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TMI Blog2014 (1) TMI 1136X X X X Extracts X X X X X X X X Extracts X X X X ..... ng from export out of India - The exemption provisions in 10BA have to be liberally interpreted unless the credit of DEPB and DDB is expressly taken away. Disallowance out of travelling expenses - Held that:- The Assessing Officer has not pointed out any instance where the expenses in question were incurred by the assessee for non-business purposes - The appellant has stated that all the above expenses are relate to wholly and exclusively for the business purpose - The disallowance is cannot be sustained being totally based on presumption - Decided against Revenue. - ITA No. 332/Jodh/2013 - - - Dated:- 10-12-2013 - Shri Hari Om Maratha And Shri N. K. Saini,JJ. For the Petitioner : Shri N. A. Joshi, D. R. For the Respondent : Shri R. R. Singhvi ORDER Per N. K. Saini, A.M. This is an appeal by the department against the order dated 13/3/2013 of Ld. CIT(A), Jodhpur. In this appeal, the department has raised as many as 16 grounds. 2. Ground No.16 is general in nature, so do not required any comment on our part and grounds No. 1 to 14 relate to deletion of disallowance of Rs. 39,74,254/- made by the Assessing Officer u/s 10BA of the I.T. Act, 1961 (hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ornamentation or reshaping. It was stated that the exemption u/s 10BA of the Act on the same activity of the manufacturing/production had been allowed from A.Ys. 2004-05 to 2008-09 after detailed examination and spot inspection, however, in the year under consideration, it was denied. The other submissions made by the assessee and various judicial pronouncements relied on, had been reproduced by the Ld. CIT(A) in para 3.2 to 3.2.2 of the impugned order. For the cost of repetition, the same is not reproduced herein. 5. The Ld. CIT(A) after considering the submissions of the assessee and by referring to the decision of this Bench of the Tribunal in the case of DCIT Vs. Manglam Arts Crafts Exports and Ors. In IT.A. No. 614/JU/2008 for the A.Y. 2005-06 and the decision of I.T.A.T. Jaipur Bench in the case of Goverdhan Prasad Singhal Vs. ITO reported in (2009) 27 DTR (Jp)1 allowed the claim of the assessee by observing in para 3.9 to 3.11 of the impugned order which reads as under:- 3.9 Further I find that for carrying out manufacturing process, the appellant engaged number of labours. The appellant has also incurred various expenses for process of manufacturing wooden handicraf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts which suggest that there was any change in activity of the appellant. Various courts has decided that if the claim of deduction was allowed after detailed scrutiny and verification, the same cannot be withdrawn unless until there is contrary distinguishable facts. The Hon'ble Bombay High Court in the case of CIT Vs. Western Outdoor Interactive P. Ltd. reported in 349 ITR 309(Bom) held that where benefit of deduction is available for particular number of years on satisfaction of certain conditions under the provisions of the Income Tax Act,1961, then unless relief granted for the first assessment year in which the claim was made and accepted is withdrawn or set aside, the Income-tax Officer cannot withdraw the relief for subsequently years. More particularly so, when the revenue has not even suggested that there was any change in the facts warranting a different view for subsequent years. Further in the recent decision of the Hon'ble Rajasthan High Court in the case of Grace Exports Vs. ITO reported in 79 DTR 361, the question No. 2 was before the Hon'ble Court Having granted the benefit to the assessee under section 10B in the base year, whether it could be denied to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose. Therefore, in our considered opinion, Section 10BA and 80HHC are more nearer to each other, and whatever interpretation of derived from is given in any decision in which Section 80HHC is involved, would also mutatis mutandis to the interpretation of Section 10BA. The Hon'ble Apex Court in the cases of Topman Exports Vs. CIT reported in 67 DTR 185 (S.C.) and ACG Associated Capsules Pvt. Ltd. vs. CIT reported in 67 DTR 205 has recently held that DEPB is chargeable as income and Case laws. (iiib) of section 28 in the year in which the assessee applies for DEPB credit against the exports where as the profit on transfer of DEPB by the assessee is chargeable as income under Case laws. (iiid) of section 28 in his hands in the year in which he makes the transfer. The Mumbai Bench of Hon'ble Income Tax Appellate Tribunal in the case of Arts and Crafts Exports Vs. Income Tax officer reported in 66 DTR 69 (Mumbai), after considering the decision of Liberty India (supra) has taken a clear cut decision in favour of the assessee. Further, Hon'ble ITAT Bench has observed that in the light of above discussion, we find that the assessee is entitled to deduction u/s 10BA on DEPB as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort] for its export profit. The assessee calculates its profit from export business pertaining to the handicrafts on the basis of direct and indirect cost/expenses, etc. in terms of the provisions of section 80HHC. The income from other sources are separately calculated as per the Act. As we have carved out different common issues which will be repeated in other appeals, we would like to discuss and decide them under different headings. A. Deduction u/s 10BA itself and with reference to DEPB, DDB etc. The assessee has claimed deduction u/s 10BA in respect of such profits and gains as are derived from the export out of India are eligible articles from its total income. The assessee has also received Duty Drawback, Brokerage, Rent, DEPB claimed, interest, as income of the year. The A.O. has allowed this claim of the assessee by holding that it is eligible for deduction u/s 10BA. But he has not allowed some of the income from the profit eligible for deduction u/s 10BA on the premise that these are not the part of the export profit. These incomes are as under: (i) Duty Drawback [DDB] (ii) DEPB receipts (iii) Brokerage on export shipping freight (iv) Interest netting [In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in which Section 80HHC is involved, would also mutatismutandis to the interpretation of Section 10BA. The Hon'ble Apex Court in the cases of Topman Exports vs. CIT reported in 67 DTR 185 (S.C.) and ACG Associated Capsules Pvt. Ltd. vs. CIT reported in 67 DTR 205 has recently held that DEPB is chargeable as income and Cl. (iiib) of Section 28 in the year in which the assessee applies for DEPB credit against the exports whereas the profit on transfer of DEPB by the assessee is chargeable as income under Cl. (iiid) of Section 28 in his hands in the year in which he makes the transfer. The Mumbai Bench of Hon'ble Income Tax Appellate Tribunal in the case Arts and Crafts Exports vs Income-tax Officer reported in 66 DTR 69 (Mumbai), after considering the decision of Liberty India (supra) has taken a clear cut decision in favour of the assessee. The held portion of the Mumbai Bench is as under: "Para-11.14-As regards deduction u/s 10 BA in respect of DEPB, we find that sub-section (4) of section 1OB A defines profits derived from eligible articles. Section 28 (iiic), (iiid) and (iiie) provides that these income are profits and gains of business. The said sub-section (4) of section 1O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akes its shape and form from erstwhile section 10B(4) which was amended vide the Finance Act, 2001 w.e.f. 01.04.2001. Prior to 01.04.2001, this section 10B(4) read as under :- 10B(4) for the purpose of s.s. (1), profits derived from export of articles or things or computer software shall be the amount which bears to the profits of the business, the same proportion as the export turnover of the business carried on by the assessee. Clarifications on notes of clauses of the Finance Act, 2001 clarifies the purpose of this amendment that under the existing provision contained in s.s. (4), the profits derived from export of articles or things or computer software shall be the amount which bears to the profit of the business, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the assessee. Sub clause (b) seeks to clarify that such proportions shall be calculated with reference to the profits and gains of the business of the undertaking and not from any other business carried on by the assessee. Thus prior to amendment the profits derived from export of articles was meant the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t profit u/s 10BA of the Act; in favour of the assessee and confirm the finding of ld. CIT(A). This finding will apply to other appeals in a similar manner. Respectfully following the above order, we allow this claim u/s 10BA of the Act. Since the facts for the year under consideration are similar to the facts involved for the A.Ys 2007-08 and 2008-09. So respectfully following the aforesaid referred to order dated 21/2/2013 in assessee s own, we do not see any merit in these grounds of the assessee s appeal. 9. The next issue vide ground No. 15 relates to deletion of addition of Rs. 2,50,000/- out of the various expenses made by the Assessing Officer on account of personal use. 10. Facts related to this issue in brief are that the Assessing Officer made the impugned addition by observing in para 2 of the assessment order dated 20/12/2011 as under:- 2. On going through the expenses of Profit Loss A/c, it has revealed that the assessee has claimed various expenses like traveling Expenses i.e Rs. 3,26,427/-,Telephone Expenses i.e. Rs. 1,10,740/-, Petrol Expenses i.e. Rs. 1,57,815/-,.Vehicle Insurance i.e. Rs. 80,186/-, Depreciation Expenses i.e. Rs. 4,99,611/- to the tune of ..... 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