MMTC LTD, V. DCIT CIRCLE 5(1),

ITA 2732/DEL/2006

AI Insights

The case involves multiple appeals by MMTC Ltd against the orders of the Commissioner of Income Tax (Appeals) and the Assessing Officer concerning the assessment years 1998-99, 1999-2000, and 2004-05. The primary issues revolved around the deduction claims for provisions made for leave encashment, the treatment of interest and dividend income, and the computation of deductions under section 80HHC of the Income Tax Act. The Tribunal examined the applicability of various judicial precedents and statutory provisions, ultimately deciding to allow some deductions while restoring others for further assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 303123 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2004-2005
• Other Referred Cases: Bharat Earthmovers Ltd vs. CIT, CIT vs. Pruthvi Brokers and shareholders, CIT vs Jai Parabolic Springs Ltd, CIT vs. Sam Global Securities Pvt. Ltd, Checkmate Services Vs. CIT, ACG Associated Capsules Pvt. Ltd. vs. CIT, CIT vs. Williamson Financial Services, V. M. Salgaoncar Sales International vs. ACIT, CIT vs. Reliance Energy Ltd
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJINDER KAUR
• Assessee Lawyers: ROHIT JAIN
• Keywords: Business income; Proportionate interest; Revised return; Bad and doubtful debts; Depreciation; Tax effect; Capital receipt; Earning of tax free income; Unabsorbed depreciation; Wholly owned subsidiary; Rule 8D
• Section: 143(3); 56; 32; 139(1); 208; 205; 22; 13; 14A; 43B; 80HHC; 44AB; 80C; 20

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA Nos. 216, 1416/Del/2011 ITA No. 2732/Del/2006 (Assessment Years: 1998-99, 1999-2000 and 2004-05) MMTC Ltd, Scope Complex, Core- 1, Lodhi Road Institutional Area, New Delhi Vs. ACIT, Circle-5(1), New Delhi (Appellant) (Respondent) PAN: AAACM1433E Assessee by : Shri Rohit Jain, Adv Ms. Soumya Jain, Adv Shri Tavish Verma, Adv Revenue by: Shri Rajinder Kaur, CIT DR Date of Hearing 20/03/2025 Date of pronouncement 23/04/2025 O R D E R PER M. BALAGANESH, A. M.: 1. These appeals in ITA Nos.216 &1416/Del/2011 and 2732/Del/2006 for AYs 1998-99, 1999-2000 and 2004-05 arise out of the order of the Commissioner of Income Tax (Appeals)-VIII, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 41/2002-03 for 1998-99 dated 21.01.2011 and for A.Y. 1999-2000 in appeal No. 40/02-03 dated 19.11.2004 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 23.02.2001 and 28.03.2002 by the Assessing Officer, DCIT, Circle-5(1), New Delhi (hereinafter referred to as „ld. AO‟). ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 2 2. Some of the issues are identical and hence they are taken up together and disposed of by this common order for the sake of convenience. ITA No. 1416/Del/2011-AY 1998-99 3. The Ground Nos. 1 and 6 raised by the assessee are general in nature and does not require any specific adjudication. 4. The Ground No. 2 raised by the assessee is challenging the confirmation and disallowance of Rs. 3,92,92,190/- towards provision for leave encashment. 5. We have heard the rival submissions and perused the materials available on record. The assessee is a Govt. of India Enterprise engaged in the business of trading and manufacturing of various commodities which are exported or imported and sold in domestic market as well. The assessee company filed its return of income for AY for 1998-99 on 20.11.1998 declaring total income of Rs. 82,58,101/- u/s 115JA of the Act and a sum of Rs. 3,02,82,098/- under normal provisions of the Act. The return was accompanied by auditor‟s report, balance sheet, profit and loss account, tax audit report u/s 44AB of the Act and audit report u/s 80HHC of the Act. During the previous year relevant to the assessment year 1998-99, the assessee for the very first time and in line with the guidelines issued by the Institute of Chartered Accountants of India (ICAI) created provision of Rs 3,92,92,190/- towards leave encashment, which was debited under the head 'salary and allowances' in the profit and loss account. However, the assessee did not claim any deduction in respect of the said provision in the return of income filed for the said assessment year 1998-99. In the subsequent assessment year 1999-00, the assessee created incremental provision for leave encashment to the extent of Rs. 1,57,07,810/-, which too was not claimed as deduction in the original return of income. However, ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 3 subsequently, in light of the decision of Hon‟ble Apex Court in the case of Bharat Earthmovers Ltd vs. CIT reported in 245 ITR 428 (SC) rendered on 09.08.2000, wherein it was held that provision made for meeting liability incurred under leave encashment scheme was eligible as business deduction, the assessee filed revised return of income for the assessment year 1999-00, claiming deduction of Rs.5,50,00,000/- in respect of provision for leave encashment which included provision of Rs.3,92,92,190/- created in assessment year 1998-99 and incremental provision of Rs. 1,57,07,810/- relating to the assessment year 1999-00. During the course of assessment proceedings for the assessment year 1999-00 (which was being conducted simultaneously with assessment for AY 98-99), the ld AO directed the assessee to explain why provision for leave encashment to the extent of Rs.3,92,92,190/- should not be disallowed being relating to the preceding assessment year 1998-99. Considering the aforesaid query raised by the ld AO, the assessee, in the on-going assessment proceedings for the assessment year 1998-99, filed revised computation of income for the assessment year 1998-99 vide letter dated 16.01.2001 inter-alia claiming deduction in respect of provision for leave encashment amounting to Rs.3,92,92,190/-. However, the ld AO did not consider the aforesaid claim of the assessee and no discussion whatsoever in respect of the said issue was made in the impugned assessment order dated 23.02.2001. During the course of appellate proceedings, the assessee pointed out to the ld CIT(A) that the claim in respect of provision for leave encashment was allowable in view of the decision of the Hon‟ble Apex Court in the case of Bharat Earthmovers (supra) and the ld AO erred in not considering the claim. It is pertinent to note that during the remand proceedings, the ld AO vide remand report dated 16.01.2002, categorically observed that the provision made during the relevant year may be allowed as deduction. The relevant observations of the ld AO are extracted as under:- ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 4 \"It may be mentioned here that previously this provision was not claimed as liability. I, however, do not agree with the point of view that the entire amount should be allowed but only the provision made during the year and whatever amount may be allowed as deduction and balance may be disallowed.