ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE XV 34 Vs. PALLAVA GRANITE INDUSTRIES 10 NORTH STREET SRIRAM NAGAR 18

JUDGEMENT

(1.) THE appeal is filed against the order of the Income Tax Appellate Tribunal Madras 'B' Bench dated 31.01.2006 made in I.T.A.No.2002/Mds/2002. THE relevant the assessment year is 1997-98.

(2.) THE assessee is a partnership firm engaged in the business of quarrying of granites and exporting the same. During the accounting period relevant for the assessment year 1997-98, the assessee had exported the goods manufactured by it and it had also shown trading activities and arrived at a loss in respect of export of such traded goods. In the return of income filed on 31.10.1997, the assessee had shown the working towards deduction under section 80HHC of the Income Tax Act at Rs.1,02,17,696/-, but however, had restricted the claim to the gross total income of Rs.1,01,06,406/-. THE return filed by the assessee was processed under section 143(1)(a) of the Act vide intimation dated 24.09.1999. While arriving at the figure of deduction under section 80HHC of the Act of Rs.10,21,796/- the assessee had actually ignored the loss arrived at in respect of the export of the traded goods which was Rs.31,73,613/-. THE assessee had also shown raising charges of Rs.1,00,87,800/- in its profit and loss account for the year ended 31.03.1997 on which also it had claimed deduction under section 80HHC of the Act. THE assessing officer found that the assessee's claim of deduction under section 80HHC of the Act on raising charges was not correct and further the loss incurred on account of export of traded goods must be adjusted against the profits and deduction under section 80HHC of the Act is allowable only on the balance profits. Accordingly, he reopened the assessment by issue of notice under section 148 of the Act and passed an order under section 143(3) read with 147 of the Act wherein he allowed deduction under section 80HHC of the Act only to the extent of Rs.11.65,355/-. THE assessing officer had arrived at this figure by excluding 90% of raising charges of Rs.90,79,020/- and also adjusting the loss on account of traded goods of Rs.31,73,613/-.

(3.) WE heard the learned counsel on either side and perused the materials on record.