Maheshraj Chemicals Pvt.Ltd., Ahmedabad V. The Dy.CIT.,Cent.Circle-2(1), Ahmedabad

ITSSA 84/AHD/2011

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9505 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 20-11-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 02-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIMALENDRA VERMA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income
• Section: 80HHC; 28

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . . . . , , , , ! ! ! ! ' #$ ' #$ ' #$ ' #$ , , , , % % % % BEFORE S/SHRI N.S. SAINI, ACCOUNTANT MEMBER AND KUL BHARAT, JUDICIAL MEMBER) IT(SS)A NO.82, 83 AND 84/AHD/2011 [ASSTT.YEAR : 2001-2002, 2002-2003 AND 2003-2004] MAHESHRAJ CHEMICALS P. LTD. 141, GIDC, PHASE-IV, NARODA, AHMEDABAD. PAN : AABCM 0424 C /VS. DCIT, CENT.CIR.2(1) AHMEDABAD. ( (( ('( '( '( '( / APPELLANT) ( (( ()*'( )*'( )*'( )*'( / RESPONDENT) +$ , - / ASSESSEE BY : SHRI S.N. SOPARKAR / , - / REVENUE BY : SHRI VIMALENDRA VERMA, CIT.DR '0 , $1/ DATE OF HEARING : 21 ST NOVEMBER, 2013 234 , $1/ DATE OF PRONOUNCEMENT : 27-11-2013 5 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST CONSOLIDATED ORDER OF THE LEARNED CIT(A) DATED 1.10.2010 PASSED IN THE ASSESS MENT YEARS 2001-2002, 2002-2003 AND 2003-2004. 2. THE FIRST COMMON GROUND OF APPEAL IN ALL THE APP EALS OF THE ASSESSEE IS THAT THE LEARNED CIT(A) ERRED IN LAW AN D ON FACTS IN IT(SS)A NO.82, 83 AND 84/AHD/2011 -2- REJECTING THE ASSESSEES GROUND OF APPEAL CHALLENGI NG THE VALIDITY OF THE PROCEEDINGS INITIATED U/S.153A OF THE IT ACT , IN THE ABSENCE OF ANY INCRIMINATING MATERIAL/DOCUMENTS FOU ND AND SEIZED FROM THE PREMISES OF THE ASSESSEE DURING THE COURSE OF SEARCH. THE LD.CIT(A) OUGHT TO HAVE QUASHED ASSESS MENT THAT IS BAD IN LAW AS VOID AB INITIO BY VIRTUE OF VARIOUS DECISIONS OF THE TRIBUNAL. IT BE SO HELD NOW. 3. AT THE TIME OF HEARING, THE LEARNED AR OF THE AS SESSEE SUBMITTED THAT HE IS NOT PRESSING THIS GROUND OF TH E APPEAL. HENCE, THIS GROUND OF THE APPEAL IN ALL THE YEARS U NDER CONSIDERATION IS DISMISSED FOR WANT OF PROSECUTION. 4. COMMON ISSUE IN GROUND NO.2 OF THE APPEAL IN THE A.Y.2001-02 AND A.Y.2002-03 AND IN GROUND NO.3 IN A .Y.2003- 2004 UNDER CONSIDERATION IS THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING ACTION OF THE AO IN EXCL UDING 90% OF DEPB RECEIPT WHILE COMPUTING ELIGIBLE BUSINESS PROF ITS FOR DEDUCTION U/S.80HHC OF THE ACT. THE LD.CIT(A) RELI ED ON JUDGMENT OF BOMBAY HIGH COURT IN KALPATARU COLOURS & CHEMICALS NOW OVERRULED BY SUPREME COURT IN TOPAMN EXPORTS VS. CIT, 342 ITR 49 HOLDING THAT ONLY PROFIT ON SAL E OF DEPB LICENSE TO BE EXCLUDED FROM ELIGIBLE BUSINESS PROFI TS FOR COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. IT BE SO HELD NOW. IT(SS)A NO.82, 83 AND 84/AHD/2011 -3- 5. BRIEF FACTS OF THE CASE ARE THAT THE AO COMPUTED THE DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 8 0HHC OF THE ACT BY EXCLUDING 90% OF ` 1,78,55,099/- IN A.Y.2001-2002, 90% OF ` 82,78,390/- IN A.Y.2002-2003 AND 90% OF ` 79,18,995/- IN A.Y.2003-2004 BEING DEPB EXPORT INCENTIVES FROM THE PROFIT OF BUSINESS. 