\" (emphasis supplied) 6. However, the ld CIT(A) proceeded to deny the claim of provision on the alleged ground that the assessee failed to substantiate that liability for leave encashment had arisen during the assessment year 1998-99. 7. A sum of Rs. 1,57,07,810/- was allowed as deduction in AY 1999- 2000 and a sum of Rs. 3,92,92,190/- being provision made for AY 1998-99 was disallowed. This was upheld by the ld CIT(A). 8. We find that the main grievance of the revenue is that this provision was not claimed in the return of income by the assessee. Since, the time limit for filing revised return had expired, the assessee made the claim during the course of assessment proceedings by filing revised computation of income, which was ignored by the lower authorities. We find that the deduction made on account of provision for leave encashment is allowable as deduction pursuant to the decision of the Hon'ble Supreme Court in the case of Bharat Earthmovers Vs. CIT reported in 245 ITR 428. As the said provision has been made based on actuarial valuation, the assessee had narrated the circumstances under which this claim was made during the course of assessment proceedings by filing the revised computation. We are convinced with the said contention of the assessee. Merely because a particular claim was not made in the valid return, a legitimate deduction should not be denied to the assessee as held by the Hon‟ble Bombay High Court in the case of CIT Vs. Pruthvi Brokers and shareholders reported in 349 ITR 336 (Bom) ; the decision of the Hon‟ble Jurisdictional High Court in the case of CIT Vs Jai Parabolic Springs Ltd reported in 306 ITR 42 (Del) ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 5 and the decision of the Hon‟ble Jurisdictional High Court in the case of CIT Vs. Sam Global Securities Pvt. Ltd reported in 360 ITR 682 (Del). 9. In view of the above observations and respectfully following the various judicial precedents relied upon hereinabove, we hold that assessee would be entitled for deduction of Rs. 3,92,92,190/- made on account of provision for leave encashment for the year under consideration. Accordingly, Ground No. 2 raised by the assessee is allowed. 10. Ground No. 3 raised by the assessee is challenging the confirmation of action of the ld AO by the ld CIT(A) in treating the interest income earned on loans and advances given to employee and staff members as “Income from other sources” while working out deduction u/s 80HHC of the Act. 11. We have heard the rival submissions and perused the materials available on record. In the previous year relevant to the assessment year 1998-99, the assessee inter-alia received interest income on loans/advances given to employees and staff members amounting to Rs.3,45,79,775/- which was assessed as 'income from other sources‟ as against 'business income‟ declared by the assessee. The details of interest earned and paid during the assessment year 1998-99 are given as under:- Interest Income Particulars Amount From banks on credit balances and also on short term deposits Rs.1,09,60,832 Earned from customers against credit facilities extended to them Rs.3,56,42,109 From intercorporate deposits on short term basis Rs.14,10,411 From staff advances Rs.3,45,79,775 From tax free bonds of different PSUs Rs.13,92,30,786 Total Rs.22,18,23,913 ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 6 Interest Paid Particulars Amount To Banks Rs 4,78,57,637 On public deposits Rs.10,42,63,547 On intercorporate borrowings Rs.2,74,34,674 On other account, mainly interest paid to UBS against gold loan Rs. 1,59,95,593 Government (Department of Fertilizer) against supplies of fertilizer Rs.35,699 Total Rs.19,55,87,150 12. In the impugned assessment order, the ld AO excluded the net interest income of Rs.2,62,36,763/- (ie., Rs. 22,18,23,913/- less Rs. 19,55,87,150/-) from 'business income‟ for the purpose of computing deduction under section 80HHC of the Act. On appeal, the ld CIT(A) directed the ld AO to treat interest from banks, customers against credit facilities, inter-corporate deposits and PSUs as business income, in line with the decision rendered for assessment year 2001-02. However, in so far as interest of Rs.3,45,79,775 from staff advances, the action of the ld AO in excluding the same from business income was confirmed by the ld CIT(A). 13. We find that this issue has been restored back by this Tribunal for AY 2001-02 to the file of the ld AO to re-decide this issue after considering the decision of the Hon'ble Delhi High Court decision in assessee‟s own case on the same issue. The relevant operative portion of the Tribunal order in assessee‟s own case for AY 2001-02 in ITA No. 2487 and 3289/Del/2010 and ITA No. 3890/Del/2011 dated 30.11.2016 is reproduced as under:- “16.6 In respect of the interest earned from repayment of loans/ advances given to employees, the assessing officer shall follow the decision of Hon'ble High Court in ITA No.127/2012. Assessee is directed to tender the final order passed by Hon'ble High Court. ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 7 14. Similar directions were given for AYs 2000-01 and 2001-02 by this Tribunal. Hence, maintaining the consistent stand, this issue is restored to the file of the ld AO to decide based on the final outcome of the decision of the Hon'ble Delhi High Court referred supra in assessee‟s own case. Accordingly, Ground No. 3 raised by the assessee is allowed for statistical purposes. 15. Ground No. 4 raised by the assessee is challenging the confirmation of action of the ld AO in treating prior period expenses as part of indirect cost for working out the cost of export of trading goods vis a vis deduction u/s 80HHC of the Act. 16. We have heard the rival submissions and perused the materials available on record. The assessee during the relevant assessment year 1998-99 claimed deduction of Rs.15,87,16,123/- u/s 80HHC of the Act based on certificate issued by Chartered Accountant in Form 10CCAC. In the impugned assessment order, the ld AO restricted the deduction claimed u/s 80HHC of the Act to Rs. 13,01,77,391/- as per Annexure A attached to the assessment order. In restricting the claim of deduction u/s 80HHC of the Act, the ld AO inter-alia treated prior period expenses of Rs.1,51,89,372/- as part of indirect cost for the purpose of determining profit derived from trading exports. It is submitted by the ld AR that the aforesaid prior period expense was not to be treated as indirect cost for the purpose of computation of deduction u/s 80HHC of the Act. The details of prior period expenses incurred are provided as under:- Expenditure/Purchase Amount Cost of Sales 2,24,13,589 Salary & Allowances 21,95,571 Administrative Expenses 24,74,880 ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 8 Interest (16,78,763) Others 2,97,355 Depreciation (81,512) Total 2,56,21,120 Income/Sales Sales (16,58,957) Interest 97,65,023 Other receipts 23,25,682 Total 1,04,31,748 Total (Net) 1,51,89,372/- 17. It was argued by the ld AR that the aforesaid prior period expenses was disallowed by the ld AO on the ground that such expense did not pertain to the assessment year 1998-99. However, for the purpose of compotation of deduction u/s 80HHC of the Act, the ld AO included the same as part of indirect cost. On appeal, the ld CIT(A) though allowed the deduction claimed in respect of prior period expenses, but proceeded to confirm the action of the ld AO in including it as part of 'indirect cost for the purpose of computation of deduction u/s 80HHC of the Act simply on the ground that the same was allowed as business deduction. 