/S 80G OF THE ACT TO THE EXTENT OF RS.1,77,843/- AS AGAINST R S.2.04,516/- CLAIMED AND THE BALANCE OF RS.61,800/- WAS DISALLOWED FOR WANT OF PROOF. 7.1 IT WAS CONTENDED BEFORE THE CIT (A) THAT THERE WAS NO REQUIREMENT IN LAW TO FURNISH ORIGINAL RECEIPTS FOR CLAIMING DE DUCTION U/S 80G OF THE ACT. IT WAS ALSO SUBMITTED THAT IN ANY CASE, THE D EDUCTION WAS ALLOWABLE U/S 37 OF THE ACT. 7.2 ON CONSIDERATION OF THE ASSESSEES CONTENTIONS, THE CIT (A) HAD OBSERVED AS UNDER: 11.2NO DOUBT, THERE IS NO PROVISION IN THE ACT TO FILE THE ORIGINAL RECEIPTS OF DONATION FOR CLAIMING DEDU CTION. HOWEVER, THE ASSESSEE IS DUTY BOUND TO PRODUCE THE ORIGINAL RECEIPTS, IF THE ASSESSING OFFICER CALLS FOR THE SA ME FOR VERIFICATION. IN THE PRESENT CASE, THE ASSESSEE D ID NOT FURNISH SUCH RECEIPTS BEFORE THE ASSESSING OFFICER FOR VERI FICATION. FURTHER, IT APPEARS THAT THE ISSUE IS NOT OF PRODUC TION OF ORIGINAL RECEIPTS BUT OF EVIDENCE THAT THESE TRUSTS ARE ELIG IBLE FOR DEDUCTION U/S 80G OF THE ACT. BEFORE ME, IN THE PA PER BOOK, THE ITA NOS.982, 1001, 1416 & 1461/AHD/2006 ASSESSEE FILED COPY OF RECEIPT OF RS.15,000/- FROM DHAR SUKHA RAHAT AND RS.11,800/- FROM CHAMPION EDUCATIONAL SOC IETY. THESE RECEIPTS DO NOT INDICATE THAT THESE TRUSTS WE RE APPROVED U/S 80G FOR THE YEAR UNDER CONSIDERATION. FURTHER, THE ASSESSEE HAS NOT BEEN ABLE TO SHOW AS TO HOW THESE PAYMENTS WERE INCURRED WHOLLY SAND EXCLUSIVELY FOR THE PURPOSES O F BUSINESS. AS THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS, T HE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS CONFI RMED .. 7.3 THE SAME SET OF ARGUMENT WAS REPEATED BEFORE THIS B ENCH TOO. IT IS A LEGAL PARLANCE THAT FOR CLAIMING ANY DEDUCTION UNDER THE PROVISIONS OF ANY ACT FOR THAT MATTER, THE CLAIMANT WAS REQUIR ED TO FURNISH THE ORIGINAL RECEIPT(S) TO AVAIL SUCH A CLAIM AND THAT IT WAS FOR THE AUTHORITY TO VERIFY THE AUTHENTICITY OR OTHERWISE OF SUCH A C LAIM BEFORE ACCEDING TO THE CLAIMANTS REQUEST. IT GOES WITHOUT SAYING THA T NO CLAIM WHATSOEVER COULD BE ADMITTED IN THE ABSENCE OF ANY DOCUMENTARY PROOF. SINCE THE ASSESSEE WAS UNABLE TO FURNISH ANY DOCUMENTARY EVID ENCE EVEN AT THIS STAGE FOR VERIFICATION, WE DO NOT FIND ANY INFIRMIT Y IN THE STAND OF THE CIT (A) ON THIS POINT. 8. GROUND NO. 4 : DISALLOWANCE OF RS.40,709/- WAS MADE BY THE AO WITH REGARD TO AMORTIZATION OF PREMIUM PAID FOR LAND TAKEN ON LEASE. THE CIT (A), RELYING ON THE RULING OF HONBLE SUPRE ME COURT IN THE CASE OF GOVIND SUGAR MILLS LIMITED V. CIT REPORTED IN 23 2 ITR 319 (SC) HELD THAT THE EXPENDITURE RELATED TO ACQUISITION OF LEAS E HOLD RIGHTS OF THE LAND WAS CAPITAL IN NATURE. 8.1 DURING THE COURSE OF HEARING, THE LD. A R DREW OUR ATTENTION TO THE RULING OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DCIT V. SUN PHARMACEUTICAL INDIA LTD REPORTED IN (2009) 227 CTR (GUJ) 206 WHICH HAS BEEN HELD IN FAVOUR OF THE ASSESSEE. ITA NOS.982, 1001, 1416 & 1461/AHD/2006 8.2 WE HAVE DULY HEARD THE EITHER PARTY ON THE ISSU E. WITH DUE REGARDS, WE HAVE PERUSED THE RULING OF THE HONBLE JURISDICTIONAL COURT CITED SUPRA. THE ISSUE BEFORE THE HONBLE COURT WA S THAT THE ASSESSEE HAD ACQUIRED LAND ON LEASE FOR A PERIOD OF 99 YEARS AND MAKING PAYMENT OF ADVANCE RENT IN THE SUM OF RS.48 CRORES AND PAYI NG NOMINAL MONTHLY RENT OF RS.40 PER MONTH. AFTER ANALYZING THE ISSUE , THE HONBLE COURT CONCLUDED THAT THE ASSESSEE ACQUIRING LAND ON LEASE FOR A PERIOD O F 99 YEARS MAKING PAYMENT OF ADVANCE RENT IN THE SUM OF RS.48 CRORES AND PAYING NOMINAL MONTHLY RENT OF RS.40 PER MONTH, ADV ANCE RENT PAID WAS ALLOWABLE REVENUE EXPENDITURE. 8.3 INCIDENTALLY, THE HONBLE SUPREME COURT IN THE CASE OF THE CIT V. MADRAS AUTO SERVICE PVT. LTD REPORTED IN 233 ITR 46 8 (SC) HAD RULED THUS: ALL THESE CASES HAVE LOOKED UPON EXPENDITURE WHICH DID BRING ABOUT SOME KIND OF AN ENDURING BENEFIT TO THE COMPA NY AS REVENUE EXPENDITURE WHEN THE EXPENDITURE DID NOT BRING INTO EXISTENCE ANY CAPITAL ASSET FOR THE COMPANY. THE ASSET WHICH WAS CREATED BELONGED TO SOMEBODY ELSE AND THE COMPANY DERIVED A N ENDURING BUSINESS ADVANTAGE BY EXPENDING THE AMOUNT. IN ALL THESE CASES, THE EXPENSES HAVE BEEN LOOKED UPON AS HAVING BEEN M ADE FOR THE PURPOSE OF CONDUCTING THE BUSINESS OF THE ASSESSEE MORE PROFITABLY OR MORE SUCCESSFULLY. IN THE PRESENT CAS E ALSO, SINCE THE ASSET CREATED BY SPENDING THE SAID AMOUNTS DID NOT BELONG TO THE ASSESSEE BUT THE ASSESSEE GOT THE BUSINESS ADVANTAG E OF USING MODERN PREMISES AT A LOW RENT, THUS SAVING CONSIDER ABLE REVENUE EXPENDITURE FOR THE NEXT 39 YEARS, BOTH THE TRIBUNA L AS WELL AS THE HIGH COURT HAVE RIGHTLY COME TO THE CONCLUSION THAT THE EXPENDITURE SHOULD BE LOOKED UPON AS REVENUE EXPEND ITURE. 8.4 IN CONFORMITY WITH THE RULINGS OF THE HONBLE J URISDICTIONAL HIGH COURT AS WELL AS THE HONBLE SUPREME COURT CITED SU PRA, WE DIRECT THE AO TO TREAT RS.40,709/- AS REVENUE EXPENDITURE. IT IS ORDERED ACCORDINGLY. ITA NOS.982, 1001, 1416 & 1461/AHD/2006 9. GROUND NO.5 : THERE WAS AN ENHANCEMENT OF DIRECT COST OF RS. 1,44,075/- WHILE COMPUTING DEDUCTION U/S 80HHC OF T HE ACT. IT WAS THE VIEW OF THE AO THAT WHILE COMPUTING THE DIRECT COST OF TRADING GOODS AT RS.32,51,965/-, THE ASSESSEE DID NOT CONSIDER THE E XPENSES OF RS.26.73 LAKHS INCLUDED IN MANUFACTURING AND OTHER EXPENSES, THE SAME SHOULD BE CONSIDERED AS DIRECT COST AND SHOULD BE REDUCED PROPORTIONATELY OUT OF EXPORT TURNOVER OF TRADING GOODS IN THE RATIO OF EXPORT TURNOVER OF TRADING GOODS AND MANUFACTURING GOODS. ACCORDINGLY , RS.1,44,075/- WAS ADDED TO THE DIRECT COST OF TRADING GOODS OF RS.32. 