2013 (2) TMI 884 - HC - Income Tax

Summary

Issues involved:
The judgment involves the following issues:
1. Whether certain amounts should be excluded from business profits for computing deduction u/s.80 HHC of the Act.
2. Application of a specific High Court ruling to the case.
3. Disallowance of a written-off amount on account of intercorporate deposits.
4. Disallowance of agency commission paid for obtaining Government contracts.

Issue 1:
The first issue pertains to whether certain amounts should be excluded from business profits for computing deduction u/s.80 HHC of the Act. The Tribunal upheld the exclusion of net exchange gain and miscellaneous receipts from business profits, despite them being income from an independent source. The High Court found no fault with this decision as the amounts were not related to the export business, thus justifying the Tribunal's stance.

Issue 2:
The second issue involves the application of a jurisdictional High Court ruling to the case. The Tribunal did not apply the ratio of a specific High Court case to the present scenario. The High Court admitted the appeal on this issue, indicating a different facet from the first question.

Issue 3:
Regarding the third issue of disallowance of a written-off amount on account of intercorporate deposits, the dispute was whether the amount should be treated as a business loss or a bad debt. The respondent-assessee had advanced intercorporate deposits to various companies, with interest earned being taxed. When a company became unable to repay, the respondent wrote off the amount as bad debts. The Tribunal upheld the CIT(A)'s decision to treat it as a business loss, considering the history of the transactions and tax treatment. The High Court found no reason to interfere with this factual finding.

Issue 4:
The final issue concerns the disallowance of agency commission paid for obtaining Government contracts. The Tribunal allowed the claim based on past rulings in the assessee's favor for earlier assessment years. The High Court noted that the revenue did not challenge these earlier rulings or provide distinctions for the current year. Therefore, the Tribunal's decision to allow the commission expenses as deduction was upheld.