18. In this regard, it would be relevant to understand that assessee has been separately allowed deduction on account of prior period expenses on the ground that this expense got crystallized during the year and is meant for business of the assessee. Obviously, the assessee is not aggrieved by this treatment but when the same prior period expenses was sought to be included as part of indirect cost, the assessee is having grievance. This is nothing but divergent stand taken by the assessee and assessee wanted to take double benefit – (i) On allowability of prior period expenses as deduction and (ii) Claiming enhanced deduction u/s 80HHC of the Act by not including prior period expenses as part of indirect cost while computing the deduction u/s 80HHC of the Act. This cannot be permitted. Hence, we ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 9 hold that prior period expenses was to be included as part of indirect cost and the action of the lower authorities in this regard requires to be upheld. Accordingly, the Ground No. 4 raised by the assessee is dismissed. 19. Ground No. 5 raised by the assessee is challenging the action of the ld CIT(A) in not allowing the claim on account of provision for productivity linked incentives. 20. We have heard the rival submissions and perused the materials available on record. It is submitted that during the relevant assessment year 1998-99, the assessee created provision of Rs.1,21,03,623/- towards productivity linked incentive to employees, against which, amount aggregating to Rs.1,07,41,206/- was paid before the due date of filing of return of income for the said assessment year and the balance amount of Rs. 13,62,417/- continued to remain payable. In the impugned assessment order, the ld AO proceeded to invoke provisions of section 43B of the Act and disallowed the provision to the extent of Rs. 13,62,417/- on the ground that the same remained payable. On appeal, though the ld CIT(A) recorded a categorical finding that provisions of section 43B of the Act were not at all applicable in respect of productivity linked incentive, but proceeded to confirm the disallowance made by the ld AO on the ground that the assessee was unable to substantiate the incurrence of such balance liability (i.e. to the extent of Rs. 13,62,417/-) and the subsequent payment made thereof. 21. In any event, in our considered opinion, this provision made for productivity linked incentive is akin to regular staff welfare expenses for the employees and paying them additional incentives/ exgratia which would have to be construed as wholly and exclusively incurred for the purpose of the business of the assessee. Hence, we have no hesitation to hold that said ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 10 provision is a ascertained liability duly eligible for deduction and provisions of Section 43B of the Act cannot be applied at all for the same. Accordingly, Ground No. 5 raised by the assessee is allowed. 22. In the result, the appeal of the assessee for AY 1998-99 is partly allowed for statistical purposes. ITA No. 216/Del/2005 AY 1999-2000 23. Ground Nos. 1 and 13 raised by the assessee are general in nature and does not require any specific adjudication. 24. Ground Nos. 2 and 3 raised by the assessee are challenging the action of the ld CIT(A) in upholding the disallowance of claim of write off of Rs. 101.37 lacs towards pre operative expenses of MITCO which got merged with assessee w.e.f. 01.04.1994. 25. We have heard the rival submissions and perused the materials available on record. It was submitted that the assessee is a public limited company incorporated on 26.09.1963 under the erstwhile Companies Act, 1956 and during the relevant year was engaged in the business of trading and exports of various metals/minerals, non-ferrous metals, fertilizers, agro products and other commodities in bulk. During the assessment year 1996- 97, MICA Trading Co. Ltd. (MITCO), a wholly owned subsidiary of the assessee stood amalgamated with the assessee w.e.f. 01.04.1995, which was duly approved by the Board for Industrial & Financial Reconstruction (BIFR) vide order dated 04.03.1997. The Transfer Date under the Scheme was fixed as 1.04.1994. In terms of the approved rehabilitation plan, the assessee was, post the amalgamation, inter-alia eligible to claim deduction of pre-operative expenses aggregating to Rs.4,05,50,000/-, which had been incurred by MITCO in respect of certain projects undertaken. Pertinently, the above statement clearly states the write off to happen in ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 11 financial year 1994-95, i.e., post amalgamation w.e.f. 1.4.94. On perusal of the above, it may be noted that in terms of the binding scheme of rehabilitation approved by the BIFR, which involved amalgamation of MITCO, the entire amount of preoperative expenses amounting to Rs.4,05,50,000/- was suggested to be written off in one installment itself. However, keeping in view the past practice, the assessee thought it appropriate to apportion the claim over four consecutive assessment years i.e., in four equal installments of Rs.1,01,37,518/- each, commencing from assessment years 1997-98 to 2000-01. Apart from the above, the BIFR also allowed adjustment of accumulated losses/ unabsorbed depreciation of MITCO to the assessee u/s 72A of the Act, which was restricted to the extent of Rs.663.12 lacs. The relevant certificate issued by the BIFR to this effect is extracted as under: \"BOARD FOR INDUSTRIAL & FINANCIAL RESCONSTRUCTION BENCH-1 CASE NO. 502/93: M/s. MICA TRADING CORPORATION LTD (MITCO) Certificate u/s 72A (2) (ii) of Income Tax Act, 1961 It is certified that during the previous year relevant to the assessment year 1996-97 for which set off of accumulated losses/ unabsorbed depreciation is claimed by the amalgamated company M/s. MMTC LTD the business of the amalgamating company, M/s MICA TRADING CORPORATION LTD (MITCO), was carried on by the former company. It is further certified that adequate steps have been taken by the amalgamated company, M/s MMTC LTD. For the rehabilitation and revival of the business of the amalgamating company M/s. MITCO This certificate is issued subject to the condition that the total tax benefit under Section 72(A) (ii) of the Income Tax Act to be availed by the amalgamated company does not exceed Rs. 663.12 lakhs envisaged in the Scheme sanctioned by the Board Order dated 08.04.96. It is further confirmed that Certificate whether filed along with the Return of Income or filed subsequently with the concerned Income Tax Authorities shall be deemed to be considered as due compliance ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 12 of the provisions of Section 72A of Income Tax Act, 1961.