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TMI Blog2012 (8) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... all the expenses involving indirect cost have to be included and no items can be excluded as done by the first appellate authority and therefore, the order passed by the ITAT directing the assessing officer to pass fresh orders after computing indirect cost in proportion to all the indirect costs incurred by the assessee attributable to export in the proportion inferred to in the order, is justified - in favour of the revenue - IT APPEAL NO. 1047 OF 2006 - - - Dated:- 21-11-2011 - V.G. SABHAHIT AND S.N. SATYANARAYANA, JJ. S. Parthasarathi for the Appellant. Indrakumar and E. Sanmathi Indrakumar for the Respondent. JUDGMENT V.G. Sabhahit, J. This appeal is by the assessee being aggrieved by the order passed by the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Commissioner of Income Tax (Appeals), Mangalore in ITA No.l20/MNG/CIT(A)MNG/2C01-02. The first appellate authority by order dated 19-3-2003 after considering the contentions of learned counsel appearing for the parties, held that in the absence of any specific material produced by the assessee indicating indirect cost incurred in the purchase of boat and export the same, indirect expenses incurred purchase of boat and constructed boat should be proportionally apportioned with reference to the total turnover, export turnover and profits of the business computed at Rs. 1,90,41,290/-, Rs.93,90,000/- and Rs. 32,88,437/- respectively and following items are to be considered from the P L Account towards indirect cost: Vehicle main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the indirect tax incurred in respect of boat purchased and exported which is in the nature of trading and pass orders in accordance with law and set aside the order passed by the first appellate authority and allowed the appeal. Being aggrieved by the same, this appeal is filed by the assessee. 3. This appeal has been admitted on 5-12-2006 for consideration of the substantial questions of law raised in the memorandum of appeal which reads as follows: (1) Whether the Tribunal was right in holding that while computing the export profit on trading of goods under Section 80HHC(3)(b) of the Act the indirect costs allocable should be in accordance with Explanation (e) even when the indirect costs attributable to such export was ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reful consideration to the contentions of learned counsel appearing for the parties and scrutinized the material on record. The material on record would clearly show that in the return filed by the assessee for the assessment year 1995-96, though deduction was claimed in respect of profit made by sale of two boats i.e., one manufactured and exported and one boat purchased and sold i.e., in the nature of trading. Further, while claiming the deduction, indirect cost was not included in respect of the boat purchased and exported and therefore, the assessing officer issued notice calling upon the assessee to show cause and the assessee filed a revised return submitting that proposed action may be dropped as no Indirect cost was incurred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section which read as under: ( d ) "direct costs" means costs directly attributable to the trading goods exported out of India including the purchase price of such goods; ( e ) "indirect costs" means costs, not being direct costs, allocated in the ratio of the export turnover in respect of trading goods to the total turnover; 9. It is not in dispute that the assessee has not included any indirect cost while arriving at the profits derived from trading goods at the time of filing return on the ground that no indirect cost was incurred. On the verification of the records, indirect costs have been incurred by the assessee which cannot at all be disputed. When once the assessee has not pointed out the indirect cost attributable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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