51 LAKHS. 9.1 AFTER DUE CONSIDERATION OF THE ASSESSEES CONTE NTIONS, THE CIT (A) TOOK A VIEW THAT SINCE HIS PREDECESSOR FOR THE REAS ONS RECORDED IN HIS IMPUGNED ORDER FOR THE AY 1998-99 REJECTED THE CLAI M OF THE ASSESSEE AND IN CONFORMITY WITH HIS REASONING, HE CONFIRMED THE AOS ACTION IN ALLOCATING THE EXPORT EXPENSES TOWARDS DIRECT COST OF EXPORT, AND, THUS, REJECTING THE ASSESSEES CLAIM. 9.2 HOWEVER, WE HAVE NOTICED THAT THE EARLIER BENCH IN ITS FINDING FOR THE AY 1998-99 IN THE ASSESSEES OWN CASE ON A SIMI LAR ISSUE OBSERVED THAT 11THE ASSESSEE CLAIMED BEFORE US THAT IT HAS ALR EADY CONSIDERED THE EXPORT EXPENSES AS PART OF INDIRECT COST OF EXPORTS WHILE COMPUTING DEDUCTION U/S 80HHC ON PROFIT OF EX PORTS OF TRADING GOODS. WE FIND THAT THE ASSESSEES CLAIM TH AT THESE DIRECT EXPENSES ARE ALREADY INCLUDED AS PART OF INDIRECT C OST OF EXPORT, THIS FACT IS EMANATING FROM THE ORDERS OF THE LOWER AUTHORITIES AND NEED FRESH EXAMINATION AT THE LEVEL OF THE ASSESSIN G OFFICER, ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. ITA NOS.982, 1001, 1416 & 1461/AHD/2006 9.3 AS THE ISSUE BEFORE US IS SIMILAR TO THE ISSUE WHICH HAS BEEN REVERTED BACK TO THE FILE OF THE AO FOR A FRESH LOO K FOR THE AY 1998-99 BY THE EARLIER BENCH, WE ARE OF THE CONSIDERED VIEW TH AT THE ISSUE BEFORE US ALSO REQUIRES TO BE REMITTED BACK TO THE FILE OF TH E AO FOR FRESH EXAMINATION, IN CONSISTENCY WITH THE EARLIER BENCH S FINDING. IT IS ORDERED ACCORDINGLY. 10. GROUND NO.6 : REJECTING THE ASSESSEES CLAIM THAT FOR COMPUTATION OF DEDUCTION U/S 80HHC, IT HAD ALLOCATED THE INDIRE CT COST OF VADODARA UNIT ONLY, INSTEAD OF INDIRECT COST OF THE ENTIRE B USINESS OF THE ASSESSEE ON THE PLEA THAT THE ENTIRE EXPORT OF TRADING GOODS WAS FROM BARODA UNIT AND AS PER S.80HHC (3), PROFIT DERIVED FROM SUCH EX PORT SHALL BE THE EXPORT TURNOVER OF TRADING GOODS AS REDUCED BY DIRE CT AND INDIRECT COST ATTRIBUTED TO SUCH EXPORTS, THE AO TOOK A VIEW THAT AS PER S.80HHC, NO COMPUTATION IS TO BE MADE ON THE BASIS OF TRADING O F SEPARATE UNITS EVEN IF SEPARATE BOOKS OF ACCOUNTS WERE MAINTAINED FOR E ACH UNIT. IT WAS, FURTHER, OBSERVED BY THE AO THAT IN ACCORDANCE WITH S. 80HHC, ALL COSTS OTHER THAN THE DIRECT COSTS WERE REQUIRED TO BE ALL OCATED AS INDIRECT COST. 10.1 AFTER CONSIDERING THE ASSESSEES SUBMISSION, T HE CIT (A) HAD OBSERVED THAT SIMILAR ISSUE WAS INVOLVED IN THE PRE VIOUS ASSESSMENT YEARS TOO AND FOR THE REASONS RECORDED IN HIS APPEL LATE ORDER, HIS PREDECESSOR REJECTED THE ASSESSEES CLAIM FOR THE A YS 1998-99 TO 2000- 01. FOLLOWING HIS PREDECESSORS REASONING, HE HELD THAT THE AO WAS JUSTIFIED IN CONSIDERING THE INDIRECT COST OF THE E NTIRE BUSINESS AND NOT ONLY THE INDIRECT COST OF VADODARA UNIT FOR THE PUR POSE OF COMPUTATION OF DEDUCTION U/S 80HHC OF THE ACT IN RESPECT OF TRADED GOODS. ITA NOS.982, 1001, 1416 & 1461/AHD/2006 10.2 BEFORE US, THE LD. AR HAD MAGNANIMOUSLY CONCED ED THAT SIMILAR ISSUE FOR THE EARLIER ASSESSMENT YEARS HAS BEEN DEC IDED AGAINST THE ASSESSEE BY THE EARLIER BENCH. 10.3 WE HAVE, WITH DUE REGARDS, PERUSED THE FINDING S OF THE EARLIER BENCH ON A SIMILAR ISSUE WHEREIN, IT HAS BEEN OBSER VED: 10 WE ARE OF THE VIEW THAT SECTION 80HHC (3)(C)(II) PROVIDES A FORMULA FOR CALCULATING THE PROFIT DERIV ED FROM EXPORT OF TRADING GOODS AND THE PROFIT FROM SUCH EXPORTS S HALL BE THE EXPORT TURN IN RESPECT OF SUCH TRADING GOODS AS RED UCED BY THE DIRECT AND INDIRECT COSTS ATTRIBUTABLE TO EXPORT OF SUCH TRADING GOODS. INDIRECT COSTS HAS BEEN DEFINED IN EXPLANAT ION (E) TO THE SAID SUB-SECTION WHICH MEANS, NOT BEING DIRECT COST , ALLOCATED IN THE RATIO OF THE EXPORT TURNOVER IN RESPECT OF TRAD ING GOODS TO THE TOTAL TURNOVER. IT MEANS THAT FOR DETERMINING THE INDIRECT COST ATTRIBUTABLE TO THE EXPORT OF TRADING GOODS ALL THE COST EXCEPT THE DIRECT COST HAS TO BE ALLOCATED IN THE RATIO OF EXP ORT TURNOVER IN RESPECT OF TRADING GOODS TO THE TOTAL TURNOVER. IN VIEW OF THE FORMULA, WHEN THE TOTAL TURNOVER OF THE BUSINESS IS CONSIDERED FOR THE COMPUTATION OF DEDUCTION U/S 80HHC OF THE A CT, WHY THE INDIRECT EXPENSES RELATABLE TO ONLY THAT UNIT WHICH EXPORT TRADING GOODS, HAS TO BE CONSIDERED. IN VIEW OF THESE FIND INGS, WE UPHOLD THE FINDING OF CIT (A) AND THIS ISSUE OF THE ASSESSEES APPEAL IS DISMISSED. 10.4 IN CONFORMITY WITH THE FINDING OF THE EARLIER BENCH REFERRED ABOVE, WE DECIDE THE ISSUE AGAINST THE ASSESSEE. IT IS OR DERED ACCORDINGLY. 11. GROUND NO.7 : THE AO HAD REDUCED 90% OF THE FOLLOWING AMOUNTS FROM THE PROFIT OF THE BUSINESS FOR THE PURPOSES OF COMPUTING DEDUCTION U/S 80HHC OF THE ACT ON THE GROUND THAT THEY DID NO T CONSTITUTE BUSINESS INCOME: (A INTEREST INCOME ON AMOUNTS OVER DUE FROM CUSTO MERS RS.2,44,65,000 (B) INTEREST ON STAFF LOAN 2,89, 730 (C) INTEREST ON NSC 742 (D) INTEREST ON SBI BONDS 95,00 0 (E) INTEREST ON INCOME-TAX REFUND 63,97,986 (F) ROYALTY 6,37,177 (G) SHORTAGES/DAMAGES CLAIM FROM SUPPLIERS 1,31,421 (H) UNCLAIMED CREDIT WRITTEN OFF 2,28,449 ITA NOS.982, 1001, 1416 & 1461/AHD/2006 3,22,45,505 11.1 THE CIT (A), AFTER CONSIDERING THE ASSESSEES SUBMISSION, HAD MORE OR LESS SUSTAINED/CONFIRMED THE STAND OF THE A O. 11.2 DURING THE COURSE OF HEARING BEFORE US, THE LD . AR FAIRLY CONCEDED THAT ALMOST ALL THE ISSUES RAISED IN GROUND NO.7 HA S BEEN DECIDED AGAINST THE ASSESSEE BY THE EARLIER BENCH IN THE AS SESSEES OWN CASE FOR THE ASST. YEARS 1998-99 AND 1997-98[SOURCE: APP ENDIX-I.]. 