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TMI Blog2006 (2) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 1991-92, dated 30-9-1994 for assessment year 1992-93, dated 28-2-1996 for assessment year 1993-94, dated 9-1-1997 for assessment year 1994-95 and dated 31-7-1998 for assessment year 1995-96. The appeals pertaining to assessment years 1991-92, 1992-93 and 1993-94 are by the assessee and those pertaining assessment years 1994-95 and 1995-96 are by the department. As the issues involved in all the appeals are either common or inter-connected, we find it convenient to dispose of all the five appeals together by this combined order. 2. In the appeals by the assessee, the grievance is two-fold, namely, that it was denied deduction under sections 80HH and 80-I of the Income-tax Act, 1961 ('the Act') on book profits and secondly, not tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected. Thus, the claim of the assessee for deduction under sections 80HH and 80-I was denied. The CIT (Appeals) was also of the view that consultancy charges and interest cannot be said to be profit derived from the industrial unit. With regard to consultancy charges, he further held that this payment had been received for consultancy given by the directors/employees of the assessee having technical knowledge and it had nothing to do with the industrial unit as such. Thus, the action of the Assessing Officer was confirmed. 4. It was submitted by the learned counsel for the assessee that the assessee was a manufacturer of a wide range of perfumery products used in industrial perfumes, chewing tobacco, synthetic paints, soaps of all types ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer had treated the consultancy income as business income and since it had a direct nexus with the industrial undertaking, it was eligible for deduction under sections 80HH and 80-I. With regard to interest income, it was contended that the impugned interest was earned on FDRs which were pledged with the Bank to obtain credit facilities. This income was also assessed as business income by the Assessing Officer. Thus, it was vehemently pleaded that both the incomes, namely, consultancy charges as well as interest, were eligible for deduction under sections 80HH and 80-I. 5. The learned DR referred to the agreement with HLL and contended that it was merely an agreement granting license for the use of the formulae for which royalty was pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and through secret formulae, they are not sold as is commonly understood but they are licensed to the specified consumers. The consideration for developing such specified products cannot, therefore, be termed as sales. In fact, any name can be given to such consideration but that would not be determinative as to whether it would be eligible for deduction or not. Since the specified product has been developed through research, the assessee has given it a name of consultation charges. The assertion of the assessee that the specified product has been developed by using the same paraphernalia of the undertaking, has not been disputed by the revenue authorities. In fact, it has not been shown by the revenue as to how a compound could have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age of opinion between the various Benches of the Tribunal as also between the judgments of various High Courts. This being the case, we restore the matter back to the file of the Assessing Officer with the direction to consider the matter afresh after taking into consideration the Third Member decision of the Delhi Bench of the Tribunal in the case of Gallium Equipment (P.) Ltd. v. Dy. Commissioner [2002] 81 ITD 358 as also the decision of the Ahmedabad Bench of the Tribunal in the case of Bio Pharma v. Dy. CIT [2003] 85 ITD 575. The former is in favour of the assessee and the latter is in favour of the revenue. The Assessing Officer would consider both the decisions and other judicial pronouncements also on the issue as give an opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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