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TMI Blog2009 (8) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) Foreign Exchange rate income ₹ 25,07,274/- (b) DEPB sales proceeds ₹ 79,12,666/- Duty Draw back ₹ 15,92,282/- (d) Other income ₹ 53,273/- (e) Income from trading activities ₹ 10,70,654/- 3. At the outset Ld. Counsel for the assessee stated that the issue as regards foreign fluctuation, DEPB, sale proceed, duty drawback is covered in favour of the assessee and against the Revenue in the case of Shah Originals v. ACIT/DCIT, Range 24(1), Mumbai (2008) 19 SOT 568 (Mum). The brief facts as regards the exchange rates difference, the Assessing Officer noted that export exchange rate difference of ₹ 25,07,234/- has generated since there was difference on the rates of rupee in comparison to the currency of the country in which sale was made. This difference results some time in the form of income and at other as loss. But this income or loss arises due to valuation of cur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... free licenses since it is carrying on the export business activity, and this income has generated from the import entitlement and sales of licenses, therefore, this income is pertaining to manufacturing business of the assessee. But according to the AO this contention is misleading, since the income generated from the entitlements, incentive is not an income directly derived from the manufacturing activity of the assessee. The AO considered the contention raised by the assessee and the plea to treat the incentives and DEPB income as income from industrial undertaking is however not found acceptable. According to the AO it is product of the incentive given by Govt. of India and on this issue decision given by the Hon ble Supreme Court in case of CIT v. Sterling Foods Ltd. (1999) 237 ITR 579 (SC) is relevant. Though this decision relates to Section 80HH of the Act but the ratio is identical that the export incentive cannot derive profit and gain from the manufacturing activity to be eligible for deduction, hence same is reduced for the purpose of computing deduction u/s.80-IB(3) of the Act. The CIT(A) also confirmed the action of the AO. Before us Ld. Counsel for the assessee relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. He also relied upon the decision of the Chandigarh Bench of the Tribunal in the case of Paramount Industrial Corpn. 109 TTJ 295, holding that income earned on account of duty drawback is income earned from industrial undertaking eligible for deduction under section 80-IB of the Act. So far as the decisions in the case of CIT v. Jameel Leathers and Uppers [2000] 246 ITR 97 and CIT v. Vishwanathan Co. 261 ITR 737, as relied upon by the revenue is concerned. The learned counsel for the assessee submitted that the decision of the Hon ble Gujarat High Court discussed above was arrived at after considering the said two decisions. 34. In view of the above legal position, we hold that duty drawback is to be considered as derived from the industrial undertaking of the assessee and would, thus, have to be considered for the purpose of allowance of deduction under section 80-IB. 38. For the assessment year 2004-05, there is another question on whether the profit on transfer of the Duty Entitlement Pass Book (DEPB) Scheme should be considered as income derived from the industrial undertaking and, hence, entitled to being reckoned for the purpose of computation of deduction und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lower authorities. Accordingly, we find no infirmity in the orders of the lower authorities and we confirm the same. This issue of the assessee s appeal is dismissed. 10. The next common issue in this appeal of the assessee is against the order of CIT(A) in confirming the action of the Assessing Officer in disallowing 1/7th out of the motor car expenses and telephone expenses. 11. After hearing the rival contentions and going through the case records, we find that the CIT(A) has restricted the disallowance on motor car expenses at 1/6th and not at 1/7th as claimed by the assessee. As regards the telephone expenses the Assessing Officer has disallowed 1/6th amounting to ₹ 1,69,276/- on the ground of personal uses. The CIT(A) restricted at 1/7th being reasonable by stating that the disallowance is slightly excessive and we find that normally disallowance for personal user is made at 1/10th and Tribunal is consistently making estimated disallowance, accordingly, we restrict the disallowance on both the counts at 1/10th. This common issue in this appeal of the assessee is partly allowed. 12. The next issue in this appeal of the assessee is against the order of CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss smoothly and maintenance of accountancy, it is crystal clear that the software purchased by the assessee will have an everlasting use and enduring benefits in future as the same would be useful for several years. The investment in software is definitely of an enduring nature and the same is capital expenditure in nature. According to the Assessing officer the income tax rules provides depreciation for computer software at 60% and this itself proves that the computer software is a capital expenditure but the income tax Act has provided depreciation on such capital assets at higher rates which the assessee is entitled for. Aggrieved, the assessee preferred appeal before CIT(A) and CIT(A) also treated the expenditure as capital and allowed depreciation. Aggrieved, now the assessee came in second appeal before us. 15. At the outset before us, Ld. Counsel for the assessee fairly stated that the issue is covered by the decision of this Tribunal in the case of Amway India Enterprises v. DCIT (2008) 111 ITD 112 (Del) (SB), wherein the Tribunal has laid down certain guidelines relevant to determine whether the advantage is operated in the capital field or revenue field in para-58 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T v. Rogini Garments (2007) 294 ITR 15 (AT), (Chennai) (SB), wherein it is held as under:- From the above, it is clear that if restrictive clause not in the same section but in some other provision, is clearly showing the mens legis it has to be given full effect. Therefore, if restriction is placed on the claim of repetitive deduction in section 80IA(9) and is made applicable in respect of all deductions under Chapter VI-A, then this restriction is to be applied. Since the wordings used are any other deductions under Chapter VI-A full effect is to be given to this provision and whenever an assessee wants to claim deduction under section 80-IA(9) restriction is to be read in every other provision providing for deduction under Chapter VI-A. Apropos the argument that the provision is couched with ambiguities, and therefore the spirit of the Act is to be seen and justice be done we find that the freedom for the search of the spirit of the Act or the mischief at which it is aimed opens the possibility of liberal interpretation. This finer aspect cannot be narrowly watched. It is that delicate and important branch of judicial power, the concession of which is dangerous but t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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