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TMI Blog2006 (3) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... facts in not allocating the common expenses of heard office to the respective units claiming deductions under section 80IA/80IB." "5.It is prayed that the order of the ld. CIT(A) may be set aside and that of Assessing Officer be restored." "6.The applicant craves leave to add, amend or delete any of the grounds of appeal before the same is taken up for the final disposal." 2. The first ground raised by the revenue pertains to interest received from customers wherein the grievance of the revenue is that the ld. CIT(A) erred on law and facts in including the interest received from customers in the total turnover instead of reducing 90 per cent of the same from the profit of the business as per explanation ( baa ) of section 80HHC (4B). During argument, the major contention of the ld. DR is that the issue is covered against the assessee. Reliance was also placed on the decision pronounced in the case of Pandian Chemicals (268 ITR 278) and also the decision in the case of 224 ITR 551. On the other hand, the major plea of the ld. counsel for the assessee is that the tribunal has decided the issue in favour of the assessee and relied upon the decision pronounced in I.T.A. No. 843 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhaya Narayan Singh followed the deduction pronounced in the case of Raja Raghunandan Parshad Singh v. CIT [1933] ITR 133 held that interest on arrears of rent payable in respect of land used for agricultural purposes is not agricultural income within the definition of that phrase contained in section 2(1) of the Indian Income-tax Act, 1922 and in therefore not exempt from Income-tax Act. It is neither rent nor revenue derived from land. The Hon ble Apex Court in the case of Pandian Chemicals Ltd. v. CIT 262 ITR 278 (SC) on the issue of "derived from" held no interest derived by industrial undertaking of the assessee on deposits made for Electricity Board that supply of electricity for running the industrial undertaking could not be said to flow directly from the industrial undertaking itself and was not profit or gain derived from undertaking for the purpose of special deduction under section 80HH. The Hon ble Apex Court while coming to this conclusion applied the decision pronounced in 27 ITR 1 (SC) and also [1948] 16 ITR 325 ( supra ). The Hon ble Madras High Court in the case of CIT v. Madras Motors Ltd./M.M. Forgings Ltd. (257 ITR 60) on identical facts held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ji Tapan Bhai Co. v. Asstt. CIT [2000] 243 ITR 192 (Ker.) and Abad Enterprises v. CIT [2002] 253 ITR 319 (Ker.) held that bank interest is not eligible for deduction wherein the assessee in support offered a fixed deposit in bank for a loan transaction connection with his export business. The interest earned on such deposit was not treated as income from export business for the purpose of allowing deduction under section 80HHC. In view of these facts and judicial pronouncements, this issue is decided against the assessee. Accordingly, this ground of the revenue is allowed and stand of the ld. CIT(A) is reversed. The next ground pertains to deleting the addition on account of sales tax and excise duty in the total turnover for the purpose of computing the deduction under section 80HHC. At the outset, we make it clear that we have not found any mistake in the order of the ld. CIT(A) on this issue as sales tax and excise duty cannot from part of total turnover. In fact, if the denominator was to include the above items and if the numerator excluded the above two items, then the former would become unworkable. These two items cannot be introduced to inflate the total turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith : "Regarding expenditure incurred at head office of the company, it is respectfully submitted that in the corporate structure like ours, the books of account kept at Head Office of the company are just for administrative convenience which in fact are the extension/part of books of accounts of the parent unit at Ludhiana which identify itself with the incorporation of the company and in fact the head office get merged with the parent unit at Ludhiana at the year end and loss its identity while preparation of profit and loss account and balance sheet. All other units/industrial undertaking of the company authorized representative operating on their own and are maintaining their separate books of account and are preparing their separate profit and loss account and balance sheet." It is seen that the total turnover of those units was worked out at Rs. 71.41 crores as against the total turnover of the assessee company at Rs. 40.3 crores. The proportionate expenditure relating to these units was worked out at Rs. 2.26 crores. The Assessing Officer disallowed the alleged excess claim under sections 80-I and 80-IA which came to Rs. 1,40,60,000 as has been detailed at page 8 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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