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Issues involved: Appeal against separate orders of CIT (A) for assessment years 2002-03 and 2004-05, involving sales commission paid to foreign agents without TDS, treatment of processing charges under S.80HHC, treatment of other incomes under S.80IA and 80IB, computation of deduction under S.80HHC after reducing deductions under S.80IA and 80IB, exclusion of sales-tax from turnover for S.80HHC, and treatment of non-compete fees as taxable capital gain.
Sales Commission without TDS: - The CIT(A) deleted the addition of sales commission paid to foreign agents without TDS, citing Circular 786 dated 17-2-2000 exempting such payments from TDS under S.195. - Rulings in Transmission Corporation of A.P. Limited and Cheminor Drugs cases were deemed inapplicable as the commission was directly paid to non-resident agents for services abroad. - The order of the CIT(A) upholding the exemption was affirmed. Treatment of Processing Charges under S.80HHC: - Both parties agreed that the issue is decided in favor of the department by the Bombay High Court in Ajanta Pharma Ltd. case. - The ground raised by the revenue regarding processing charges in computing deduction under S.80HHC was allowed. Treatment of Other Incomes under S.80IA and 80IB: - The Tribunal followed the decision in Godavari Drugs case, allowing treatment of foreign exchange gains and miscellaneous income while computing deductions under S.80IA and 80IB. - The orders of the CIT(A) on this issue were confirmed. Computation of Deduction under S.80HHC: - The issue of computing deduction under S.80HHC after reducing deductions under S.80IA and 80IB was discussed based on a previous case. - The matter was restored to the assessing officer to ensure compliance with the Special Bench ruling on preventing repetitive deductions. Exclusion of Sales-Tax for S.80HHC Deduction: - The issue of excluding sales-tax from turnover for computing deduction under S.80HHC was decided in favor of the assessee based on the CIT vs. Laxmi Machine Works case. - The ground raised by the revenue was dismissed. Treatment of Non-Compete Fees: - The treatment of non-compete fees as taxable capital gain was ruled in favor of the assessee based on a previous Tribunal decision and the Calcutta High Court case. - The insertion of sub-section (va) to section 28 of the Income-tax Act was deemed inapplicable for the assessment year in question. - The ground raised by the revenue on this issue was dismissed. Overall Result: - Both appeals filed by the revenue were treated as partly allowed for statistical purposes based on the above findings.
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