2011 (9) TMI 1084 - AT - Income Tax

Addition u/s 41 - exclude receipt on sale of services in computing profit of the business under Explanation (baa) to section 80 HHC - disallowance of claim for deduction should have been restricted to only profits on transfer of DEPB licence and not on gross receipts - reducing deduction u/s. 80-IB while computing deduction under section 80 HHC - dis allowance of deduction u/s. 80M on dividend distributed.

Summary

Issues involved:
1. Correctness of CIT(A)'s order regarding addition made under section 41(1) of Rs. 3,06,20,848.
2. Inclusion of sales of services in total turnover for deduction under section 80 HHC.
3. Deduction of miscellaneous receipts and income from non-trade investments.
4. Reduction of deduction under section 80-IB while computing deduction under section 80 HHC.
5. Disallowance of deduction under section 80M on dividend distributed.

Issue 1: The appellant challenged the correctness of CIT(A)'s order regarding the addition made under section 41(1) of Rs. 3,06,20,848. The Tribunal upheld the grievance of the assessee, citing a Special Bench decision in a similar case. The appellant succeeded on this issue, and Ground No.1 was allowed.

Issue 2: The appellant contested the inclusion of sales of services in total turnover for deduction under section 80 HHC. The Tribunal remitted the issue to the Assessing Officer for reworking the claim based on Supreme Court guidelines. The Tribunal rejected the appellant's contention regarding DEPB license sale proceeds, citing a Bombay High Court judgment. Ground No.2 was partly allowed for statistical purposes.

Issue 3: The appellant disputed the deduction of miscellaneous receipts and income from non-trade investments. These issues were not pressed by the appellant's counsel and were dismissed as not pressed.

Issue 4: The appellant challenged the reduction of deduction under section 80-IB while computing deduction under section 80 HHC. The Tribunal referred to previous decisions and held in favor of the appellant based on a Jurisdictional High Court judgment. Ground No.3(iii) was allowed.

Issue 5: The appellant appealed against the disallowance of deduction under section 80M on dividend distributed. The Tribunal upheld the appellant's grievance based on a Bombay High Court ruling, directing the Assessing Officer to grant relief. Ground No.4 was allowed in favor of the appellant.

In conclusion, the Tribunal partly allowed the appeal, addressing various issues related to deductions and additions under different sections of the Income Tax Act, 1961. The judgments were based on relevant legal precedents and guidelines provided by higher courts, ensuring a fair and just decision in each matter.