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TMI Blog2012 (8) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... any other investment being shown by the assessee - in favour of assessee. Inclusion of Sales Tax and Excise Duty in total turnover for the purpose of computation of deduction u/s 80HHC - Held that:- As decided in Commissioner of Income-Tax Versus Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] excise duty and sales tax were includible in the "total turnover", which was the denominator in the formula contained in section 80HHC(3) as it stood in the material time - direction of CIT(A) for excluding it thus warranted - against revenue. Reduction of export shortage from the turnover - Held that:- The export turnover can be verifiable from the report in Form No.l0 CCAC & assessee has also provided invoice wise FOB value realized for the whole year - this proves that the claim of shortage is further paid as compensation which makes the cost of exports higher, but actually does not reduce the export turnover. In fact, this is a normal business practice in all trades where shortage in handling is compensated by payment, but does not mean that the goods were not cleared or payment not received for the full amount of export turnover - against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law the learned CIT(A) ought to have upheld the order passed by the Assessing Officer. It is, therefore prayed that the order of the CIT(A be set aside and that of the Assessing officer be restored." 4. Regarding grounds No. 1-6 raised by the revenue in the original appeal memo, it was submitted by the Ld. A.R. in the very beginning that all these grounds are covered in favour of the assessee by various Tribunal decisions as cited by him in a chart prepared by him. 5. Ld. D.R. supported the assessment order on these issues. 6. Regarding ground No.1 raised by the revenue, we find that the issue in dispute is regarding inclusion of Sales Tax and Excise Duty in total turnover for the purpose of computation of deduction allowable to the assessee u/s 80HHC. As per the tribunal decision in the assessee's own case, for the assessment year 2000-01 in I.T.A.No. 3798/Ahd/2003 dated 17.02.2012, this issue was decided by the tribunal in favour of the assessee by following the judgement of Hon'ble Apex Court rendered in the case of CIT Vs Laxmi Machine Works as reported in 290 ITR 667. Accordingly, this ground of the revenue is rejected in the present year also. 7. As per the 2nd gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment year 2000-01 and the relevant paras are para 29-31 of this tribunal order. Since no difference in facts could be pointed out by the Ld. D.R. in the present year, on this issue also, we do not find any reason to interfere in the order of Ld. CIT(A). Hence, this ground of the revenue is also rejected. 11. Ground No.5 is regarding allowability of 100% deprecation on pollution control equipments. This issue is also covered by the same tribunal order in assessee's own case for the assessment year 2000-01 and the relevant paras are para 31-32 of the Tribunal order. Since no difference in facts could be pointed out by the Ld. D.R. on this issue also in the present year, this ground of the revenue is also rejected. 12. Ground NO.6 is regarding deletion of addition of Rs.28920/- made on advances written off. It is the contention of the assessee that this issue is covered in favour of the assessee by the decision of the tribunal in C.O. No.266/Ahd/2004 dated 31.01.2011. The relevant paras are pars 4-7 of this tribunal order. Nothing could be brought on record by the Ld. D.R. to show that this Tribunal order is not applicable in the present year and hence, on this issue als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r state that the compensation is not given only for the profits that could have been earned. It is irrelevant as to what profit the appellant ultimately makes by using the concerned manufacturing facilities. The compensation is a total package for the cessation of manufacture and sale of one item and closing down of that business, which is effectively a negative covenant. Such a situation is normally covered as a capital receipt by all the above mentioned case law. 15.51. To conclude I would hold that if the position is considered prior to the amendment, the compensation received still falls in the purview of capital receipt-for stoppage of the business of the manufacture and sale of the CFCs. Even if looked at from the pint of view of amended section 28 and the proviso therein, a harmonious construction of the provisions and the intention of the legislature, it would lead to the conclusion that the compensation was a capital receipt not intended to be taxed. Hence the addition made on this point is deleted." 14. Sub-section (va) of Section 28 was inserted by the Finance At 2002 w.e.f. 01.04.2003 and hence, the same is not applicable in the present year. As per this sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the services rendered by these two persons is in respect of investment in shares. Ld. CIT(A) has confirmed the disallowance of Rs.2,63,972/- being 10% of the dividend income and deleted the balance disallowance. From the assessment order, we find that the assessee has earned dividend income of Rs.27,23,178/- and interest on tax free bonds of Rs.10.50 lacs totaling Rs.37.73 lacs. In addition to this, no income is reported by the assessee under the head 'income from other sources' being on account of investment other than investment in shares for which this payment of professional fee of Rs.45 lacs was said to have been paid by the assessee. Ld. CIT(A) has based his finding on this basis that the assessee has declared capital gain of Rs.1.09 crores. The payment of professional fee is not allowable for computing capital gain because it is neither the cost of acquisition nor the cost of improvement of capital asset or cost of transfer and, therefore, the entire payment of professional fee has to be considered towards earning of dividend income in the absence of any other income from any other investment being shown by the assessee. Even this is not shown that any such other inve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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