11.3 ON A PERUSAL OF THE CIT (A)S FINDING, WE OBS ERVE THAT THE ISSUES OF INTEREST INCOME ON AMOUNTS OVERDUE FROM CUSTOMERS A ND ALSO ROYALTY, AMONG OTHERS, HAVE BEEN DECIDED AGAINST THE ASSESSE E, FOLLOWING HIS PREDECESSORS FINDINGS. THE ASSESSEE HAD ALSO NOT BROUGHT ANY EVIDENCE TO SUPPORT ITS CLAIM THAT ROYALTY WAS NOT IN THE NATURE OF BROKERAGE, COMMISSION, INTEREST, RENT OR CHARGES. WE, THEREFORE, AGREE WITH THE REASONING OF THE CIT (A) ON THESE TWO ISSU ES. 11.4 WITH REGARD TO OTHER ISSUES, WE HAVE DULY PERU SED THE FINDING OF THE EARLIER BENCH WHEREIN IT HAS BEEN OBSERVED THAT 14 WE HAVE HEARD THE RIVAL SUBMISSIONS AND NOTICED THAT THE ASSESSEE HAS FILED COMPLETE DETAILS OF ITE MS EXCLUDED FROM PROFIT OF BUSINESS/INDUSTRIAL UNDERTA KING ON ACCOUNT OF STAFF LOAN, NSC, FDR, SBI BONDS, INCOME- TAX REFUND, OTHERS, INSURANCE CLAIM, MISC. INCOME, UNC LAIMED CREDIT WRITTEN OFF, EXPORT INCENTIVES AND DIVIDEND. THE LD. COUNSEL FOR THE ASSESSEE ON THESE ONLY MADE SUBMISS IONS THAT NETTING SHOULD BE ALLOWED IN VIEW OF DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SHRI RAM HO NDA POWER EQUIPMENT (2007) 289 ITR 475 (DEL). ON QUERY FROM THE BENCH, THE LD. COUNSEL COULD NOT EXPLAIN ANY NE XUS WITH EXPORT OF THESE OTHER INCOMES LIKE INCOME-TAX REFUNDS, NSC INTEREST, INTEREST ON SBI BONDS, INSURANCE CLAI M, MISC. INCOME AND UNCLAIMED CREDIT WRITTEN OFF. ALSO, THE LD. COUNSEL FOR THE ASSESSEE MADE ALTERNATIVE PLEA THAT ONLY NETTING SHOULD BE ALLOWED AND FOR THIS COMMON GROUN D WAS RAISED IN THESE TWO APPEALS OF THE ASSESSEE. IN VI EW OF THIS, ITA NOS.982, 1001, 1416 & 1461/AHD/2006 WE ARE OF THE VIEW THAT THE ASSESSEE IS NOT ENTITLE D TO ANY NETTING OFF ON THESE OTHER INCOMES AS WELL AS 90% WILL BE EXCLUDED FROM THE GROSS AMOUNT OF OTHER INCOMES. ACCORDINGLY, THIS ISSUE OF THE ASSESSEES APPEAL IS DISMISSED. 11.5 IN CONSONANCE WITH THE FINDING OF THE EARLIER BENCH (SUPRA) AND ALSO IN LIEU OF THE ASSESSEES AVERMENT (SEE: APPEN DIX-I), WE DECIDE THIS GROUND AGAINST THE ASSESSEE. 12. GROUND NO.8 : WITH REGARD TO THE CIT (A)S STAND IN CONFIRMING TH E ACTION OF THE AO THAT THE GROSS AMOUNT OF INTEREST AND OTHER INCOME WAS REQUIRED TO BE EXCLUDED FOR THE PURPOSE OF COMPUTIN G DEDUCTION U/S 80 HHC OF THE ACT AND NO DEDUCTION SHOULD BE GRANTED F OR EXPENDITURE INCURRED FOR EARNING THE SAID INCOME ETC., WE FIND THAT THIS GROUND ALSO GOES AGAINST THE ASSESSEE IN VIEW OF THE EARLIER BE NCHS FINDING RECORDED IN PARA 14 OF ITS ORDER WHICH IS EXTRACTED SUPRA. THIS FACT HAS ALSO BEEN FAIRLY CONCEDED BY THE ASSESSEE [SOURCE: APPENDIX I]. ACCORDINGLY, THIS ISSUE IS DECIDED AGAINST THE ASSE SSEE. 13. GROUND NO.9 & 10 : THE CIT(A) HAD CONFIRMED THE ACTION OF THE AO IN REDUCING FORM INCOME ELIGIBLE FOR DEDUCTION U /S 80-IB THE FOLLOWING AMOUNTS ON THE GROUND THAT THESE INCOMES WERE NOT D ERIVED FROM THE INDUSTRIAL UNDERTAKING: (A) INTEREST INCOME ON AMOUNTS OVERDUE FROM CUSTOME RS RS.53,16,627 (B) INSURANCE CLAIM ON FG AND RM 4,98,562 (C) INTEREST ON STAFF LOAN 47,122 (D) SALES OF OLD NEWSPAPER/SCRAP 1,50,997 (E) DISCOUNT RECEIVED AGAINST RM 1,54,307 (F) UNCLAIMED CREDIT WRITTEN OFF 57,205 TOTAL 62,24,820 13.1 IN RESPECT OF (A) I.E., INTEREST INCOME ON AMO UNTS OVERDUE FROM CUSTOMERS OF RS.53.16 LAKHS, THE HONBLE JURISDICTI ONAL HIGH COURT IN ITS ITA NOS.982, 1001, 1416 & 1461/AHD/2006 RULING IN THE CASE OF NIRMA INDUSTRIES LTD V. DCIT REPORTED IN 283 ITR 402 (GUJ) HAD OBSERVED THAT: THE TRIBUNAL WAS, THEREFORE, NOT JUSTIFIED IN HOLDI NG THAT WHILE COMPUTING DEDUCTION UNDER SECTION 80-I OF THE ACT, INTEREST RECEIVED FROM TRADE DEBTORS TOWARDS LATE PAYMENT OF SALES CONSIDERATION IS REQUIRED TO BE EXCLUDED FROM THE P ROFITS OF THE INDUSTRIAL UNDERTAKING AS THE SAME CANNOT BE STATED TO HAVE BEEN DERIVED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTA KING. 13.2 IN CONFORMITY WITH THE RULING OF THE HONBLE J URISDICTIONAL HIGH COURT, THE AO IS DIRECTED NOT TO INCLUDE THE INTERE ST RECEIVED FROM THE TRADE DEBTORS TOWARDS LATE PAYMENT OF SALE CONSIDER ATION FROM THE PROFITS OF THE INDUSTRIAL UNDERTAKING. 13.3 WITH REGARD TO (B) INSURANCE CLAIM OF FINISHED GOODS AND RAW MATERIAL AMOUNTING TO RS.4,98,562/-, THE CIT (A) HA D DIRECTED THE AO TO VERIFY WHETHER THESE RECEIPTS WERE ON ACCOUNT OF LO SS OF FINISHED GOODS OR RAW MATERIAL OR CAPITAL GOODS. IF THE RECEIPTS WERE ON ACCOUNT OF LOSS OF FINISHED GOODS OR RAW MATERIAL, THE SAME MAY BE TREATED AS BUSINESS INCOME AND NOT TO BE EXCLUDED TO THE EXTENT OF 90%. SINCE THE ISSUE HAS ALREADY BEEN REMITTED BACK TO THE AO FOR VERIFI CATION, THE ASSESSEE IS DIRECTED TO FURNISH THE REQUIRED DETAILS BEFORE THE AO FOR HIS VERIFICATION. 13.4 WITH REGARD TO (C) INTEREST ON STAFF LOAN, WE FIND THAT THE SAME WAS IN THE NATURE OF INCOME FROM OTHER SOURCES AND WAS NOT PROFIT FROM THE BUSINESS AND, THEREFORE, IT WAS TO BE FULLY EXCLUDE D FROM THE BUSINESS PROFIT. 13.5 IN RESPECT OF (D) SALE OF OLD NEWSPAPERS, WE FIND THAT THIS WAS THE RECOVERY AGAINST THE EXPENSES INCURRED FOR THE PURP OSE OF BUSINESS AND, THUS, THERE WAS NO ELEMENT OF INCOME INVOLVED. THE AO IS DIRECTED NOT TO EXCLUDE THIS RECEIPT FROM THE PROFITS OF THE BUS INESS. ITA NOS.982, 1001, 1416 & 1461/AHD/2006 13.6 WITH REGARD TO (E) DISCOUNT RECEIVED AGAINST R AW MATERIALS OF RS.1,54,307/-, IT WAS THE CONTENTION OF THE ASSESSE E THAT IT WAS REDUCTION IN PURCHASE PRICE AND NOT IN THE NATURE OF INCOME. THERE IS FORCE IN THE CONTENTION OF THE ASSESSEE ON THIS SCORE. THE AO I S, THEREFORE, DIRECTED NOT TO EXCLUDE THIS INCOME FROM THE PROFITS OF THE BUSINESS. 