- (1.) THIS appeal has been preferred by the assessee under s. 260A of the IT Act, 1961 (for short, "the Act") against the order passed by Tribunal, Amritsar Bench, Amritsar in ITA No. 343/Asr/2001 for the asst. yr. 1999 -2000, proposing following substantial questions of law : (i) Whether in the facts and circumstances of the present case the action of the authorities below in restricting the deduction under s. 80HHC of the IT Act, 1961 on its own presumption, is legally sustainable in the eyes of law ? (ii) Whether the action of the Tribunal in confirming that stock surrendered under survey is income from other sources and not eligible for deduction under s. 80HHC claimed by appellant/assessee without appreciating the ratio of judgments laid down by the appellant/assessee in its correct perspective, is legally sustainable in the eyes of law ?
(2.) FACTS noticed in the order of the Tribunal are that the assessee filed return declaring its income of Rs. 6,67,850 on of Rs. 87.28 lacs on which a gross profit of 45.23 per cent was reflected as against the gross profit of 45.12 per cent on stock physically available at the premises of the assessee was excess by Rs. 11,97,809 as compared to the stocks reflected in the books of accounts. In order to cover the above discrepancy, the assessee offered to disclose an additional income of Rs. 12 lacs over and above the normal business income to be taxed for the assessment year under consideration. This income is duly reflected in the P&L a/c and thereby a net profit of Rs. 51,16,053 was declared. However, while working out the deduction under s. 80HHC of the Act, the entire amount of Rs. 51,16,053 has been shown as profits of the business and profits derived from export of goods to which s. 80HHC of the Act applies. Benefit available under sub -s. (3) of the s. 80HHC of the Act has been worked at Rs. 50,49,304.
(3.) ACT be not disallowed on income surrendered at the time of survey as the same is not export income and does not fulfil Rs. 12 lacs made by him over and above his normal business income represents business income since this is on calculated by applying fix GP whereas during the year under consideration GP was higher. Miscellaneous income which represents excess stocks is eligible for deduction under s. 80HHC of the Act since it is business income. The AO did not accept the stand of the assessee and held that the excess stocks available at the premises were not recorded in the books of account on which deduction under s. 80HHC of the Act was being claimed. Mere surrender by the assessee at the time of survey, on excess stock being found did not entitle the assessee to deduction under s. 80HHC of the Act, which was available only in respect of income derived from the export. This view was upheld by the CIT(A) as well as the Tribunal. The Tribunal noticed that the assessee failed to offer any explanation for the difference in the stocks and in such a situation, the assessee was not eligible to claim deduction under s. 80HHC of the Act without showing facts necessary for claiming the said deduction.;