\" (emphasis supplied) ) Copy of BIFR certificate is enclosed at pages 175 of the Paper Book. 26. It is pertinent to note that restriction of the aforesaid benefit was in respect of accumulated losses and depreciation u/s 72A of the Act relating to MITCO was for the period prior to amalgamation. The said restriction had nothing to do with the post- amalgamation event, i.e., events post 1.04.1994. It may also be pertinent to note that the claim of the assessee in respect of the aforesaid preoperative expense was allowed in the first year of claim i.e., assessment year 1997-98, after specific query being raised by the ld AO vide Question no. 17 of questionnaire dated 07.02.2000, which was duly replied by the assessee vide letter dated 14.3.2000. Copy of the aforesaid notice and response filed by the assessee is enclosed at pages 183 to 204 of the Paper Book II. In the assessment concluded for the assessment year 1998-99 vide order dated 23.02.2001, the ld AO took a completely contradictory stand and for the first time proceeded to disallow the claim of deduction in respect of preoperative expenses made pursuant to the BIFR order on the alleged ground that the benefit of preoperative expense was subjected to the overall limit of tax benefit of Rs.663.12 lacs, without appreciating that such restriction related only to the claim of adjustment of accumulated losses/ unabsorbed depreciation of MITCO in terms of section 72A of the Act as is evident from the certificate issued by BIER extracted above. On appeal, the ld CIT(A) vide order dated 21.01.2011, deleted the aforesaid disallowance made by the ld AO by holding that \"the direction of the Hon'ble BIFR in regard to allowing benefit of tax credit of Rs.663.12 lacs was applicable only to the accumulated losses and unabsorbed depreciation of M/s MITCO and the same has nothing to do with the routine adjustments with respect to the other claims including ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 13 claim of preoperative expense\". It may be noted that further appeal preferred by the Department on the aforesaid issue before the Tribunal was dismissed on account of low tax effect. Copy of order of Tribunal dismissing the departmental appeal for the assessment year 1998-99 is enclosed at pages 205 to 208 of Paper Book II. In the impugned assessment order passed for the relevant assessment year 1999-00, the ld AO merely following the order passed for preceding assessment year 1998-99 proceeded to deny the claim of deduction amounting to Rs. 1,01,37,518/- in respect of preoperative expenses pertaining to MITCO. On appeal, the ld CIT(A) confirmed the disallowance made by the ld AO by misinterpreting the direction of BIFR. It may be critical to note here that the ld CIT(A)'s order for the relevant assessment year 1999-00 was passed on 19.11.2004 i.e., before the ld CIT(A) order for assessment year 1998-99 i.e., in other words, the ld CIT(A) order for assessment year 1998-99 was passed after considering and dissenting from the adverse view taken by the ld CIT(A) in AY 1999-00. It may also be pertinent to note that the claim of deduction in respect of preoperative expense has also been allowed in assessment year 2000-01. It is submitted that the ld AO / ld CIT(A) failed to appreciate that the BIFR vide its order/ certificate, merely provided that the benefit of adjustment of accumulated losses/ unabsorbed depreciation of MITCO in terms of section 72A of the Act alone would stand restricted to Rs 663.12 lakhs and nowhere provided for any capping/restriction in respect of other expenses. 27. it was submitted that as per Section 32 of Sick Industrial Companies Act, 1985, the provisions of the scheme approved by BIFR has overriding effect over anything inconsistent contained in any other law, which includes the provisions of Income Tax Act also. Reliance in this regard is placed on the CBDT Circular dated 31.08.1990 and the decision of Hon'ble Delhi High ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 14 Court in the case of Lord Chlora Alkalies Ltd Vs. DGIT in WP(C) No 1915/2013 dated 19.07.202(Del). The total tax benefit eligible u/s 72A of the Act has been provided in the BIFR order for Rs. 663.12 lacs which is enclosed in page 162 of the Paper Book. It is pertinent to note that the restriction of the aforesaid benefit of accumulated loss and depreciation of Rs. 663.12 lacs u/s 72A of the Act is relevant to MITCO for the period prior to the date of amalgamation. The date of amalgamation is 01.04.1994. The amalgamation therefore had been approved at a later date post 01.04.1994. But in the mean while, some expenses had been incurred and claimed in the books of Mitco from 01.04.1994, which are regular in nature. They are allowable as deduction in the hands of the assessee as part of consolidation. We find that the BIFR order restricting the claim of accumulated loss and depreciation of MITCO u/s 72A of the Act has got nothing to do with the post amalgamation events i.e. events happening in the form of incurrence of regular expenses of MITCO post 01.04.1994. Hence, we have no hesitation to hold that the assessee would be entitled for deduction of Rs. 101.37 lacs during the year under consideration. Accordingly, Ground Nos. 2 and 3 raised by the assessee are allowed. 28. Ground No. 4 raised by the assessee is challenging the addition made on account of employees contribution to PF of Rs. 1,21,81,971/- beyond the due date prescribed under respective Act but before the due date of filing of income tax return u/s 139(1) of the Act. We find that this issue has been decided against the assessee by the Hon'ble Supreme Court in the case of Checkmate Services Vs. CIT reported in 143 taxmann.com 178 and accordingly Ground No. 4 raised by the assessee is dismissed. 29. Ground No. 5 raised by the assessee is challenging the action of the ld CIT(A) in upholding the action of the ld AO by adding gross interest paid ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 15 instead of net interest while working out the deduction u/s 80HHC of the Act. 30. We have heard the rival submissions and perused the materials available on record. The assessee, being a trader exporter claimed deduction u/s 80HHC of the Act as computed as under: Export Turnover (A) Less: Direct Costs (B) Indirect Costs (C ) Amount admissible for 80HHC deduction (A)- (B)- (C ) 31. The assessee, while computing deduction as aforesaid and while computing \"indirect costs\", considered net interest paid, i.e., interest paid less interest income, for the purpose of computation of deduction u/s 80HHC of the Act. However, the Revenue considered gross interest paid of Rs. 19,19,86,297/-. 