13.7 HOWEVER, THE ASSESSEES CLAIM FOR THE (F) UNCL AIMED CREDIT WRITTEN OFF WAS A SMALL BALANCE OF PARTIES WHICH WERE WRITT EN OFF HAS BEEN TURNED DOWN BY THE CIT (A) FOLLOWING HIS PREDECESSORS FIN DING. THE ASSESSEES CONTENTION THAT THOSE WERE INCURRED IN THE NORMAL C OURSE OF BUSINESS IS NOT CONVINCING WITHOUT ANY PROOF. WE, THEREFORE, C ONFIRM THE CIT (A) STAND ON THIS ISSUE. 14. GROUND NO.11: (I) CHARGING OF INTEREST U/S 234B OF THE ACT IS MA NDATORY AND CONSEQUENTIAL IN NATURE AND, THEREFORE, THIS PART O F THE GROUND IS DISMISSED AS NOT MAINTAINABLE; & (II) INTEREST U/S 234D OF THE ACT CANNOT BE CHARGED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN LIEU OF THE FINDING OF THE HONBLE DELHI E BENCH IN THE CASE OF ITO V. EKTA PROMOTER PVT. LTD. REPORTED IN 117 TTJ 289 WHEREIN IT HAS BEEN THAT INTEREST UNDER SECTION 234D COULD NOT BE CHARGED IN RESPECT OF ASSESSMENT YEARS FALLING P RIOR TO ASSESSMENT YEAR 2004-05 . III. ITA NO.1416/AHD/06 : A.Y. 2002-2003 (BY TH E DEPARTMENT): 15. AFTER CAREFUL CONSIDERATION OF THE SUBMISSION S OF THE REVENUE AS WELL AS THE ASSESSEE, THOROUGH PERUSAL OF THE RELEV ANT CASE RECORDS AND ALSO DOCUMENTARY EVIDENCES PRODUCED BY THE LD. A R ALONG WITH VARIOUS CASE LAWS, WE HAVE ADJUDICATED THE APPEAL AS UNDER: ITA NOS.982, 1001, 1416 & 1461/AHD/2006 16. GROUND NOS. L & 2 : ROYALTY DISALLOWANCE OF RS.4.28 CRORES: THIS ISSUE HAS BEEN DEALT WITH IN THE REVENUES APP EAL IN THE ASSESSEES OWN CASE FOR THE AY 2001-02 [GROUND NOS. 3 & 4] SUPRA. THE FINDINGS RECORDED THEREIN HOLD WELL FOR THIS AY ALSO. IT IS ORDERED ACCORDINGLY. 17. GROUND NOS.3 & 4: EXCLUSION OF SALES TAX & EXCISE DUTY : INCIDENTALLY, THIS ISSUE HAS ALSO BEEN COVERED IN T HE REVENUES APPEAL FOR THE AY 2001-02 REFERRED ABOVE. THE FIND INGS OF THIS BENCH FOR THE AY 2001-02 HOLD WELL FOR THIS AY UNDER CHALLENG E. IT IS ORDERED ACCORDINGLY. 18. GROUND NOS.5, 6 & 7: DEDUCTION OF 90% OF INTEREST AND OTHER INCOME FOR D EDUCTION U/S 80HHC OF THE ACT : (1) SALE OF VALUE OF SCRAP: 18.1 THE EARLIER BENCH IN THE ASSESSEES OWN CASE F OR THE AYS 98-99 AND 97-98 IN ITA NOS.3945/2002-03 & 2911/2003-04 DA TED 21.11.2008 HAD OBSERVED THUS: 5IT IS NOTICED THAT SCRAP SALE FORM PART OF SA LE OF SCRAP GENERATED DURING THE MANUFACTURING PROCESS OF THE ASSESSEE AND THIS BEING AN INTEGRAL PART OF THE MANUFACTURING ACTIVITY, THE INCOME THERE-FROM IS TO BE CONSIDERED FOR THE PURPOSE OF WORKING OUT DEDUCTION U/S 80HH OF THE ACT. HOWEVER, AS REGARDS TO THE CLAIM OF DEDUCTION U/S 80HHC, THIS INCOME DOES NOT COME WITH IN THE PURVIEW OF EXPORT INCOME. HENCE, IN VIEW OF THE LA TEST DECISION OF THE HONBLE APEX COURT IN THE CASE OF C IT V. K. RAVINDRANATHAN NAIR (2007) 295 ITR 228 (SC), THE AS SESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80HHC OF THE ACT. HOWEVER, THIS WILL BE INCLUDED IN THE FORMULA FOR THE PURPOS ES OF COMPUTATION OF DEDUCTION U/S 80HHC OF THE ACT AS PR OFIT OF THE BUSINESS. IN VIEW OF THESE DIRECTIONS, THE ASSE SSING OFFICER WILL RE-COMPUTE THE INCOME WITH REGARD TO D EDUCTION U/S 80HH AND 80HHC OF THE ACT. 18.2 ACCORDINGLY, THIS ISSUE GOES IN FAVOUR OF THE ASSESSEE. ITA NOS.982, 1001, 1416 & 1461/AHD/2006 (2) DISCOUNT RECEIVED AGAINST RAW MATERIALS: 18.3 THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESS EE BY THE EARLIER BENCH (FOR THE A.YS 1998-99 & 1997-98) IN THE ASSES SEES OWN CASE. THE FINDING OF THE BENCH IS AS FOLLOWS: 6..AFTER HEARING THE RIVAL CONTENTIONS, IT IS O BSERVED THAT THE DISCOUNT RECEIVED ON EARLY PAYMENT TO SUPP LIERS AND THE LD COUNSEL FOR THE ASSESSEE ADMITTED THAT I T IS IN FACT DOES NOT AMOUNT TO INCOME AND IT ONLY REDUCES THE COSTS, THEREFORE, THE SAME CANNOT BE REDUCED FOR CO MPUTING PROFIT OF BUSINESS. BUT, WE ARE OF THE VIEW THAT W HEN THIS DOES NOT AMOUNT TO INCOME AND IT ONLY REDUCES THE C OST, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80HHC OF THE ACT ON THIS AMOUNT AND, ACCORDINGLY, IN VIEW OF THIS DI RECTION, THE ASSESSING OFFICER WILL RE-COMPUTE THE DEDUCTION U/S 80HHC OF THE ACT. 18.4 THUS, THIS ISSUE GOES AGAINST THE ASSESSEE. (3) INTEREST INCOME EARNED FROM CLIENTS: 18.5 INCIDENTALLY, THE CIT (A) HAD, IN FACT, FAVOUR ED THE REVENUE WITH REASONING THAT THE AO WAS JUSTIFIED IN EXCLUDING TH IS INCOME FROM PROFITS OF BUSINESS. THE ASSESSEE HAS ALSO CONCEDED DURING THE COURSE OF HEARING THAT THIS ISSUE GOES AGAINST IT (REFER: APP ENDIX IV). (4) SALE CONSIDERATION OF OLD NEWSPAPER/SCRAP: 18.6 AS THESE WERE RECOVERIES AGAINST THE EXPENSES INCURRED FOR THE PURPOSE OF BUSINESS AND RIGHTLY OBSERVED BY THE CIT (A), THERE WAS NO ELEMENT OF INCOME INVOLVED. THE CIT (A) WAS, THERE FORE, JUSTIFIED IN DIRECTING THE AO NOT TO EXCLUDE THOSE RECEIPTS FROM THE PROFITS OF THE BUSINESS. WE, THEREFORE, FIND NO INFIRMITY TO MEDD LE WITH THE FINDING OF THE CIT (A). ACCORDINGLY, THIS ISSUE GOES AGAINST T HE REVENUE. 19. GROUND NOS.8 & 9: DISALLOWANCE OF DEDUCTION U/S 81-B (PITHAMPUR PLANT): ITA NOS.982, 1001, 1416 & 1461/AHD/2006 19.1 BY THE BY, A SIMILAR ISSUE TO THAT OF THE PRES ENT ONE HAS BEEN CONSIDERED ELABORATELY IN THE REVENUES APPEAL FOR THE AY 2001-02 IN THE ASSESSEES OWN CASE (SUPRA). THE FINDINGS REC ORDED THEREIN ARE SQUARELY APPLICABLE FOR THIS ASSESSMENT YEAR TOO. IT IS ORDERED ACCORDINGLY. 