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TMI Blog2022 (3) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment proceeding it was found that the assessee firm has credited several "other incomes" to the 80IE units including miscellaneous income of Rs. 4,50,593/-. According to the AO such incomes are not eligible income for the purpose of deduction under Section 80IE of the Act. Accordingly, the said income were excluded from the profits of eligible unit for calculation of deduction under Section 80IE and added to the taxable income of the assessee which was further been confirmed by the First Appellate Authority. Hence, the instant appeal before us. 4. We have heard the respective parties and also perused the relevant materials available on record. 5. This miscellaneous income is the debit note of Rs. 4,50,493/- for excess billing by vendor including punch card re-issue charges recovered of Rs. 100/-. The case of the assessee is this that this particular amount pertains to excess billing by KEPL Electricals Pvt. Ltd. and the entire cost charged by the vendor was included in the expenses and charged to profit and loss account of the appellant. When the debit note was raised by the appellant regarding such excess amount charged by the supplier such excess amount was credited t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred by the assessee is, therefore, allowed. 8. Ground No.2:- Exclusion of income earned in the nature of cash discount amounting to Rs. 2,32,004/- from the profits eligible for deduction under Section 80IE of the Act is the issue before us. 9. We have heard the respective parties and also perused the relevant materials available on record. 10. The above cash discount amounting to Rs. 2,32,004/- was received for making prompt payments to the vendor on account of purchases made from them by the appellant. It is the case of the assessee that rather than reducing such discount from the purchase cost they have shown it separately under the head "other income" which, however, does not change its nature of having direct nexus with manufacturing activity carried out by the appellant undertaking and, therefore, the same is allowable to be claimed deduction under Section 80IE of the Act. 11. The Ld. DR relied upon the order passed by the authorities below. However, he has not been able to controvert such submission made by the Ld. AR. We have further considered the order passed by the Ld. CIT(A) wherefrom it appears that the Ld. CIT(A) simply following the order passed by his predece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing for the assessee further submitted before us that in the event the interest income is not eligible for deduction under Section 80IE of the Act then netting off interest income shall be excluded from profits for deduction under Section 80IE of the Act. On this aspect he has relied upon the judgment passed by the Hon'ble Jurisdictional High Court in the case of Nirma Ltd. (supra) and the judgment passed by the Hon'ble Apex Court in the case of ACG Associated Capsules (P.) Ltd. vs. CIT, reported in 18 traxmann.com 137 (SC) and also the judgment passed by the Hon'ble Jurisdictional High Court in the case of CIT vs. Metrochem Industries Ltd., reported in 79 taxmann.com 440 (Guj.). 16. On the contrary, the Ld. DR relied upon the order passed by the authorities below. However, he has not been able to controvert such submission made by the Ld. AR. We have further considered the order passed by the Ld. CIT(A) wherefrom it appears that the Ld. CIT(A) simply following the order passed by his predecessor rejected the above claim made by the assessee without dealing the issue on merit. On the aspect of netting off of interest income we have considered the judgment passed by the Juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of Explanation (baa) to section 80HHC. In other words, ninety per cent. of not the gross rent or gross interest but only the net interest or net rent, which has been included in the profits of business of the assessee as computed under the head "Profits and gains of business or profession", is to be deducted under clause (1) of Explanation (baa) to section 80HHC for determining the profits of the business.' In view of such decision, question No. 3 raised by the Revenue gets automatically answered since the amounts referred to in the said question are to be excluded for the purpose of deduction under section 80HHC of the Act. Learned counsel for the Revenue vehemently contended that the ratio of the decision in the case of ACG Associated Capsules Pvt. Ltd. (supra) cannot be applied to a situation where the exclusion from the claim of deduction relates to section 80HH or section 80-I of the Act. He strenuously urged that the language used in both the sets of provisions are different. Section 80HHC is also vitally different and that therefore the concept of netting may not be automatically applied to deduction under sections 80HH and 80-I of the Act. He submitted that numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Essel Shyam Communication (supra) held referring to the decision in the case of ACG Associated Capsules Pvt. Ltd. (supra). It is true that in the case of Bloom Decor Ltd., a question was suggested by the assessee which may have some bearing on the controversy on hand. However, the entire focus of the order of the court was regarding applicability of the decision of the Supreme Court in the case of Topman Exports (supra) and not on the question of netting. In any case, therein, the decision in the case of ACG Associated Capsules Pvt. Ltd. was not noticed."" Respectfully relying upon the order passed by the Hon'ble Jurisdictional High Court, thus, on the identical facts we find it fit and proper to allow this ground of appeal filed by the assessee by directing the AO to re-compute the addition upon netting off of interest income by excluding the same from profits eligible for deduction under Section 80IE of the Act of the appellant undertaking, in the light of the above observation made by the Hon'ble Jurisdictional High Court in the case of Nirma Ltd. (supra). 17. In the result, the appeal preferred by the assessee is allowed for statistical purposes. This Order p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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