6. ON APPEAL, THE LEARNED CIT(A) BY FOLLOWING THE D ECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . KALPATARU COLOURS AND CHEMICALS, 328 ITR 451 UPHELD THE ACTIO N OF THE AO. 7. THE LEARNED AR OF THE ASSESSEE SUBMITTED BEFORE US THAT THE SAID DECISION OF THE HONBLE BOMBAY HIGH COURT HAS BEEN OVERRULED BY THE HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS VS COMMISSIONER OF INCOME-TAX, 342 ITR 49 ( SC) WHERE THE HONBLE SUPREME COURT HAS HELD THAT ONLY THE AM OUNT THAT THE ASSESSEE RECEIVES IN EXCESS OF THE DEPB WHICH REPRE SENTS HIS PROFITS ON TRANSFER OF THE DEPB CREDIT SHOULD BE RE DUCED WHILE COMPUTING THE BUSINESS PROFIT ELIGIBLE FOR DEDUCTIO N UNDER SECTION 80HHC OF THE ACT. 8. THE LEARNED DR HAS ALSO AGREED WITH THE ABOVE SUBMISSIONS OF THE LEARNED AR OF THE ASSESSEE. 9. THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DIRECT THE AO TO COMPUTE DEDUCTION UNDER SECTIO N 80HHC OF IT(SS)A NO.82, 83 AND 84/AHD/2011 -4- THE ACT ALLOWABLE TO THE ASSESSEE BY EXCLUDING ONLY THE PROFIT ON SALE OF DEPB LICENCE, FROM THE ELIGIBLE BUSINESS PR OFIT OF THE ASSESSEE. THUS THE GROUND OF THE APPEAL OF THE ASSE SSEE IS ALLOWED FOR ALL THE YEARS UNDER CONSIDERATION. 10. THE THIRD COMMON GROUND IN APPEAL IN ALL THE YE ARS UNDER CONSIDERATION IS THAT THE LEARNED CIT(A) ERRED IN N OT GRANTING DEDUCTION U/S.80IA OF THE ACT ON INCOME FROM DEPB L ICENSES. 11. AT THE TIME OF HEARING, THE LEARNED AR OF THE A SSESSEE SUBMITTED THAT THE ISSUE IS NOW COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF LIBERTY INDIA LTD. VS.CIT, 317 ITR 218 (SC), WHERE IT WAS H ELD THAT DEPB/DUTY DRAWBACK ARE INCENTIVES WHICH FLOW FROM T HE SCHEMES FRAMED BY THE CENTRAL GOVERNMENT OR FROM SE CTION 75 OF THE CUSTOMS ACT,1962. INCENTIVE PROFITS ARE NOT PRO FITS DERIVED FROM ELIGIBLE BUSINESS UNDER SECTION 80-IB, THEY BE LONG TO THE CATEGORY OF ANCILLARY PROFITS OF SUCH UNDERTAKING. PROFITS DERIVED BY WAY OF INCENTIVES SUCH AS DEPB/DUTY DRAWBACK CAN NOT BE CREDITED AGAINST THE COST OF MANUFACTURE OF GOODS D EBITED IN THE PROFIT AND LOSS ACCOUNT AND THEY DO NOT FALL WITHIN THE EXPRESSION 'PROFITS DERIVED FROM INDUSTRIAL UNDERTAKING' UNDER SECTION 80-IB. 12. IN VIEW OF THE ABOVE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE, THIS GROUND OF THE APPEAL OF THE ASSE SSEE IN ALL THE YEARS UNDER CONSIDERATIONS IS DISMISSED. IT(SS)A NO.82, 83 AND 84/AHD/2011 -5- 13. THE COMMON GROUND NO.4, TAKEN IN ALL THE YEARS UNDER CONSIDERATION IS THAT THE LEARNED CIT(A) ERRED IN L AW AND ON FACTS IN CONFIRMING THE ACTION OF THE AO IN COMPUTING DED UCTION UNDER SECTION 80IA AFTER REDUCING DEDUCTION AVAILABLE UND ER SECTION 80HHC OF THE