20. GROUND NOS.10 & 11: SCRAP SALE INCLUDED IN THE PROFIT FROM INDUSTRIAL. U/T WHILE COMPUTING DEDUCTION U/S 80-IB : 20.1 THE AO IN HIS IMPUGNED ORDER HAD STATED THAT - 12.1. WITHOUT PREJUDICE TO THE ABOVE, IT IS TO MEN TION HERE THAT THE ASSESSEE IN ITS COMPUTATION OF DEDUCTION U/S 8 0IB, THE ASSESSEE HAS NOT EXCLUDED INTEREST AND SIMILAR INCO ME, WHICH ARE NOT DERIVED FROM INDUSTRIAL UNDERTAKING. AS SUCH, DEDUCTION UNDER SECTION 80IB IS AVAILABLE ONLY IN RESPECT OF INCOME DERIVED FROM INDUSTRIAL UNDERTAKING RELIANCE IS PLACED IN THIS R EGARD ON THE DECISION OF HONOURABLE SUPREME COURT IN THE CASE OF STERLING FOODS LTD. (237 ITR 579) AND OF THE ITAT, AHMEDABAD IN THE CASE OF MIRA INDUSTRIES (ITA NO.4085/AHD/1996) AND OTHERS. FURTHER, THE ASSESSEE IS NOT MAINTAINING ANY SEPARA TE BOOKS OF ACCOUNT FOR THE PURPOSE OF SO CALLED NEW INDUSTRIAL UNDER-TAKING AND IS CLAIMING DEDUCTION ON THE BASIS OF WORKING P ROVIDED BY SOME COST ACCOUNTANT. THEREFORE, IF AT THE APPELLAT E STAGE, THE RELIEF IS GRANTED TO THE ASSESSEE, THE INTEREST AND OTHER INCOME SHOULD BE EXCLUDED WHILE GRATING THE RELIEF AND DIR ECTION TO EXAMINE THE QUANTUM OF DEDUCTION U/S 80IB SHOULD B E GIVEN ITA NOS.982, 1001, 1416 & 1461/AHD/2006 20.2 ON APPEAL, THE CIT (A) OBSERVED BRIEFLY THAT [PARA 18.5 (IV) THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT I N EARLIER YEARS. I AM INCLINED TO FOLLOW THE SAME FINDING . 20.3 DURING THE COURSE OF HEARING, THE REVENUE HAD NOT CONTESTED THE FINDING OF THE CIT (A), BUT, MERELY SUBMITTED THAT THE CIT (A) OUGHT TO HAVE UPHELD THAT SCRAP SALE IS NOT PROFIT DERIVED F ROM INDUSTRIAL UNDERTAKING AND, AS SUCH, NOT ELIGIBLE FOR DEDUCTIO N U/S 80-IB OF THE ACT. 20.4 ON THE OTHER HAND, THE LD A R SUBMITTED THAT T HE SCRAP SALES WERE INTEGRAL PART OF THE BUSINESS AS THE SAME WERE GENE RATED FROM MANUFACTURING ACTIVITIES. 20.5 WE HAVE GIVEN DUE WEIGHT-AGE TO THE RIVAL SUBM ISSIONS. AS COULD BE SEEN FROM THE REVENUES CONTENTION, IT WAS BEING GENERAL WITHOUT PIN- POINTING ANY SPECIFIC REASON AS TO WHY THE SCRAP SA LE WAS NOT A PROFIT DERIVED FROM THE INDUSTRIAL UNDER-TAKING. ON THE OTHER HAND, THERE IS A CONSIDERABLE FORCE IN THE CLAIM OF THE ASSESSEE THA T THE SCRAP SCALE WAS AN INTEGRAL PART OF ITS BUSINESS SINCE SCRAPS ARE B OUND TO ARISE WHILE INDULGING IN MANUFACTURING ACTIVITIES. 20.6 AS NO CONCRETE EVIDENCE WAS FORTH-COMING TO RE FUTE THE STAND OF THE CIT (A) FROM THE REVENUES ANGLE, WE SUSTAIN TH E FINDING OF THE FIRST APPELLATE AUTHORITY ON THIS ISSUE. IV. ITA NO.1461/AHD/06 : A.Y. 2002-2003 (BY THE ASSESSEE): 21. GROUND NO.1 : WITH REGARD TO THE DISALLOWANCE OF RS.3,212,377/- BY INVOKING THE PROVISIONS OF S.14A OF THE ACT, IT HAS BEEN OBSERVED THAT DURING THE YEAR, THE ASSESSEE RECEIVED DIVIDEND INC OME OF RS.32.13 LAKHS AND CLAIMED THE SAME AS EXEMPT U/S 10(33) OF THE ACT ON GROSS ITA NOS.982, 1001, 1416 & 1461/AHD/2006 BASIS WITHOUT ALLOCATING ANY EXPENDITURE. THE AO E STIMATED THE EXPENSES ON ACCOUNT OF INFRASTRUCTURAL FACILITIES, SERVICES OF THE EMPLOYEES ETC., AT 10% OF DIVIDEND INCOME AND ALLO WED EXEMPTION ON NET DIVIDEND INCOME THEREBY DISALLOWING EXPENDITURE OF RS.3,21,377/-. 21.1 AFTER CONSIDERING THE ASSESSEES CONTENTION, B ROADLY DELIBERATING THE PROVISIONS OF S. 115-O, EXPLANATORY MEMORANDUM OF THE FINANCE ACT, 1997, EXTENSIVELY QUOTING THE RULINGS OF VARIO US JUDICIARIES, CHIEFLY: (I) CWT V. MUTHU ZULAIKHA (2000) 245 ITR 800 (MAD)9 FB); (II) CBDT V. COCHIN GOODS TRANSPORT ASSN. (1999) 23 6 ITR 993(KER) (III) V.M.DAKSHINAMURTHY MUDALIAR V. TRO 202 ITR 94 6 (MAD); (IV) ACIT V. DAKESH S SHAH 90 ITD 519; & (V) HARISH KRISHNA KANT BHATT V. IOT 91 ITD 311 (AH MD) 21.2 THE CIT (A) OBSERVED THUS: 5.2.9. THE APPELLANT ARGUED THAT BORROWED FUNDS W ERE NOT USED FOR THE PURPOSE OF PURCHASE OF SHARES AND THER EFORE, NO DISALLOWANCE ON ACCOUNT OF INTEREST CAN BE MADE. A PERUSAL OF THE ASSESSMENT ORDER SHOW THAT NO DISALLOWANCE ON A CCOUNT OF INTEREST EXPENDITURE RELATABLE TO THE ACQUISITION O F SHARES WAS MADE BY THE ASSESSING OFFICER AND, THEREFORE, THIS ARGUMENT OF THE ASSESSEE IS IRRELEVANT. AS REGARDS QUANTUM OF DISALLOWANCE, THE ASSESSEE HAS NOT MADE ANY SUBMISSION AS TO HOW THE DISALLOWANCE IS UNREASONABLE. IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF UNITED GENERAL TRUST 2 00 ITR 488 (SC) THAT THE PROPORTIONATE MANAGEMENT EXPENSES CAN BE ALLOCATED TO THE EARNING OF DIVIDEND INCOME. THE A SSESSEE DID NOT FURNISH ANY DETAILS OR ESTIMATE OF EXPENSES INC URRED ON EARNING OF DIVIDEND INCOME. THE DISALLOWANCE OF RS .3,21,377/- FOR EARNING DIVIDEND INCOME OF RS.32,13,766/- APPEA RS TO BE REASONABLE AND IS CONFIRMED. 21.3 AFTER GIVING DUE WEIGHT-AGE TO THE ASSESSEES CONTENTIONS, PERUSAL OF THE OBSERVATIONS OF THE CIT (A) REFERRED ABOVE A ND ALSO VARIOUS JUDICIAL VIEWS ON A SIMILAR ISSUE AND ABOVE ALL THE ASSESSEE DID NOT CHOOSE TO FURNISH ANY DETAILS OR ESTIMATE OF EXPENS ES INCURRED ON ITA NOS.982, 1001, 1416 & 1461/AHD/2006 EARNING OF DIVIDEND INCOME, WE ARE OF THE CONSIDERE D VIEW THAT THE CIT (A) WAS JUSTIFIED IN CONFIRMING THE AOS ACTION IN DISALLOWING OF RS.3.21 LAKHS ON THIS COUNT. IT IS ORDERED ACCORDINGLY. 22. GROUND NO.2 : DISALLOWANCE OF EMPLOYERS CONTRIBUTION TO ESI FUND : IT WAS THE CASE OF THE CASE OF THE AO THAT THE PAYM ENTS TOWARDS EMPLOYERS & EMPLOYEES CONTRIBUTIONS TO ESI WERE NO T MADE WITHIN THE STIPULATED DUE DATES AS PRESCRIBED UNDER THE RELEVA NT STATUTE. ON AN APPEAL, THE CIT (A), FOLLOWING HIS FINDINGS FOR THE AY 2001-02 WHEREIN THE ISSUE HAS BEEN DEALT WITH AT LENGTH, CONFIRMED THE AOS STAND. 