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Issues involved:
The judgment involves issues related to disallowance of foreign travel expenditure and reduction of claim under u/s 80HH and 80-I. Disallowed foreign travel expenditure: The appellant, a company manufacturing water purifier systems, claimed expenditure on foreign travel, disallowed by the AO on the basis that it was not incurred for business purposes. The CIT(A) upheld this decision. The appellant argued that the expenses were indeed for business purposes, especially for sales promotions. The Tribunal found that the AO did not adequately examine the claim and ordered a fresh assessment to properly consider the issue, noting discrepancies in the claim and the appellant's sales structure. The case was restored to the AO for further review. Reduction of claim u/s 80HH and 80-I: Another issue involved the reduction of the claim under u/s 80HH and 80-I on duty drawback and interest, as these sums were deemed not derived from industrial undertakings. The appellant argued that duty drawback should be considered as profits and gains of the business, citing relevant case law. The Tribunal analyzed the nature of duty drawback and its relation to industrial undertakings, concluding that duty drawback qualifies for deduction under u/s 80HH and 80-I as it is directly linked to the industrial undertaking's profits and gains. The ground was allowed in favor of the appellant in both years. Conclusion: The Tribunal partially allowed the appeals of the assessee, directing a fresh assessment on the disallowed foreign travel expenditure and allowing the claim under u/s 80HH and 80-I related to duty drawback.
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