32. This issue has already decided in assessee‟s own case by this Tribunal in ITA No. 1722/Del/2006 dated 30.03.2023 for AY 2003-04 wherein, by placing reliance on the decision of the Hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. vs. CIT reported in 343 ITR 89 (SC), the Tribunal held only the net interest is to be considered while computing deduction u/s 80HHC of the Act. Hence, respectfully following the same, the Ground No. 5 raised by the assessee is allowed. 33. Ground No. 6 raised by the assessee is challenging the action of the ld CIT(A) in upholding the action of the ld AO by including the certain items ( as detailed below in later part of this order) as part of indirect cost for working out deduction u/s 80HHC of the Act. ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 16 34. We have heard the rival submissions and perused the materials available on record. In the computation of total income, the assessee claimed deduction u/s 80HHC of the Act amounting to Rs.19,19,99,875/-. The claim of the assessee was supported by report of the Chartered Accountant u/s 80HHC(4) of the Act. The ld AO, however, recomputed the claim of deduction u/s 80HHC of the Act at Rs.14,67,44,405/-/- as against deduction of Rs. 19,19,99,875/- claimed by the assessee. In restricting the claim of deduction, the ld AO inter-alia treated the following expenses as part of 'indirect cost‟ for the purpose of computation of deduction u/s 80HHC of the Act:- Bad Debts written off - Rs.7,63,25,036 Destinational Weight and Analysis Risk - Rs.3,26,44,250 Prior Period Adjustments taken at gross amount of Rs.6,67,23,989 without reducing prior period income (net amount charged to P&L Account is only Rs.4,62,39,000) Statutory liabilities written back - Rs.7,28,69,363 Bad debts written off – Rs 7,63,25,036/- 35. The assessee has submitted that the aforesaid amount of Rs.7.63 crores considered by the ld AO comprised of two components - (i) bad debts written off during the year - Rs.3.34 crores; and (ii) provision for bad debts no longer required written back during the year - Rs.4.29 crores. It is of utmost importance to note that the amount of bad debts written off during the year amounting to Rs.3.34 crores had already been suo-moto considered for the purpose of working out indirect cost under the head \"Administration and General Expense\" and thus the adjustment made by the ld AO has resulted in inflating the expenses twice. Further, in so far as provision written back of Rs.4.29 crores, which has been credited to the profit & loss account, the same being in the nature of income, cannot be ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 17 considered as part of 'cost/expense', much less in the nature of indirect cost. 36. It could be seen that as and when the provision for bad debts has been made in the respective years the assessee consistently had been disallowing it voluntarily in the computation of income. When any such provision is treated no longer required and accordingly credited to profit and loss account in subsequent years, then the said credit in profit and loss account had to be reduced from the computation of income in order to avoid double taxation. The sum of Rs. 4.29 crores representing provision for bad debts no longer required written back during the year falls in this category and accordingly deserves to be reduced as part of indirect cost. Further, we find that the total debit to profit and loss account in respect of bad debts written off was Rs. 3,34,27,122/- which is evident from the audited balance sheet. Hence, for the purpose of computing deduction u/s 80HHC of the Act, the ld AO cannot take a different figure as part of indirect cost which is not reflected as expenditure in the profit and loss account. Hence, relief is granted to the extent of Rs. 4,28,97,914/- (Rs.7,63,25,036- Rs.3,34,27,122/-) to the assessee in respect of bad debts as not to be treated as part of indirect cost. 37. With regard to actual bad debts written off Rs. 3,34,27,122/- we find that same is part of total administrative and general expenses of Rs. 35,93,12,072/- which fact is evident from page 40 of Paper Book containing audited financial statement. Hence, inclusion of bad debts written off of Rs. 3,34,27,122/- again as separate line item in Annexure A to computation of deduction u/s 80HHC as part of indirect cost, tantamount to double addition. Hence, we direct the ld AO to remove Rs. 3,34,27,122/- as part of indirect cost while computing deduction u/s 80HHC of the Act. ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 18 38. To provide clarity, we hold that the entire sum of Rs. 7,63,25,036/- (3,34,27,122/- +Rs. 4,28,97,914/-) on account of bad debts should not be treated as part of indirect cost while computing deduction u/s 80HHC of the Act in the facts and circumstances of the instant case and in view of the observations given above. Destinational Weight And Analysis Risk-32644250 39. It is submitted that in order to cover the risk of quality of material, moisture content in material, shortage etc., at the port of discharge where the material is surveyed and analyzed, the assessee, as a matter of practice, makes provision for destinational weight and analysis risks in the range of 1% to 3%, depending upon the area from where the ores are extracted and exported. After analysis and weighment at the load port, provision is created on the amount of provisional sale price booked in the accounts. During the relevant assessment year, provision of Rs.3,26,44,250/- was created towards Destinational weight and analysis risk. It may be pertinent to note that in the year of creation of provision for destinational weight and analysis risk, the same is added back in the computation of income. Further, when a certain amount out of the earlier year(s) provision is no longer required, the same is written back and credited to the profit & loss account and if the same is actually utilized, only then it is claimed as deduction. It is emphatically submitted that the aforesaid expense is related to the manufacturing activity undertaken by the assessee and has no relation with the trading export activity and therefore cannot be considered as part of indirect cost. 40. This sum of Rs. 3,26,44,250/- was treated as part of indirect cost arising of trading activities while computing deduction u/s 80HHC of the Act by the ld AO which stood upheld by the ld CIT(A). But ld AR submitted that expenses relates to manufacturing activity and has no relation to trading ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 19 export activities. In our considered opinion, this matter has to be factually verified as to whether the said expenditure incurred relates to manufacturing activity or trading export activities. Hence, in the interest of justice and fairplay, we deem it fit and appropriate to restore this aspect of the issue to the file of the ld AO for de novo adjudication in accordance with law. Prior period expenses- Rs. 6,67,23,989/- 41. We have already held that this expenditure is to be construed as part of indirect cost for the purpose of claiming deduction u/s 80HHC of the Act for AY 1998-99. 