22.1 BEFORE US, IT WAS BRIEFLY SUBMITTED THAT ALL T HE PAYMENTS WERE MADE WITHIN THE DUE DATE OF FILING OF INCOME, BUT, NO PROOF HAS BEEN ADDUCED. IN CONSONANCE WITH THE PRINCIPLES OF NATU RAL JUSTICE, THIS ISSUE IS REMITTED BACK TO THE FILE OF THE AO TO VERIFY TH E CLAIM OF THE ASSESSEE WHICH SHALL BE FURNISHED BY IT AND TO TAKE APPROPRI ATE ACTION IN ACCORDANCE WITH THE PROVISIONS OF ACT PREVALENT AT THAT RELEVANT TIME. THE AO, SHALL, HOWEVER, KEEP IN VIEW THE JUDICIAL P RONOUNCEMENTS ON SIMILAR ISSUE WHILE DEALING WITH THE MATTER. 23. GROUND NO.3 : DISALLOWANCE OF AMORTIZATION LEASE PAYMENTS FOR LAND : A SIMILAR ISSUE CAME UP FOR ADJUDICATION FOR THE AY 2001-02 IN THE ASSESSEES OWN CASE AND FINDINGS RECORDED BY THIS B ENCH (SUPRA) IS SQUARELY APPLICABLE FOR THIS A.Y ALSO. 24. GROUND NOS.4 & 5 : THE ISSUES OF DISALLOWANCE OF AD-HOC MISCELLANEOUS AND WELFARES EXPENSES WERE AGITATED B EFORE THIS BENCH BY THE ASSESSEE FOR THE AY 2001-02 AND OUR FINDINGS RECORDED THEREIN HOLD WELL FOR THIS ASSESSMENT YEAR TOO. IT IS ORDE RED ACCORDINGLY. ITA NOS.982, 1001, 1416 & 1461/AHD/2006 25. GROUND NO.6 : (A) SOFTWARE EXPENSES OF RS.2,21,640/- : 25.1 AT THE OUTSET, WE WOULD LIKE TO RECALL THE RUL ING OF HONBLE APEX COURT IN THE CASE OF A.R. KRISHNSAMURTHY & ANOTHER V. CIT (176 ITR 417 (SC) THAT THE LICENSE TO USE OR RIGHT TO USE IS ALSO A CAPITAL ASSET; YET ANOTHER RULING THE HON. SUPREME COURT HAS, IN T HE CASE OF SCIENTIFIC ENGINEERING HOUSE, IN ITS WISDOM RULED THAT THE RI GHT TO USE A TECHNICAL KNOW-HOW IS A CAPITAL ASSET IN THE NATURE OF PLANT. IN THE PRESENT CASE, THE ASSESSEE HAD OBTAINED LICENSE TO USE THE TALLY SOFTWARE AND THAT THE LICENSE WAS IN THE NATURE OF CAPITAL ASSET. THEREF ORE, THE CIT (A) WAS WITHIN HIS REALM TO DISALLOW THE CLAIM OF THE ASSES SEE. THE FINDING OF MUMBAI TRIBUNALS FINDINGS IN THE CASE OF JCIT V. C ITICROP OVERSEAS SOFTWARE LTD (85 TTJ 87) CANVASSED BY THE ASSESSEE CANNOT COME TO ITS RESCUE SINCE THE ASSESSEE HAD NOT BROUGHT ANY DOCUMENTARY PROOF ON RECORD TO ASSERT THAT THE SOFTWARE HAD BECOME OB SOLETE SO AS TO AVAIL THE CLAIM AS REVENUE EXPENDITURE. THUS, THIS ISSUE GOES AGAINST THE ASSESSEE. 25.2 WITH REGARD TO THE ASSESSEES CLAIM THAT ALLOW ING DEPRECIATION ON SOFTWARE ONLY HALF-YEAR WAS WRONG ON THE ASSUMPTION THAT THE SOFTWARE WAS PUT TO USE ONLY FOR A PERIOD OF LESS THAN 180 D AYS ETC., THE ASSESSEE IS AT LIBERTY TO APPROACH THE AO WITH RELEVANT PROO F AT ITS POSSESSION TO CLAIM THAT THE SOFTWARE WAS PUT TO USE FOR MORE THA N 180 DAYS TO AVAIL FULL DEPRECIATION. THE AO IS DIRECTED TO LOOK INTO THE GRIEVANCE OF THE ASSESSEE AND TO TAKE REMEDIAL MEASURE, IF THE ASSES SEE COMES FORWARD WITH A DOCUMENTARY PROOF AS DETAILED ABOVE AND ALSO THE CLAIM IS WITHIN THE STIPULATED TIME FRAME. (B) REPAIRS TO BUILDINGS OF RS.15,56,706/- : ITA NOS.982, 1001, 1416 & 1461/AHD/2006 25.3 IT WAS THE CONTENTION OF THE ASSESSEE THAT THE EXPENSES WERE INCURRED FOR REPAIRING OF THE FLOOR IN THE FACTORY BUILDING AND OF ROOF IN THE SHOP FLOOR; THAT THE EXPENSES WERE INCURRED TO KEEP THE ASSET IN A WORKING CONDITION AND THAT NO NEW ASSET CAME INTO E XISTENCE. IT WAS, FURTHER, CLAIMED THAT ALL EXPENSES WERE INCURRED FO R REPLACEMENT OF OLD ITEMS WHICH WERE WORN OUT ETC. THIS HAS BEEN COUNT ERED BY THE CIT (A) THAT THE ASSESSEE HAD INCURRED EXPENDITURE ON PVC C ARPET FLOORING, REPAIRING AND REPLACEMENT OF WHITE TILES, CONCRETIN G OF LPG AREA ETC., SUCH EXTENSIVE REPLACEMENT OF EXISTING FLOORING, AC CORDING TO THE CIT (A), CANNOT BE TERMED IN THE NATURE OF CURRENT REP AIRS. 25.4 ADMITTEDLY, IN THE IMMEDIATELY PRECEDING YEAR, THE EXPENDITURE CLAIMED ON REPAIRS TO THE BUILDING WAS RS.9.46 LAKH S WHEREAS FOR THE CURRENT YEARS, IT HAS BEEN A WHOPPING RS.22.18 LAKH S. AS RIGHTLY POINTED OUT BY THE CIT (A), AS PER S.31(1) ONLY THE EXPENSE INCURRED ON CURRENT REPAIRS WAS AN ALLOWABLE DEDUCTION THE WORD CURR ENT REPAIR CONNOTES AN EXPENDITURE FOR THE PERSEVERANCE AND MAINTENANCE OF ALREADY EXISTING ASSET ONLY. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE WENT WITH A SPENDING SPREE ON RENEWAL AND RESTORATION OF THE FACTORY FLOORING WITH EXTENSIVE REPLACEMENT OF THE EXISTING ONE. TH IS EXPENDITURE, NO DOUBT, GIVES AN ENDURING ADVANTAGE TO THE ASSESSEE WHICH CANNOT BE TERMED AS REVENUE EXPENDITURE. THE CIT (A) WAS, TH EREFORE, JUSTIFIED IN HIS STAND. THIS ISSUE IS DECIDED AGAINST THE ASSES SEE. (C) REPAIRS TO MACHINERY OF RS. 2,18,153/- : 25.5 IT WAS THE CONTENTION OF THE ASSESSEE THAT THE ITEMS OF MACHINERY REPAIRS COULD NOT BE USED INDEPENDENTLY AS THEY WER E ATTACHED TO THE MAIN MANUFACTURING PLANT; AND THAT IT WAS THE REPLA CEMENT OF OLD WORN ITA NOS.982, 1001, 1416 & 1461/AHD/2006 OUT PARTS OF MAIN MACHINERY AND, THEREFORE, REQUIRE TO BE ALLOWED AS REVENUE EXPENDITURE. 25.6 HOWEVER, THE ASSESSEES CONTENTION WAS DISPUTE D BY THE CIT (A) THAT ON PERUSAL OF DETAILS OF REPAIRS, HE NOTICED T HAT THE EXPENDITURE INCURRED TOWARDS REPLACEMENT OF OLD CASTING DRUM, W ET CHAMBER, ELECTRIC WORK AND DUCTING. ACCORDING TO THE CIT (A), THE AS SESSEE HAD NOT DETAILED AS TO HOW THE EXPENDITURE WAS IN THE NATUR E OF CURRENT REPAIRS. 25.7 WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE ASSESSEE AS WELL AS THE REASONING OF THE CIT (A). AS THE ASSES SEE COULD NOT ABLE TO IDENTIFY AND RATHER ESTABLISH THAT THE EXPENDITURE SO CLAIMED WAS IN THE NATURE OF CURRENT REPAIRS. IN THE ABSENCE OF SUCH DETAILS, WE CONFIRM THE EXPENSES CLAIMED TOWARDS CASTING DRUM, WET CHAMBER AND DUCTING OF AC PLANT AS THEY DO NOT FALL WITHIN THE CATEGORY OF CURRENT REPAIRS. HOWEVER, THE ASSESSEE HAD CLAIMED A SUM OF RS.14,45 0/- BEING ELECTRIC WORK. THIS ELECTRIC WORK APPEARS TO HAVE BEEN EXEC UTED FOR THE UP- KEEPING OF THE MACHINERY. THEREFORE, IN OUR CONSI DERED VIEW, THE ASSESSEE WAS ENTITLED TO CLAIM THE SUM OF RS.14,450 /- UNDER THE HEAD REPAIRS TO MACHINERY. IT IS ORDERED ACCORDINGLY. 