ACT. BOTH THE LOWER AUTHORITIES ERRED IN LAW AND ALSO ON FACTS IN NOT GRANTING CLAIM UNDER SECTION 8 0HHC ON THE ELIGIBLE PROFITS WITHOUT REDUCING 80HHC DEDUCTION F ROM THE SAME. 14. BRIEF FACTS OF THE CASE ARE THAT THE AO WHILE C OMPUTING DEDUCTION UNDER SECTION 80IA OF THE ACT REDUCED THE DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 80HHC OF TH E ACT. THE SAME WAS CONFIRMED IN APPEAL BY THE LEARNED CIT(A) HOLDING THAT AS PER SECTION 80IA(9) OF THE ACT, THE AMOUNT OF PR OFIT ALLOWED AS DEDUCTION UNDER SECTION 80IA(1) OF THE ACT HAS TO B E REDUCED FROM THE PROFIT OF THE BUSINESS OF THE UNDERTAKING WHILE COMPUTING DEDUCTION UNDER ANY OTHER SECTION UNDER C HAPTER VI-A OF THE IT ACT. 15. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES P. LTD. VS. DCIT, 332 ITR 42 (BOM) HAS HELD THAT TH E REASONABLE CONSTRUCTION OF SECTION 80-IA(9) WOULD BE THAT WHER E THE DEDUCTION IS ALLOWED UNDER SECTION 80-IA(1), THEN T HE DEDUCTION COMPUTED UNDER OTHER PROVISIONS UNDER HEADING C OF CHAPTER VI- A HAVE TO BE RESTRICTED TO THE PROFITS OF THE BUSIN ESS THAT REMAIN IT(SS)A NO.82, 83 AND 84/AHD/2011 -6- AFTER EXCLUDING THE PROFITS ALLOWED AS DEDUCTION UN DER SECTION 80- IA, SO THAT THE TOTAL DEDUCTION ALLOWED UNDER THE H EADING C OF CHAPTER VI-A DOES NOT EXCEED THE PROFITS OF THE BUS INESS. HE SUBMITTED THAT THE LEARNED CIT(A) WAS, THEREFORE, N OT JUSTIFIED IN REDUCING THE AMOUNT OF DEDUCTION ALLOWED UNDER SECT ION 80HHC OF THE ACT TO THE ASSESSEE FROM THE PROFITS COMPUTE D FOR DEDUCTION UNDER SECTION 80IA OF THE ACT. 16. THE LEARNED DR ALSO AGREED WITH THE ABOVE SUBMI SSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HENCE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE AO T O RE-COMPUTE THE DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTI ON 80IA OF THE ACT WITHOUT REDUCING THE DEDUCTION ALLOWED TO THE A SSESSEE UNDER SECTION 80HHC OF THE ACT. THUS, THIS GROUND OF THE APPEAL OF THE ASSESSEE IN ALL THE YEARS UNDER CONSIDERATION IS AL LOWED. 17. FIFTH COMMON GROUND OF THE APPEAL OF THE ASSESS EE IN ALL THE YEARS IS THAT THE LEARNED CIT(A) ERRED IN LAW A ND ON FACTS IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENSES OF ` 1,16,227/- IN A.Y.2001-2002, ` 7,70,343/- IN A.Y.2002-2003 AND ` 5,05,618/- IN A.Y.2003-2004 BY THE AO HOLDING THAT THE INTEREST BEARING FUNDS WERE UTILIZED FOR ADVANCING INTEREST FREE LOANS TO M.R. CHEMICALS, PROPRIETARY CONCERN OF THE DIRECTOR OF THE ASSESSEE-COMPANY, SHRI MAHESH AGRAWAL. IT(SS)A NO.82, 83 AND 84/AHD/2011 -7- 18. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVE D THAT THE ASSESSEE HAS ADVANCED LOAN TO M.R.CHEMICALS IN WHIC H SHRI MAHESH AGRAWAL OF THE COMPANY IS PROPRIETOR WITHOUT CHARGING ANY INTEREST AND DIRECTOR HAS UTILIZED THE AMOUNT F OR INVESTMENT IN PERSONAL CAPACITY, WHILE THE ASSESSEE HAS CLAIMED T HE INTEREST PAID TO FINANCIAL INSTITUTIONS AND BANKS AS EXPENDITURE. THUS, THE AMOUNT BORROWED FROM THE FINANCIAL INSTITUTIONS AND BANKS HAVE BEEN UTILIZED BY THE ASSESSEE FOR OTHER THAN BUSINE SS PURPOSE, WHICH WAS NOT ADMISSIBLE, HENCE, PROPORTIONATE INTE REST EXPENSES WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSES SEE. 19. ON APPEAL, THE LEARNED CIT(A) RESTORED THE MATT ER BACK TO THE FILE OF THE AO TO EXAMINE WHETHER THE SOURCE OF LOAN GIVEN TO M.R. CHEMICALS IS OUT OF OWN FUNDS OF THE ASSESSEE OR OUT OF THE BORROWED FUNDS OF THE ASSESSEE. HE DIRECTED THE AO THAT IF THE SOURCE OF THE FUNDS ADVANCED WAS OUT OF THE ASSESSE ES OWN FUNDS, THEN NO DISALLOWANCE OF INTEREST WAS CALLED FOR, OTHERWISE, DISALLOWANCE OF INTEREST HAS TO BE CONFIRMED. 20. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT H ONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE U TILITIES & POWER LTD., 313 ITR 340 (BOM) HAS HELD THAT IF THER E WERE FUNDS AVAILABLE BOTH INTEREST-FREE AND OVERDRAFT AND/OR L OANS TAKEN, THEN A PRESUMPTION WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF THE INTEREST-FREE FUNDS GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST-FREE FUNDS WERE SUFFICIENT TO MEET THE INV ESTMENTS. IN THIS IT(SS)A NO.82, 83 AND 84/AHD/2011 -8- CASE THIS PRESUMPTION WAS ESTABLISHED CONSIDERING T HE FINDING OF FACT BOTH BY THE COMMISSIONER (APPEALS) AND THE TRI BUNAL. THE INTEREST WAS DEDUCTIBLE. LEARNED AR OF THE ASSESSEE THEN REFERRED TO PAGES NO.1 TO 44 OF THE PAPER BOOK FILED BEFORE US. HE POINTED OUT FROM PAGE 6 OF THE PAPER BOOK, WHEREIN BALANCE SHEET FOR THE YEAR ENDING 31.3.2001 IS FILED, THAT THE SHARE CAPI TAL AND RESERVES AND SURPLUS OF THE ASSESSEE WAS ` 8,76,31,146, WHEREAS ADVANCE GIVEN TO M.R.CHEMICAL WAS ` 9,98,902/- ONLY. FURTHER, HE REFERRED TO PAGE NO.22 OF THE PAPER BOOK, WHEREIN T HE BALANCE SHEET FOR THE YEAR ENDING 31.3.2002 IS FILED, AND P OINTED THERE FROM THAT THE SHARE CAPITAL AND RESERVES & SURPLUS OF THE ASSESSEE WAS ` 10,50,31,583/- AND THE AMOUNT ADVANCED TO M/S.M.R. CHEMICALS WAS ` 2,75,90,237/-. HE FURTHER REFERRED TO PAGE NO.36 OF THE PAPER BOOK WHEREIN THE BALANCE SHEET FOR THE YEAR ENDING AS ON 31.3.2003 IS FILED, AND POINTED THEREFROM THA T THE SHARE CAPITAL AND RESERVES & SURPLUS OF THE ASSESSEE WAS ` 11,50,59,299/- AND THE ADVANCE MADE TO M/S.M.R.CHE MCIALS WAS ` 3,54,13,938/-. THUS, HE SUBMITTED THAT IT IS CLEAR THAT THE ASSESSEE HAD SUFFICIENT OWN FUNDS TO ADVANCE LOAN T O M/S.M.R.CHEMCIALS DURING THE YEAR UNDER CONSIDERATI ON, AND THEREFORE, IN VIEW OF THE DECISION OF THE HONBLE B OMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. (SUPRA), NO DISALLOWANCE OF INTEREST EXPENDITURE WA S CALLED FOR. 21. THE LEARNED DR AGREED WITH THE ABOVE SUBMISSION S OF THE ASSESSEE. IT(SS)A NO.82, 83 AND 84/AHD/2011 -9- 22. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AN D DIRECT THE AO TO DELETE THE DISALLOWANCE OF INTEREST EXPENDITURE OF ` 1,16,227/- IN A.Y.2001-2002, ` 7,70,343/- IN A.Y.2002-2003 AND ` 5,05,618/- IN A.Y.2003-2004. THUS, THIS GROUND OF THE APPEAL OF THE ASSESSEE IS ALLOWED IN ALL THE YEARS UNDER C ONSIDERATION. 23. ONLY OTHER ISSUE TAKEN BY THE ASSESSEE IN GROUN D NO.2 OF THE APPEAL FOR A.Y.2003-2004 IS THAT THE LEARNED CI T(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE AO THAT SALE PROCEEDS OF SLUB AND VATAV AND KASAR IS NOT ARISING FROM EXPORT ACTIVITIES AND WERE THEREFORE, NOT ELIGIBLE FOR DE DUCTION UNDER SECTION 80HHC OF THE ACT. THE LEARNED CIT(A) OUGHT TO HAVE FOLLOWED THE ORDER OF THE TRIBUNAL FOR A.Y.2003-200 4 TO GRANT DEDUCTION. 24. BRIEF FACTS OF THE CASE ARE THAT THE AO DISALLO WED DEDUCTION UNDER SECTION 80HHC ON SALE OF SLUB, VATVA AND KASAR ON THE GROUND THAT THE SAME WAS NOT RELATED TO THE ACTIVIT IES OF THE EXPORTS, AND THEREFORE, THE ASSESSEE WAS NOT ENTITL ED TO DEDUCTION UNDER SECTION 80HHC ON THE SAME. 25. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ACT ION OF THE AO BY OBSERVING THAT INCOME OF ` 1.23 LAKHS REPRESENTING SALE OF SLUB IN THE PRODUCTION THOUGH WAS PART OF THE BUSIN ESS PROFIT, WAS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80HHC IN V IEW OF THE IT(SS)A NO.82, 83 AND 84/AHD/2011 -10- DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F RAVINDERNATHAN NAIR, 295 ITR 228. 26. THE LEARNED AR OF THE ASSESSEE RELIED ON THE OR DER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.881/AHD/2 007 PASSED IN A.Y.2003-2004 ORDER DATED 13.7.2007, WHEREIN IT WAS HELD THAT THERE WAS NO MERIT IN THE REVENUES SECOND OBJECTIO N INASMUCH AS EVEN IF THE SAID INCOME IS ON ACCOUNT OF SCRAP S ALES, THE SAME, WOULD, THOUGH A BUSINESS RECEIPT/INCOME, CAN ONLY B E CONSIDERED AS PART OF ITS TOTAL TURNOVER AND NOT EXPORT TURNOV ER INASMUCH AS THE LATTER TERM STANDS SPECIFICALLY DEFINED U/S.80H HC OF THE ACT, AND THE SCRAP IS NEITHER EXPORTED OUT OF THE COUNTR Y NOR THE SALE PROCEEDS THEREOF ARE RECEIVED OR RECEIVABLE IN CONV ERTIBLE FOREIGN EXCHANGE, AND SUBMITTED THAT THE DEDUCTION UNDER SE CTION 80HHC SHOULD BE ALLOWED TO THE ASSESSEE. 27. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LEARNED AR E XPLAINED BEFORE US THAT SLUB ARE SCRAP GENERATED DURING THE MANUFACTURING ACTIVITY OF THE ASSESSEE, AND SALE PROCEEDS THEREOF IS PART OF BUSINESS INCOME OF THE ASSESSEE. WE FIND THAT AS P ER PROVISIONS OF EXPLANATION (BAA) TO SECTION 80HHC PROFITS OF THE BUSINESS MEANS (BAA) 'PROFITS OF THE BUSINESS' MEANS THE PROFITS O F THE BUSINESS AS COMPUTED UNDER THE HEAD 'PROFITS AND GA INS OF BUSINESS OR PROFESSION' AS REDUCED BY-- IT(SS)A NO.82, 83 AND 84/AHD/2011 -11- (1) NINETY PER CENT. OF ANY SUM REFERRED TO IN CL AUSES (IIIA), (IIIB), (IIIC), (IIID) AND (IIIE) OF SECTI ON 28 OR OF ANY RECEIPTS BY WAY OF BROKERAGE, COMMISSION, INTEREST, RENT, CHARGES OR ANY OTHER RECEIPT OF A SIMILAR NATURE IN