2009 (11) TMI 925 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT(A) u/s 143(3) of IT Act for AY 2005-06; Claim of export incentives Duty Drawback/DEPB u/s 80IB; Reduction of deduction u/s 80IB; Disallowance of telephone expenses.

Claim of export incentives Duty Drawback/DEPB u/s 80IB:
The assessee, an exporter, claimed deduction u/s 80IB on duty drawback and DEPB received. AO disallowed the claim, upheld by CIT(A) citing precedents. Assessee appealed. AR conceded to SC's decision confirming duty drawback/DEPB as ancillary profits, not eligible for deduction u/s 80IB. Appeal dismissed.

Reduction of deduction u/s 80IB:
During survey, excess stock led to additional income of Rs. 40 lakhs surrendered. AO treated it as other income, denying 80IB deduction. Assessee argued income was from industrial undertaking, hence eligible for deduction. DR contended excess stock not linked to industrial income. Tribunal found surrendered income not from industrial undertaking, following SC's Liberty India decision. Claim for deduction u/s 80IB denied.

Disallowance of telephone expenses:
AO and CIT(A) disallowed Rs. 26,442 of telephone expenses as personal expenditure. Tribunal reduced disallowance to 1/10th considering nature of business. AO directed to adjust accordingly.

In conclusion, the appeal was partially allowed by the Tribunal.