42. Accordingly, Ground No. 6 is partly allowed for statistical purposes. 43. Ground No. 7 raised by the assessee is challenging the action of the ld AO in upholding the action of the ld AO by taking the gross rental income instead of net rental income as part of other income and reducing 90% therefrom while computing deduction u/s 80HHC of the Act. 44. We have heard the rival submissions and perused the materials available on record. The rental payment made by the assessee was more than the rental income earned by the assessee. The assessee considered net rental income, if found to be positive in the deduction u/s 80HHC of the Act. The ld AO took the gross rental income, which stood upheld by the ld CIT(A). We find that this issue is no longer res integra in view of the decision of the Tribunal in assessee‟s own case for AY 2003-04 in ITA No. 1722/Del/2006 dated 30.06.2023 wherein, it has been held that net rental income should be considered by placing reliance on the decision of the Hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd Vs. CIT reported in 343 ITR 89. Accordingly, Ground No. 7 raised by the assessee is allowed. ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 20 45. Ground No. 8 raised by the assessee is challenging the order of the ld CIT(A) in upholding the action of the ld AO in treating the following items as part of other income and thereafter reducing 90% thereby reducing the benefit u/s 80HHC of the Act:- Miscellaneous receipts Liabilities written back Foreign exchange gain Grant in aid 46. We have heard the rival submissions and perused the materials available on record. The aforesaid receipts were treated by the assessee as other income and considered as part of business income of the assessee eligible for deduction u/s 80HHC of the Act. The ld AO treated the same as not derived from the business of export and therefore not eligible for deduction u/s 80HHC of the Act. Accordingly, the ld AO proceeded to reduce 90% of the aforesaid receipts while computing profit and loss account of the business in terms of clause (baa) of Explanation to Section 80HHC of the Act. This action of the ld AO was upheld by ld CIT(A). 47. We find that this is akin to Ground No. 7 raised and has already been decided by the Co-ordinate Bench decision of this Tribunal for AY 2003-04 in assessee‟s own case referred supra. The decision rendered thereon shall apply for this year also on the said issue. Accordingly, Ground No. 8 raised by the assessee is allowed. 48. Ground No. 9 raised by the assessee is challenging the order of the ld CIT(A) with regard to treatment of profit on sale of assets vis-a-vis deduction u/s 80HHC of the Act. ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 21 49. We have heard the rival submissions and perused the materials available on record. A sum of Rs. 9,78,490/- was credited in the profit and loss account as profit on sale of assets under other income. The ld AO considered the same as income from other sources for the purpose of determining deduction allowable u/s 80HHC of the Act. Aggrieved, the assessee preferred an appeal before the ld CIT(A), who did not record any finding on this issue. The ld AR submitted that profit on sale of asset represent income from disposal of fixed assets which formed part of the block of assets, being the nature of capital receipts and could not have been considered as part of other income for the purpose of computing deduction u/s 80HHC of the Act. This proposition is purely a legal issue and hence, we proceed to adjudicate at our level for the first time even though the ld CIT(A) had not given any finding. Since, the matter being very old, sending back this particular ground alone to the file of the ld CIT(A) would serve no purpose. Hence, we proceed to adjudicate the same at the level of Tribunal directly. It is a fact that a sum of Rs. 9,78,490/- is credited as part of other income on account of profit on sale of assets and whether this receipt is to be construed as capital receipt or revenue receipt is of no relevance as far as computation of deduction u/s 80HHC of the Act. All said and done, this profit on sale of assets has been credited by the assessee itself in its profit and loss account considering it as revenue receipt. No revised return or no revised computation was made by the assessee to shift the same as capital receipt either during the course of assessment proceedings or during the course of first appellate proceedings or during before us. Hence, that question per se need not be gone into at all at this level. Be that as it may, the said receipts have been credited in the profit and loss account. The same would have to be considered as part of other income. Consequently, need to be part of the computation of deduction u/s 80HHC of the Act. ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 22 Hence, we do not find any infirmity in the action of the lower authorities in this regard. Accordingly, Ground No. 9 raised by the assessee is dismissed. 50. Ground No. 10 raised by the assessee is challenging the order of the ld CIT(A) in directing the ld AO to enhance the income of the assessee for reducing 100% income from units of Unit Trust of India instead of 90% as done by the ld AO. 51. We have heard the rival submissions and perused the materials available on record. This income is derived out of investment made in Unit Trust of India (UTI) either out of business funds or out of borrowed funds. This investment has got absolutely no relevance or link or direct nexus with the activity of trading export and hence, the income derived thereon need to be treated as part of income from other sources not eligible for deduction u/s 80HHC of the Act. Hence, we do not find any infirmity in the order of the lower authorities. Accordingly, Ground No. 10 raised by the assessee is dismissed. 52. Ground No. 11 is challenging the order of the ld CIT(A) in not disposing of the assessee‟s contention that deduction u/s 80HHC is to be restricted to Gross Total Income instead of income from business as was done by the ld AO. 53. We have heard the rival submissions and perused the materials available on record. The assessee, it is submitted, is a merchant and manufacturer exporter and is entitled to deduction under section 80HHC of the Act as computed in accordance with the strait jacket formula prescribed in section 80HHC(3) of the Act. The ld AO, however, held that deduction u/s 80HHC of the Act is to be restricted only to business income as against Gross Total Income claimed by the assessee. ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 23 54. This issue was subject matter of adjudication by this Tribunal in assessee‟s own case in ITA No. 1722/Del/2006 for AY 2003-04 dated 30.06.2023 wherein, it was held as under:- 25. In regard to ground no. 4 to 6, on behalf of the assessee the Ld Counsel submitted that as assessee is the merchant and also exporter of manufactured goods. The deductions have to be allowed with the strait jacket formula prescribed in sub section (3) of section 80HHC. It was submitted that the Assessing Officer has fallen in error while holding the deduction u/s 80HHC of the Act is to be restricted to business income forming part of the gross total income and therefore assessee is not entitled to deduction u/s 80HHC. It was submitted that as per sub section (1) of section 80HHC of the Act an exporter is entitled to deduction in respect of profits derived from export and in case of an exporter like present assessee who is engaged in both export of trading goods i.e. goods other than, one manufactured by the assessee and also goods manufactured by the assessee, then the profits derived from export which formed the basis for deduction under the said section is computed in accordance with formula prescribed in sub-section (3) of sub section 80HHC of the Act. It was submitted that Chapter VI-A of the Act deals with deduction to be made in computing total income. According to section 80A of the Act, in computing the total income of assessee deductions specified in section 80C to 80U are allowed from gross total income. It was submitted that the only limitation contained in sub section 2 of section 80A is that the aggregate deduction under Chapter VI-A of the Act cannot exceed the gross total income which is defined in section 80B(5). It was submitted that the aforesaid interpretation establishes that first the gross total income has to be computed and thereafter deductions if any under Chapter VI-A of the Act have to be made. It was submitted that in the case of assessee the profit eligible for deduction u/s 80HHC of the Act is the profit which stood included in the gross total income and because of loss suffered in other business and exclusión of interest and dividend income, the overall computation under the head \"profit and gains of business or profession\" was arrived at a negative figure by the Assessing officer. It was submitted that it is incorrect to say that the profits from export of goods did not form part of gross total income to deny deduction u/s 80HHC of the Act in respect thereof. It was submitted that in assessee's own case for assessment year 2001-02 relying IPCA Laboratories Ltd. case the Tribunal has held that since business income of assessee was negative after excluding interest, dividend and miscellaneous income, no deduction was allowable under that section. Ld. Counsel submitted that the aforesaid decision for assessment year 2001-02 is challenged and pending before Hon'ble High Court. It was submitted that in IPCA case issue involved was ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 24 regarding computation of deduction u/s 80HHC (3)(c) of the Act and the issue regarding allowance of deduction was not subject matter of the dispute. It was submitted that in the present case the issue pertains to the question of set off of deduction computed in terms of section 80HHC (3)(c) of the Act in arriving as the total income. Ld. Counsel relied for judgment of Hon'ble Supreme Court of India in CIT vs. Williamson Financial Services 297 ITR 17 and Bombay High Court in V. M. Salgaoncar Sales International vs. ACIT: 281 CTR 191. 26. Ld. Counsel relied judgment of Hon'ble Supreme Court of India in Commissioner of Income Tax v. Reliance Energy Ltd (2021) 127 taxmann.com 69 to draw an analogy, where in regard to section 801A it is held that the scope of sub section 5 of section 801A is limited to determination of quantum of deduction under sub section (1) of section IA by treating 'eligible business' as 'only source of income' and sub section 5 cannot be pressed into service for reading a limitation of deduction under sub-section (1) only to business income. 27. Ld DR however endorsed the findings of Ld Tax authorities below. It was submitted that in assesse's own case relying IPCA Case, findings have been given against the assessee and matter is pending before Hon'ble High Court. 28. In regard to these grounds it can be observed that the assessee had reported profit of the business at R 2,47,088,375/- while profits from export of trading goods at 33,78,35,239/-. The Gross Total Income (Revised) was submitted at Rs. 19,13,55,170 and the Id AO arrived at Business income of (-) 913479702/- after reducing the interest income and dividend and in alternative the adjusted business profit is calculated at (-)Rs. 313591737/ after reducing the interest income and 90% of other income including dividend income. 29. Now, in regard to manner of treating interest income of assessee the issue has been restored to the files of Ld AO. Therefore, the effect giving order has to passed by the ld AO and the Business income has to be re-calculated. Similarly on determination of ground no 3 as above and also the interest income issue as determined by previous orders, the 'Adjusted business profit has to be recalculated. Therefore, by merely relying the decision of Hon'ble Supreme Court in IPCA Laboratories Ltd. Case, the 80HHC deduction can not be declined as adjusted business profit has to be recomputed and may not be in minus. 29.1 At the same time in regard to the applicability of Section 80AB for not allowing deduction u/s 80HHC, as AO arrived at net loss from the profit and gains of business and profession, the judgement of Hon'ble Supreme Court in the case of Commissioner of Income Tax-1 versus Reliance Energy Ltd. [2021]127 taxmann.com69 (SC) now hold the key where Hon'ble apex Court has held; ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 25 9. The controversy in this case pertains to the deduction under Section 80-1A of the Act being allowed to the extent of 'business income only. The claim of the Assessee that deduction under Section 80-IA should be allowed to the 5 (1986) 3 SCC 538 6 [2010] 328 ITR 448 (Bombay) 9 Page extent of 'gross total income was rejected by the Assessing Officer. It is relevant to reproduce Section 80AB of the Act which is as follows: \"80AB. Deductions to be made with reference to the income included in the gross total income. Where any deduction is required to be made or allowed under any section included in this Chapter under the heading \"C Deductions in respect of certain incomes\" in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income.