CLUDED IN SUCH PROFITS ; AND (2) THE PROFITS OF ANY BRANCH, OFFICE, WAREHOUSE OR ANY OTHER ESTABLISHMENT OF THE ASSESSEE SITUATE OUT SIDE INDIA ; . THE LEARNED DR HAS NOT DISPUTED THE FACT THA T SALE OF SCRAP IS NOT AN ITEM SPECIFIED IN EXPLANATION (BAA) OF WHICH 90% IS TO BE REDUCED FROM PROFITS AND GAINS OF BUSINESS FOR A RRIVING AT PROFITS OF THE BUSINESS. THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF HAS HELD THAT THOUGH THE SALE PROCEEDS OF SL UB ARE TO BE INCLUDED IN THE PROFITS OF THE BUSINESS AND TOTAL T URNOVER, BUT ARE NOT TO BE INCLUDED IN THE EXPORT TURNOVER FOR COMPU TING THE AMOUNT, WHICH IS DEDUCTIBLE UNDER SECTION 80HHC OF THE ACT. WE RESPECTFULLY FOLLOWING THE SAME, DIRECT THE AO T O FOLLOW THE SAID DIRECTION OF THE TRIBUNAL. 28. BEFORE PARTING WITH THIS ORDER, WE WOULD ALSO L IKE TO OBSERVE THAT THE RELIANCE PLACED BY THE DEPARTMENT ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF K. RAVI NDERNATHAN NAIR (SUPRA) IS NOT APPLICABLE IN THE INSTANT CASE, AS IN THE SAID CASE, THE ISSUE INVOLVED WAS JOB CHARGES, WHICH WAS ONE OF THE ITEMS SPECIFIED IN EXPLANATION (BAA) OF SECTION 80HHC, WHEREAS IN THE INSTANT CASE, THE ISSUE INVOLVED IS IN RESPE CT OF SALE IT(SS)A NO.82, 83 AND 84/AHD/2011 -12- PROCEEDS OF SLUB WHICH IS STATED EARLIER, IS NOT AN ITEM COVERED UNDER EXPLANATION (BAA) OF SECTION 80HHC OF THE ACT. THUS THIS GROUND OF THE ASSESSEE IS ALLOWED. 29. THE GROUND NO.6 FOR A.Y.2002-2003 IS DIRECTED A GAINST THE ORDER OF THE LEARNED CIT(A) IN CONFIRMING THE DISAL LOWANCE MADE BY THE AO OF ` 25,113/- BEING LATE PAYMENT OF PF CONTRIBUTION. THE LEARNED CIT(A) OUGHT TO HAVE DIRECTED THE AO TO ALLOW DEDUCTION OF THE AMOUNT IN YEAR OF PAYMENT. 30. BRIEF FACTS OF THE CASE THAT THE LEARNED CIT(A) HAS OBSERVED THAT REGARDING DISALLOWANCE OF ` 25,113/- TOWARDS PF & ESI ON THE GROUND THAT THE SAME WAS NOT PAID BY THE ASSESS EE DURING THE YEAR, IT WAS REQUESTED BY THE LEARNED AR THAT THE A O MAY BE DIRECTED TO ALLOW DEDUCTION FOR THIS AMOUNT IN YEAR OF PAYMENT. THE LEARNED CIT(A) OBSERVED THAT NO PROOF OF THE PA YMENT OF ` 25,113/- WAS PRODUCED BEFORE HIM, NOR IT WAS STATED WHETHER THE CONTRIBUTION WAS EMPLOYERS CONTRIBUTION OR EMPLOYE ES CONTRIBUTION. THEREFORE, THE CIT(A) CONFIRMED THE ACTION OF THE AO IN DELETING THE SAME. 31. BEFORE US ALSO, THE LEARNED AR OF THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE OF PAYMENT OF ` 25,113/-, THEREFORE, WE DO NOT FIND ANY IN INFIRMITY IN THE ORDER OF THE LEARN ED CIT(A) IN CONFIRMING THE DISALLOWANCE OF ` 25,1123/- BEING CONTRIBUTION IT(SS)A NO.82, 83 AND 84/AHD/2011 -13- TOWARDS PF&ESI MADE BY THE AO. THUS, THIS GROUND O F THE APPEAL OF THE ASSESSEE IS DISMISSED. 32. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( ' #$ ' #$ ' #$ ' #$ /KUL BHARAT /JUDICIAL MEMBER . .. . . . . . /N.S. SAINI /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD