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TMI Blog1985 (5) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant's production Unit-III at Rs. 19,11,831 instead of at Rs. 16,02,611 only. 1.1 It is further submitted that the assessee's claim under section 80J was based on a correct application of the provisions of the Act, as evidenced by various High Courts, which have ruled that for the purpose of section 80J 'capital employed' should not be confused with 'capital used'. To that extent, rule 19A (2) (i) of the Income-tax Rules, 1962, which talks of written down value of the fixed assets, does not bring out the intentions and purpose of the incentive under section 80J correctly. It is, therefore, contended that only the actual cost of the fixed assets should be taken for the purpose of average capital employed under section 80J. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, reading as follows : "1. That the learned ITO and Commissioner (Appeals) failed to recognize and give due legal relief owing to the fact that 'cash compensatory support' received by the appellant of the amount of Rs. 86,73,677 was in the nature of capital receipt and that it was not taxable, notwithstanding the fact that the same has been treated as a 'revenue receipt' and included in the taxable profits of the appellant. 2. That the learned ITO and Commissioner (Appeals) failed to recognise and give due legal relief owing to the fact that 'draw-back of duty' of the amount of Rs. 18,17,445 was in the nature of capital receipts and that it was not taxable notwithstanding the fact that the same has been treated as a 'revenue receipt' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the exporters ignoring that the same are not taxable as per the charging provisions of the Income-tax Act, 1961, thus violating article 266(3) of the Constitution of India." 3. It may be mentioned here that in respect of the assessment year 1975-76 also the assessee filed additional grounds of appeal in relation to its second appeal submitted on30-3-1979. For that year even the revenue filed additional grounds before the Tribunal. Further the additional grounds filed for this year are more or less on the same pattern as for the assessment year 1975-76. 4. We have dealt with most of the additional grounds vide our order of even date in IT Appeal Nos. 1143 and 1826 (Delhi) of 1979, but before referring to the same, we like to bring in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, the ITO is directed to recompute section 80J relief in accordance with the provision as held to be applicable for the year. 9. The assessee had claimed weighted deduction under section 35B of the Act on exchange rate difference of Rs. 7,75,211, inland freight on export assignment of Rs. 7,68,173 and packing material consumed exclusively for export to the tune of Rs. 25,02,836. As far as first two of the three items are concerned, similar claims were made, but disallowed by the Tribunal in the assessee's case in respect of the assessment year 1973-74 in IT Appeal Nos. 184 and 878 (Delhi) of 1977-78 by order dated 21-3-1978. Making the said order as the basis, and for the reasons recorded therein, we rejected the assessee's appeal in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 35B. The total claim is in respect of Rs. 25,02,836 but it shall be subject to bifurcation, if necessary, after it is subject to the scrutiny of the ITO. 11. We like to mention here that the Commissioner (Appeals) disallowed the claim by observing that packing expenses were incurred in the assessment year. As observed above, if part of the expenses reached the customers as beautiful souvenirs along with goods sold, these should better be considered in the category of samples of goods for export. 12. As far as ground No. 3 is concerned, the Commissioner (Appeals)'s order reads as follows : "In ground No. 6 the appellant had objected to the disallowance of the claim made before the ITO for deduction of surtax liability fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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