26. GROUND NO.7 : INCLUSION OF OTHER INCOMES IN TOTAL TURNOVER: AS COULD BE SEEN FROM THE DISCUSSION OF THESE ISSUE S IN AN EXHAUSTIVE MANNER IN THE IMPUGNED ORDER OF THE CIT (A) AND ALSO TAKING INTO ACCOUNT THE SUBMISSIONS OF THE ASSESSEE ON THE SE ISSUES, THE ISSUES ARE DEALT WITH AS UNDER: (A) SHORTAGES/DAMAGES CLAIM FROM SUPPLIERS - RS. 3,44,382/-: 26.1 THE REASONING OF THE ASSESSEE BEING THAT ALL THOSE ITEMS WERE IN THE NATURE OF OTHER INCOME AND IN NO WAY INCLUDED I N THE TOTAL TURNOVER OF THE ASSESSEE. HOWEVER, WE FIND, THERE IS A FORCE I N THE REASONING OF THE ITA NOS.982, 1001, 1416 & 1461/AHD/2006 CIT (A) IN UPHOLDING THE ACTION OF THE AO. WE, THE REFORE SUSTAIN THE STAND OF THE CIT (A) ON THIS ISSUE. (B) INSURANCE CLAIM ON FINISHED GOODS AND RAW MAT ERIALS: TAKING CUE FROM THE FINDINGS OF THE MUMBAI TRIBUNAL REPORTED IN PATEL COTTON COMPANY LTD V. ACIT REPORTED IN 64 ITD 273 (MUM), THE CIT (A) HAD DIRECTED THE AO TO VERIFY AS TO WHETHER THOSE RECEIPTS WERE ON ACCOUNT OF LOSS OF FINISHED GOODS AND RAW MATERI ALS, IF THAT WAS SO THEY SHOULD BE INCLUDED IN TOTAL TURNOVER. SINCE THE AO HAS BEEN DIRECTED TO LOOK INTO THE ASPECT, WE DECLINE TO INT ERFERE WITH THE MATTER AT THIS POINT OF TIME. (C) SCRAP SALES OF RS.15,16,994/-: RELYING ON THE FINDING OF THE CALCUTTA TRIBUNAL IN THE CASE OF RECTKITT & COLMAN OF INDIA LTD V. DCIT REPORTED IN 77 ITD 198, THE CIT (A) OBSERVED THAT THOSE RECEIPTS AROSE OUT OF SALE OF GOODS MANUFACTURED BY THE ASSESSEE AND WERE RIGHTLY INCLU DED IN TOTAL TURNOVER. WE HAVE PERUSED THE SAID FINDING OF THE HONBLE TRIBUNAL WHEREIN IT HAS BEEN OBSERVED THAT WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT ALL THE ITEMS AS CO NSIDERED BY THE ASSESSING OFFICER AS PARTS OF THE TOTAL TURNOVER OF BUSINESS OF THE ASSESSEE, SHOULD BE EXCLUDED IN COMPUTATION OF ITS EXPORT PROFIT IN THIS YEAR. IN VIEW OF THE ABOVE, WE SUSTAIN THE STAND OF THE C IT (A) ON THIS ISSUE. D) SALE OF OLD NEWSPAPERS/SCRAP: FOLLOWING THE FINDINGS OF VARIOUS TRIBUNALS AS LIST ED OUT IN HIS FINDINGS, THE CIT (A) SUSTAINED THE AOS ACTION OF INCLUDING THOSE RECEIPTS IN THE TOTAL TURNOVER AS THE ASSESSEE ITSE LF INCLUDED THOSE RECEIPTS IN ITS BUSINESS INCOME. ON PERUSAL OF THE OBSERVATIONS OF THE ITA NOS.982, 1001, 1416 & 1461/AHD/2006 CIT (A) AS WELL THE CONTENTIONS OF THE ASSESSEE, WE FIND FORCE IN THE CIT (A)S OBSERVATION WHICH REQUIRES NO INTERVENTION BY THIS BENCH AT THIS STAGE. (E) DISCOUNT RECEIVED AGAINST RAW MATERIALS-: WE FIND THAT THE HONBLE MUMBAI TRIBUNAL IN ITS FIN DING IN THE CASE OF PATEL COTTON COMPANY LTD V. ACIT REPORTED IN 64 ITD 273 (MUM) HAD HELD THAT THE TOTAL TURNOVER WOULD INCLUDE ALL RECE IPTS OF BUSINESS NOT NECESSARILY IN REGARD TO SALE OF GOODS. THEREFORE, THE CIT (A)S STAND IN CONFIRMING THE AOS ACTION IN INCLUDING THOSE RECEI PTS IN TOTAL TURNOVER IN THE PRESENT CASE IS SUSTAINABLE. IT IS ORDERED ACC ORDINGLY. 27. GROUND NO.8 : DEDUCTION OF 90% OF INTEREST & OTHER INCOME FROM PR OFITS OF BUSINESS OF DEDUCTION U/S 80HHC OF THE ACT: (A) INTEREST INCOME ON AMOUNTS OVERDUE FROM CUSTOME RS RS.32,13,766 (B) DIVIDEND 2,13,014 (C) INTEREST ON STAFF LOAN, NSC BOND 2,029 (D) INTEREST ON INCOME-TAX REFUND 32,500 (E) INTEREST FROM SUPPLIERS 20,58,148 (F) UNCLAIMED CREDIT WRITTEN OFF 10,124 (G) BROKERAGE OF INVESTMENTS 3,971 27.1 IT HAS BEEN NOTICED THAT INCIDENTALLY, THE EAR LIER BENCH IN THE ASSESSEES OWN CASE FOR THE AYS 1998-99 AND 97-98 ( SUPRA) HAD OBSERVED THUS: 14..WE ARE OF THE VIEW THAT THE ASSESSEE IS NOT ENTITLED TO ANY NETTING OFF ON THESE OTHER INCOMES AS WELL AS 9 0% WILL BE EXCLUDED FROM THE GROSS AMOUNT OF OTHER INCOMES.. 27.2 IN CONFORMITY WITH THE ABOVE FINDING OF THE EA RLIER BENCH, THIS ISSUE GOES AGAINST THE ASSESSEE FOR THIS AY TOO. IT IS O RDERED ACCORDINGLY. 27.3 ROYALTY OF RS.59,895 : IT WAS THE CONTENTION OF THE ASSESSEE THAT ROYALTY WAS NOT IN THE NATURE OF BROKERAGE, COMMISS ION, INTEREST, RENT OR CHARGES AND THEREFORE SHOULD NOT BE EXCLUDED FOR TH E PURPOSE OF ITA NOS.982, 1001, 1416 & 1461/AHD/2006 CALCULATING DEDUCTION U/S 80HHC. TO STRENGTHEN HIS CONTENTION, THE LD. A R HAD ROPED IN THE FINDING OF THE DELHI TRIBUNAL S FINDING IN THE CASE OF GLAXO SMITHKLINE ASIA (P) LTD V. ACIT REPORTED 97 T TJ 108 (DEL). ON A PERUSAL, IT HAS BEEN NOTICED THAT THE HONBLE BENCH OBSERVED THUS: 35. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED COUNSEL FOR THE ASSESSEE AND THE LEARNED D R. 'PROFITS OF T HE BUSINESS' HAS BEEN DEFINED IN EXPLN. (BAA) OF S. 80HHC OF THE ACT , WHICH READS AS UNDER: '(BAA) 'PROFITS OF BUSINESS' MEANS THE PROFITS OF THE BUSINESS AS COMPUTED UNDER THE HEAD 'PROFITS AND GAINS OF BUSINE SS OR PROFESSION' AS REDUCED BY- (1) NINETY PER CENT OF ANY SUM REFERRED TO IN CLS. (IIIA), (IIIB) AND (IIIC) OF S. 28 OR OF ANY RECEIPTS BY WAY OF BROKERAGE, CO MMISSION, INTEREST, RENT, CHARGES OR ANY OTHER RECEIPT OF A S IMILAR NATURE INCLUDED IN SUCH PROFITS; AND.............' IN VIEW OF THE SAID EXPLANATION FOR COMPUTING 'PROF ITS OF THE BUSINESS', 90 PER CENT OF RECEIPTS BY WAY OF BROKER AGE, COMMISSION, INTEREST, RENT, CHARGES OR ANY OTHER RE CEIPT OF A SIMILAR NATURE HAS TO BE REDUCED FROM THE INCOME COMPUTED U NDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'. FROM A READING OF THE AFORESAID PROVISIONS, IT IS