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TMI Blog1982 (9) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... . 75,000. The assessee furnished before the IAC separate Trading, Profit and Loss account and Balance Sheet for all its branches at Bombay, Calcutta, Delhi and Trivandrum etc. The total sales of all the branches during the year under consideration were Rs. 1,62,72,880 on which a gross profit of Rs. 26,06,686 (16%) was disclosed. The ITO considered the gross profit rate to be low in comparison to other assessees carrying on similar business, like Nizam Handicrafts Ivory Works in whose case the rate of profit shown/taken/adopted was 20% or more. He also felt that all the expenses were not perfectly verifiable. The IAC therefore, disallowed Rs. 50,000 out of labour charges and Rs. 25,000 out of direct expenses total Rs. 75,000. This increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,64. The G.P. rate comes to 19.1% if inter-branch transfer load is deducted from the sales. The adjusted G.P. rate comes to 23.9% if cash incentives and premium and drawbacks are considered. We, therefore, confirm the order of the CIT(A) deleting the extra profit addition. As a result the appeal filed by the revenue fails. 5. In the assessee's appeal most of the claims relate to weighted deduction u/s 35B. We have heard both the sides on these claims. The first relates to bank commission of Rs. 90,786 for Bombay branch and of Rs. 54,293 for Varanasi Branch. This claim is not allowable vide para 36 of the Special Bench decision dt. 17th June, 1978 of the Appellate Tribunal in the case of M/s J. Hem Chand Co. (I.T.A. No. 3255 and 3330/19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argued that the percentage of export to sales was 64.4% and so 64.4% of the total expenses should have been allowed. We have considered the papers on the record. It is not possible to find any computation or justification for applying the percentage of 20 when according to the complete details furnished by the assessee the percentage of export comes to 64.4%. On fact, therefore, we take the view that it would be reasonable to allow 64% of the total expenditure on Postage, Tele-Telex Office, Salary, Printing and Stationery and Advertisement. We hold accordingly. 7. The next claim relates to expenses incurred on Sea and Air Freight, Insurance and Packing and Forwarding. These expenses were held to be not allowable vide decision in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claim of Rs. 1,19,349 the assessee claimed Rs. 76,131 for inland travelling and Rs. 43,218 for foreign travelling. The IAC disallowed Rs. 17,000 out of the claim for inland travelling and Rs. 3,000 out of the claim for foreign travelling. We have already deleted in the preceding paragraph the disallowance of Rs. 3,000 out of the claim for foreign travelling expenses. The disallowance out of inland travelling expenses was sustained by the CIT (A) at Rs. 2,000 on the basis of past history. We see no justification of reason for any interference therewith. 10. The next disallowance is of Rs. 10,000 out of miscellaneous expenses claimed by the assessee at Rs. 81,361. The IAC made the disallowance observing that most of the expenses were in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assistance is given to the assessee with a view to compensate it as an exporter for an unrefunded taxes and levies which he has paid on export goods and on the inputs going into the manufactures of the goods. It is not a case where assessee has made exports and the Govt. of India decided on cash assistance later on in pursuance of a scheme which came into effect later on, i.e., later than even of export. The export assistance scheme was in operation before the assessee made exports. Cash assistance is given to the assessee as a percentage of FOB value of goods and where contract is CIT on the basis of C.I.F. value of the good exported. It is neither a wind fall nor an amount paid ex gratia or by way of charity or gift to the assessee. Und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, failed to establish that the cash assistance receipts are not taxable. The observation of the CIT (A) that the cash assistance may have been given to the assessee with a view to compensate it is an exporter and not as a windfall or ex gratia or as a charity or gift cannot, therefore, be taken exception to. Since the assessee has not been able to establish that it did not cost it to acquire import licence, the decisions relied upon on its behalf cannot be availed. On the other hand, in the case of Agra Chain Mfg. Co. the Hon'ble High Court of Allahabad took the view that if import entitlements were obtained in consideration of the export of the aluminium chains in connection with the assessee's business, they could not be treated as a b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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