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TMI Blog1995 (6) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... yanan, learned Chartered Accountant, very fairly brought to our notice that the disallowance was to be confirmed in the light of the decision of the Kerala High Court reported in 138 ITR 1 as affirmed by the Supreme Court in 208 ITR 649. Accordingly, the ground against the disallowance under section 40A(5) in respect of the expenditure on building, depreciation thereon and repairs to furniture are decided against the assessee. 3. The assessing authorities disallowed the expenditure on motor cars together with the depreciation thereon at 1/3rd of such expenditure under the provisions of section 40A(5) of the Act. 4. Shri Ananthanarayanan, learned Chartered Accountant, while conceding that the disallowance is called for in terms of the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her words, their dearness allowance was fixed as against the variable dearness allowance paid to other staff members. Further, the company did not want to have a permanent commitment towards these staff and that is why the ex gratia payments were made solely at the discretion of the management. He further argued that the payments were ranging from Rs. 105 at the minimum end of the scale to Rs. 3,650 at the maximum end of the scale. The company had profits to the tune of Rs. 396 lakhs and in these circumstances, the ex gratia payment should be allowed under section 37 of the Income-tax Act. The authorities erred in viewing the payment as bonus payment coming within the purview of section 36(1)(i) of the Income-tax Act, 1961. The learned depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer and confirmed in appeal. The learned Chartered Accountant relies on the decision of the Madhya Pradesh High Court in the case of CIT v. Steel Ingots (P.) Ltd. [1989] 175 ITR 290/44 Taxman 193. 8. Having heard rival submissions, we decline to interfere with the order of the CIT (Appeals). Mrs. Kuruvilla had accompanied her husband to United States only in her capacity as the wife of the ailing person, though it was in connection with the medical treatment abroad. She has no locus standi with the company. In the circumstances, the authorities rightly disallowed the expenses on her travel. The disallowance is confirmed. 9. The last ground in the assessee's appeal is against the denial of deduction under section 80HHC. The b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income. " The authorities are of the view that as there was only loss in Kerala Tea (which was exported) and as there was small profit in Tamil Nadu Tea (which was exported) and as the net result was only loss in such exports, there was nothing by way of income of export nature to be included in the total income and therefore the assessee was not eligible for any deduction under section 80HHC. For this proposition empha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rently " Profits from export business " alone in a case where the business did not consist exclusively of export business. The profits derived from export of goods has been given a fictional meaning for purpose of deduction. That fictional meaning has to be carried to its logical end in order to give effect to the letter and spirit of the deduction envisaged in section 80HHC of the I. T. Act. In this view of the matter, we hold that the business income of the assessee as computed by the Assessing Officer in a sum of Rs. 96,49,307 which entered the total income of the assessee amounting to Rs. 1,04,40,020 should be deemed to include the income by way of exports in an extent of a sum computed in accordance with clause (b) of sub-section (3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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