\" As stated above, Section 80AB was inserted in the year 1981 to get over a judgment of this Court in Cloth Traders (P) Ltd. (supra). The Circular dated 22.09.1980 issued by the CBDT makes it clear that the reason for introduction of Section 80AB of the Act was for the deductions under Part C of Chapter VI-A of the Act to be made on the net income of the eligible business and not on the total profits from the eligible business. A plain reading of Section 80AB of the Act shows that the provision pertains to determination of the quantum of deductible income in the 'gross total income'. Section 80AB cannot be read to be curtailing the width of Section 80-IA. It is relevant to take note of Section 80A(1) which stipulates that in computation of the total income of an assessee, deductions specified in Section 80C to Section 800 of the Act shall be allowed from his 'gross total income'. Sub-section (2) of Section 80A of the Act provides that the aggregate amount of the deductions under Chapter VI- A shall not exceed the 'gross total income' of the Assessee. We are in agreement with the Appellate Authority that Section 80AB of the Act which deals with determination of deductions under Part C of Chapter VI-A is with respect only to computation of deduction on the basis of 'net income'. 30. Therefore, these grounds no 4 to 6 are allowed for statistical purpose while directing the Ld. AO to recompute the deduction u/s 80HHC, while giving effect to the judgment of Hon'ble Supreme court in Commissioner of Income Tax-1 versus Reliance Energy Ltd.(Supra).” ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 26 55. Respectfully following the same, the Ground No. 11 is restored to the file of the ld AO to recompute the deduction u/s 80HHC of the Act in the light of the judgment of Hon‟ble Supreme Court in the case of Reliance Energy Ltd reported in 127 taxmann.com 69 (SC) . Accordingly, Ground No. 11 raised by the assessee is allowed for statistical purposes. 56. Ground No. 12 raised by the assessee is to be dismissed as infructuous in view of our decision in Ground No. 2 for AY 1998-99. 57. In the result, the appeal of the assessee for AY 1999-2000 is partly allowed for statistical purposes. ITA 2732/Del/2006-AY 2004-05- Assessee’s appeal 58. Ground Nos. 1 and 11 raised by the assessee are general in nature and does not require any specific adjudication. 59. Ground No. 2 raised by the assessee is challenging the order of the ld CIT(A) in treating interest income of Rs. 31,96,06,868/- and dividend income from MMTC Trust National Pte Ltd (MTPL) of Rs. 95,95,039/- as income from other sources. 60. We have heard the rival submissions and perused the materials available on record. The interest income and dividend income were to be construed as business income or income from other sources was subject matter of consideration by this Tribunal in assessee‟s own case for AY 2001- 02. The ld AR placed on record the copy of order giving effect to Tribunal for AY 2001-02 u/s 143(3) read with Section 254 of the Act dated 22.12.2020 in pages 21 to 30 of the case law Paper Book, wherein in para 31, the ld AO had agreed to the finding of the Tribunal that interest income is to be construed as business income. However, with regard to dividend income, we find that this was made as an investment in MMTC and ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 27 assessee is obviously not engaged in the business of making investments. Either way dividend income is sought to be taxed only u/s 56 of the Act as income from other sources. We direct accordingly. Hence, Ground No. 2 raised by the assessee is partly allowed. 61. Ground Nos. 3, 7 and 8 raised by the assessee are only challenging the action of the ld CIT(A) in upholding the action of the ld AO in restricting deduction u/s 80HHC of the Act to “income from business” as against Gross Total Income”. 62. This issue is already decided by us in Ground No. 11 for AY 1999- 2000. The decision rendered thereon shall apply for this assessment year also. 63. Ground Nos. 4 to 4.1 raised by the assessee are identical to ground Nos. 7 and 8 raised by the assessee for AY 1999-2000 and hence, decision rendered thereon shall apply for this year also. 64. Ground Nos. 5, 6, 9 raised by the assessee are challenging the order of the ld CIT(A) in not allowing netting of interest expenditure against interest income for the purpose of claiming deduction u/s 80HHC of the Act. The assessee while computing the amount admissible for deduction u/s 80HHC of the act had considered net interest (interest paid less interest income) in the indirect cost. The revenue considered gross interest paid. This issue is no longer res integra in view of the decision of the Hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd Vs. CIT reported in 343 ITR 89 (SC) wherein it has been held only the net interest is to be considered. Respectfully following the same, Ground Nos. 5, 6 and 9 raised by the assessee are allowed. ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 28 65. Ground Nos. 10 to 10.2 raised by the assessee are challenging the disallowance u/s 14A of the Act. 66. We have heard the rival submissions and perused the materials available on record. It is not in dispute that the assessee had earned dividend income at Rs. 2,97,04,556/- from the Units of Unit Trust of India which was claimed as exempt u/s 10 of the Act. The ld AO disallowed proportionate interest expenses of Rs. 1,61,69,085/- u/s 14A of the Act as expenses incurred for the purposes of earning exempt income which stood confirmed by the ld CIT(A). There is no question of applicability of computation mechanism provided in Rule 8D(2) of the Income Tax Rules for making the disallowance u/s 14A of the Act up to 2007-08 as Rule 8D was introduced in the statute only w.e.f 24.03.2008 and applicable only from AY 2008-09 onwards. In these circumstances, the Hon‟ble Calcutta High Court had an occasion to consider the disallowance u/s 14A of the Act wherein, they held that 1% of exempt income should be disallowed u/s 14A of the Act in the case of CIT Vs. RR Sen & Brother P Ltd in GA-3019 of 2012 in ITAT No. 243 of 2012 dated 04.01.2013 as under:- “The assessee did not show any expenditure incurred by him for the purpose of earning the money which is exempted under income tax. The tribunal has computed expenditure at 1% of such dividend income, which, according to them, is the thumb rule applied consistently. We find no reason to interfere. The appeal is dismissed.\" 67. Respectfully following the same, Ground Nos. 10 to 10.2 raised by the assessee are partly allowed. 68. The assessee has raised an additional ground of appeal seeking claim of foreign tax credit. This additional ground goes to the root of the matter and is hereby admitted and restored to the file of the ld AO as was done in ITA Nos. 216 &1416/Del/2011 MMTC Ltd Page | 29 AY 2003-04 by this Tribunal. Accordingly, additional ground is hereby admitted and allowed for statistical purposes. 69. In the result, the appeals of the assessee are partly allowed for statistical purposes. Order pronounced in the open court on 23/04/2025. -Sd/- -Sd/- (ANUBHAV SHARMA) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 23/04/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "