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TMI Blog2014 (1) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not claimed expenditure of Rs.10,13,759/- due to oversight in its P&L account, but subsequently made the claim before the AO and also filed an application for rectification of mistake, after original assessment proceedings were concluded - Following CIT vs. K.N.Oil Industries [1982 (3) TMI 16 - MADHYA PRADESH High Court] - if it is apparent from the record that the assessee was entitled to relief admissible under the Income Tax Act, that relief can be granted to him by an order under section 154 by rectifying the assessment even though relief under that section had not been claimed by the assessee in the original assessment proceedings - Decided against Revenue. - I.T.A.No.2692,2693/Ahd/2010 - - - Dated:- 31-10-2013 - N S Saini And Kul Bharat, JJ. For the Appellant : Shri S C Tiwari, Sr.DR For the Respondent : Shri M J Shah, AR ORDER:- PER : Kul Bharat Both these appeals by the Revenue are directed against the separate orders of the Ld.Commissioner of Income Tax(Appeals)-XX, Ahmedabad( CIT(A) for short) both identically dated 07/07/2010 pertaining to Assessment Years (AYs) 1996-97 2006-07. Since the appeals pertain to the same assessee, both these appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Tribunal passed in ITA No.2056/Ahd/2005. On the contrary, ld.Sr.DR supported the orders of the authorities below. 4. We have heard the parties, perused the material available on record and gone through the orders of the authorities below. We find that the Hon ble Coordinate Bench has held vide para-5 of its order dated 31/01/2006 passed in ITA No.2056/Ahd/2005 for AY 2002-03 in assessee s own case, as under:- 5. The next dispute is with regard to the exclusion of packing income of Rs.8,12,732/-, Service charges Rs.51,42,906/- and Erection and Installation charges Rs.3,03,482/- while computing the deduction u/s.80HHC. Here, the claim of the assessee is that they are part of the business income and even through they are not the income derived from export, they are to betaken into consideration while computing the deduction by virtue of the provisions contained in section 80HHC(3) of the Act, the assessee being manufacturer and seller its case will be covered by section 80HHC(3)(a) which reads as under: (3) For the purposes of sub-section (1),-- (a) where the export out of India is of goods or merchandise manufactured or processed by the assessee, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also covered by the decision of the Hon ble Coordinate Bench rendered in assessee s own case in ITA No.2056/Ahd/2005 for AY 2002-03, dated31/01/2006. On the contrary, ld.Sr.DR has supported the order of the AO. 6. We have heard the rival contentions. We find that the Coordinate Bench in assessee s own case(supra) has decided this issue vide paragraph Nos.3 4, by observing as under:- 3. The next dispute is with regard to the exclusion of interest income of Rs.3,09,683/- from business income for the purpose of deduction u/s.80HHC. interest income is not an income derived from export in view of the decision of the Supreme Court in the case of Pandian Chemicals Ltd. 262 ITR 278 (SC) and also the decision of the Tribunal in the case of Mire Industries 87 ITD 475 (Ahd) wherein it is held as under:- This interest is earned on the surplus money which was earned by the industrial undertaking and to augment the income of the undertaking. Assessee solicits the distinction between initial fund and surplus/idle funds and the argument is that initial funds are deposited when the undertaking had not yet set on and that profit alone could be said to have not been derived fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessing Officer was to be restored. The interest income, therefore, is to be excluded from the income while computing deduction u/s.80HHC. The exclusion, however, is to be of the net amount i.e. the net income after allowing the expenditure incurred by the assessee in earning the same in view of the decision of the Special Bench of the Tribunal in the case of Lalsons Enterprises 89 ITD 25 wherein it is held as under:- For the purpose of applying Explanation (baa) below subsection 4B) of section 80HHC and while reducing 90 per cent of the receipt by way of interest from the profits of the business, it is only the 90 per cent of the net interest remaining after allowing a set-off of interest paid, which has a nexus with the interest received, that can be reduced and not 90 per cent of the gross interest. (underlining by us). We order accordingly. 6.1. Since the ld.Sr.DR has not placed anything on record for suggesting that how this finding of Hon ble Coordinate Bench does not apply on the facts and circumstances, therefore respectfully following the decision of the Hon ble Coordinate Bench, we reject this ground of the Revenue. 7. The next ground is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d preferred an appeal before the ld.CIT(A) who directed the AO to allow the claim of the assessee. 12. The ld.counsel for the assessee submitted that inadvertently, the expenditure incurred was not recorded and when it came to the notice, the same was claimed during the course of assessment proceedings. He submitted that it is not the case of Revenue that the expenditure is bogus or sham, any expenditure incurred for business purposes is required to be allowed u/s.37 of the Act. He strongly relied on the order of the ld.CIT(A) and also the decision relied upon by the ld.CIT(A) in his order. 12.1.On the contrary, ld.Sr.DR supported the order of the AO. 13. We have considered the rival submissions and perused the material available on record. We find that the ld.CIT(A) has granted the relief following the decision of Hon ble Madhya Pradesh High Court rendered in the case of CIT vs. K.N.Oil Industries (142 ITR 13)(MP) and decision of Hon ble Delhi High Court rendered in the case of Container Corp. of India Ltd. vs. Dy.CIT (92 ITD 333)(Delhi.). The Hon ble MP High Court in the case of CIT vs. K.N.Oil Industries has held that if it is apparent from the record that the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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