2006 (2) TMI 85

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..... st the common order of the Income-tax Appellate Tribunal in I.T.A. Nos. 247, 1038, 435 and 1157/Mds/99, dated March 15, 2005. The Revenue is the appellant. The assessee is a manufacturer of pistons for automobiles and other stationary engines. The assessee filed returns of income for the assessment years 1995-96 and 1996-97, wherein the assessee claimed, inter alia, deduction under section 80HHC of the Income-tax Act (hereinafter referred to as "the Act") in respect of its income from exports, deduction in respect of interest on foreign bills (for 1995-96 only), and deduction of customs duty from closing stock. The Assessing Officer found that the assessee had excluded the sales tax and excise duty from the total turnover for the purpose .....

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..... paid is not to be included in the value of closing stock?" With regard to the first question whether, on the facts and circumstances of the case, the Tribunal was right in holding that the interest on foreign bills is a deductible expenditure, it is not in dispute that the assessee claimed deduction in respect of interest on foreign bills. The Assessing Officer made disallowance by following the earlier assessment orders. The Commissioner of Income-tax (Appeals) deleted the disallowance made by the Assessing Officer. On appeal by the Revenue, the Appellate Tribunal allowed the issue in favour of the assessee. It could be found that the conditions for supply of goods by the nonresident to the assessee were that the payment of purchase p .....

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..... amount was not a loan and the amount of interest paid was not interest on loan, deduction of tax at source is not attracted and as such, we find that the directions of the Commissioner as well as the Tribunal are strictly in compliance with section 40(a)(i) of the Act, which require no interference. In respect of question No. 2, viz., whether, on the facts and circumstances of the case, the Tribunal was right in holding that the excise duty and sales tax should be excluded from the total turnover to arrive at the deduction under section 80HHC, this court in CIT v. Wheels India Ltd. [2005] 275 ITR 319 and CIT v. Sundaram Fasteners Ltd. [2005] 272 ITR 652 (Mad) held that it is highly impossible to accept the contention that the term "turnov .....

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