COMMISSIONER OF INCOME TAX Vs. BAWA SKIN COMPANY

JUDGEMENT

(1.) THIS reference under s. 256(1) of the IT Act, 1961 (for short "the Act") has been made to this Court at the instance of the Revenue by the Income -tax Appellate Tribunal, Amritsar Bench, Amritsar, (for brevity "the Tribunal") arising out of question of law :

(2.) "Whether, on the facts and in the circumstances of the case, the learned Tribunal is right in law in dismissing the appeal of the Revenue against the order of the learned CIT(A), holding that the assessee is justified in claiming deduction under s. 80HHC of the IT Act, 1961, of such profits as determined by the AO and that there is no infirmity in the order of the learned CIT(A) in directing to allow such deduction, with regard to the amount of addition of Rs. 2,50,000 made in the trading account while finalising the assessment for the asst. yr. 1989 -90 - accompanied by a report of the chartered accountant within the meaning of s. 80HHC of the Act claiming deduction at Rs. 54,091 in relation to the exports made during the year under reference. The assessee has declared the gross profits at Rs. 2,44,24,055 including duty draw back of Rs. 14,52,622 on sales/exports of Rs. 19,51,51,000 (including exports of Rs. 5,71,06,630), GP rate works out to a little less than 12 per cent against 9.37 per cent during the last year. The assessee was requested to file a separate trading account for purchase and sale of leather and shoe uppers to know the prepare separate trading account as it was maintaining one set of books of account for all these transactions. The assessee also failed to furnish the details of value of the grinders used on each pair of shoe uppers and the details of consumable stores. The accounts of the assessee firm were rejected under s. 145 of the Act. Accordingly, on the basis of trading account of the assessee was made, the Dy. CIT, Special Range, Jalandhar served a notice of demand upon the deduction under s. 80HHC of the Act in relation to the addition of Rs. 2,50,000 made in the trading account. Accordingly, the total income of the assessee firm stood reduced to Rs. 6,50,394 after allowing further deduction under s. 80HHC of affirmed the order passed by the CIT(A).

(3.) WE have heard learned counsel for the Revenue.