C LEAR THAT ROYALTY INCOME IS NOT INCOME OF THE NATURE OF BROKERAGE, CO MMISSION, INTEREST, RENT OR CHARGES. THE ROYALTY INCOME IS CL EARLY IN THE NATURE OF PROFITS AND GAINS OF BUSINESS. THE ROYALTY INCOM E IS NOT RECEIPT OF A SIMILAR NATURE AS THAT OF BROKERAGE, COMMISSIO N, ETC. THE EXPRESSION 'OF ANY OTHER RECEIPT OF A SIMILAR NATUR E' OCCURRING IN CL. (1) OF EXPLN. (BAA) HAS TO BE CONSTRUED EJUSDEM GEN ERIS WITH THE WORDS APPEARING IMMEDIATELY PRECEDING THAT EXPRESSI ON. THE PLEA OF THE ASSESSEE ALSO FINDS SUPPORT FROM THE DECISIO N OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BANGALORE CLOTHING CO. (2003) 180 CTR (BOM) 127 : (2003) 260 ITR 371 (BOM) AND THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SMT. SUJ ATHA GROVER VS. DCIT (2002) 74 TTJ (DEL) 347. THE ACTION OF THE REV ENUE AUTHORITIES IN EXCLUDING 90 PER CENT OF ROYALTY INC OME CANNOT, THEREFORE, BE SUSTAINED. THE AO IS, THEREFORE, DIRE CTED TO RE- COMPUTE THE INCOME UNDER S. 80HHC BY CONSIDERING TH E ROYALTY INCOME AS PROFITS OF THE BUSINESS . ITA NOS.982, 1001, 1416 & 1461/AHD/2006 27.4 IN CONFORMITY WITH THE FINDING OF THE HONBLE DELHI BENCH, THE AO IS DIRECTED TO RE-COMPUTE THE INCOME U/S 80HHC OF THE ACT CONSIDERING THE ROYALTY INCOME AS PROFITS OF THE BUSINESS. IT IS OR DERED ACCORDINGLY. 28. GROUND NO.9 : REDUCTION OF GROSS AMOUNT OF INCOMES IN STEAD OF NET INCOME: 28.1 IT WAS THE URGE OF THE ASSESSEE THAT NETTING O FF MAY BE ALLOWED IN VIEW OF THE RULING OF THE DELHI HIGH COURT IN THE C ASE OF CIT V. SHRI RAM HONDA POWER EQUIP (289 ITR 475). 28.2 INCIDENTALLY, A SIMILAR ISSUE WAS RAISED FOR T HE AY 2001-02 IN THE ASSESSEES OWN CASE WHEREIN THE ASSESSEE ITSELF CON CEDED THAT THIS ISSUE IS COVERED AND DECIDED AGAINST THE ASSESSEE B Y THE EARLIER BENCH [REFER: ASSESSEES BRIEF FOR 2001-02]. MOREOVER TH E EARLIER BENCH IN ITS FINDING IN THE ASSESSEES OWN CASE FOR THE AYS 1998 -99 REFERRED ABOVE HAS RECORDED THAT 14..WE ARE OF THE VIEW THAT THE ASSESSEE IS NOT ENTITLED TO ANY NETTING OFF ON THESE OTHER INCO MES AS WELL AS 90% WILL BE EXCLUDED FROM THE GROSS AMOUNT OF OTHER INCOMES.. 28.3 IN CONFORMITY WITH THE FINDING OF THE JURISDIC TIONAL EARLIER BENCH, THE ISSUE IS DECIDED AGAINST THE ASSESSEE. 29. GROUND NO.10 : AN IDENTICAL ISSUE TO THAT OF THE PRESENT ONE WAS RAISED BY THE ASSESSEE FOR THE AY 2001-02 (GROUND N O.5). AFTER CONSIDERING THE ASSESSEES CONTENTIONS AND ALSO IN CONFORMITY WITH THE FINDINGS OF THE EARLIER BENCH (SUPRA) THE ISSUE WAS REMITTED BACK TO THE AO FOR VERIFICATION OF THE ASSESSEES CLAIM AND TO TAKE APPROPRIATE ACTION. THE FINDINGS RECORDED FOR THE AY 2001-02 A LSO HOLD WELL FOR THIS AY ALSO. IT IS ORDERED ACCORDINGLY. ITA NOS.982, 1001, 1416 & 1461/AHD/2006 30. GROUND NO.11 : DIFF. IN BASIS OF ALLOCATION OF INDIRECT COST TO EX PORT OF TRADING GOODS: BY THE BY, A SIMILAR ISSUE TO THAT OF THE PRESENT O NE CAME UP BEFORE THIS BENCH FOR THE AY 2001-02 SUPRA (GROUND NO.6) WHEREIN THE ISSUE WAS DECIDED, IN CONFORMITY WITH THE FINDINGS OF THE EARLIER BENCH, AGAINST THE ASSESSEE. THEREFORE, THE FINDINGS RECO RDED THEREIN HOLD GOOD FOR THIS ASSESSMENT YEAR ALSO. IT IS ORDERED A CCORDINGLY. 31. GROUND NO.12 : DEDUCTION OF INTEREST AND OTHER INCOME FROM THE IN COME ELIGIBLE FOR DEDUCTION U/S 81-IB OF THE ACT. 31.1 THE ISSUES I.E., (I) INTEREST INCOME ON AMOUNT S OVER DUE FROM THE CUSTOMERS OF RS.46,78,717/-; (II) INTEREST ON STAFF LOAN OF RS.40,035/-; (III) INTEREST CLAIM ON FINISHED GOODS AND RAW MATERIALS OF RS.1,52,429/-; (IV) DISCOUNT RECEIVED AGAINST RAW MATERIALS OF RS.3,85, 995/-; AND (V) UNCLAIMED CREDIT WRITTEN OFF OF RS.10,124/- RAISED NOW HAVE COME UP FOR ADJUDICATION FOR THE ASSESSMENT YEAR 2001-02 IN THE ASSESSEES OWN CASE SUPRA WHEREIN THIS BENCH HAD ADJUDICATED THE S AME AFTER DUE DELIBERATIONS. THE ISSUES BEING IDENTICAL, THE FIN DINGS RECORDED THEREIN HOLD WELL FOR THIS ASSESSMENT YEAR ALSO. IT IS ORD ERED ACCORDINGLY. 32. GROUND NO.13 : (I) CHARGING OF INTEREST U/S 234B OF THE ACT IS MA NDATORY AND CONSEQUENTIAL IN NATURE AND, THEREFORE, THIS PART O F THE GROUND IS DISMISSED AS NOT MAINTAINABLE; & (II) INTEREST U/S 234D OF THE ACT CANNOT BE CHARGED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN LIEU OF THE FINDING OF THE HONBLE DELHI E BENCH IN THE CASE OF ITO V. EKTA PROMOTER PVT. LTD. REPORTED IN 117 TTJ ITA NOS.982, 1001, 1416 & 1461/AHD/2006 289 WHEREIN IT HAS BEEN THAT INTEREST UNDER SECTION 234D COULD NOT BE CHARGED IN RESPECT OF ASSESSMENT YEARS FALLING P RIOR TO ASSESSMENT YEAR 2004-05 . 33. GROUND NO.14 : WHEN THE ASSESSMENT PROCEEDINGS WERE CONCLUDED, INITIATION OF PENAL PROCEEDING U/S 271(1 )(C) OF THE ACT WAS IN ITS INFANCY AND IT HAD NOT REACHED ITS FINALITY AT THE FILING OF THIS APPEAL. MOREOVER, INITIATION AND FINALIZATION OF PENAL PROC EEDINGS U/S 271(1)(C) OF THE ACT HAS SEPARATE ENTITY WHICH CANNOT BE AGITATE D WITH THE QUANTUM APPEAL. THEREFORE, THIS GROUND RAISED BY THE ASS ESSEE IS DISMISSED AS NOT MAINTAINABLE. 34. IN THE RESULT, THE REVENUES APPEALS FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03 ARE PARTLY ALLOWED AND THE AS SESSEES APPEALS FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03 ARE PARTLY ALLOWED. 2 1 * 0 $ 3!% 16 / 02 /201 2 4 * / 5 SD/- SD/- (D.K.TYAGI) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED : 16/02/2012 1 1 1 1 * ** * (- (-(- (-6 6 6 6 76$-% 76$-% 76$-% 76$-% - 1. &' 2. (&' 3. - .8 4. .8 - - 5. 69 (-! , , 5 6. :2 1 , ; / ) , 5 TALUKDAR/ SR. P.S . ITA NOS.982, 1001, 1416 & 1461/AHD/2006