ANIL DANG Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) This appeal is by the Assessee under Section 260A of Income Tax Act, 1961 being aggrieved by the order passed by ITAT, Bangalore Bench in ITA No. 1928(Bang)/2004 dated 19-5-2006. This Court by order dated 17-1-2007 has admitted the appeal to answer the following substantial questions of law:

(2.) Assessee is the proprietor of M/s Tycoon International, which firm engaged in the manufacturing and export of garments. For the assessment year 2001-02 return of income was filed and Assessee had computed the allowable profits under Section 80HHC of the Act in his return of Income. It was noticed by the Assessing Officer during the Course of assessment proceedings that Assessee had received a sum of Rs. 18,45,733/- from M/s Indus Textiles Limited in Indian currency for having passed on the export order to Indus Textiles limited. Thus, Assessing Officer while computing deduction under Section 80HHC disallowed the same while arriving at the profit from export of goods or merchandise, in view of explanation (baa) to Section 80HHC and accordingly determined the total turnover.

(3.) Being aggrieved by this order Assessee carried the matter in appeal, before Commissioner of Income Tax (Appeals) who directed the Assessing Officer to consider exclusion of 90% of professional charges out of Rs. 18,45,733/- claimed in full (100%) by Assessee and also held that stitching charges of Rs. 15,39,707/-and sale of fabrics of Rs. 5,07,035/- to be treated as part of business profit. The Appellate authority rejected the alternate plea of the Assessee to exclude only the net receipts.