RAJESH BINDAL J. - (1.) THE assessee has approached this Court, by filing the present appeal, raising the following substantial questions of law, 757/Chandi/2002, for the asst. yr. 1998 -99 : "(i) Whether, on the facts and circumstances of the case, the learned Tribunal was right in law in holding that the appellant is not entitled to deduction under s. 80HHC as an exporter on surrendered income of Rs. 13.00 lakhs when it is not disputed that the appellant is not selling any goods within the country and is 100 per cent export oriented unit ? (ii) Whether the learned Tribunal was right in law in holding that the deduction under s. 80HHC is not admissible on the amount of Rs. 13.00 lakhs as the same has been shown as miscellaneous income, whereas it is settled law that real character of transaction is to be seen and the nomenclature given is not relevant - 1998, declaring the same at Rs. 20,51,900. The same was processed under s. 143(1)(a) of the IT Act, 1961 (for short, the financial year in question, survey under s. 133A of the Act, was conducted at the business premises of the assessee 12,77,906 was found to be short. In addition to this, the amounts declared to have been spent by the assessee, on the construction of a factory shed at Panipat, was also found to be short. Accordingly, the assessee surrendered additional income of Rs. 13 lakhs on account of discrepancy in the stock found at the time of survey and another sum of Rs. 6 lakhs on account of investment in the construction of building at Panipat. As the assessee is engaged in the business of export of goods while claiming deduction under s. 80HHC of the Act, the additional income of Rs. 13 lakhs, surrendered at the time of survey, was added in the business income and benefit was sought to be claimed therein. The claim made assessment, the assessee succeeded before the CIT(A).
(2.) IN further appeal before the Tribunal, the order passed by the CIT(A) was reversed and it was held, that the assessee is not entitled to add income of Rs. 13 lakhs surrendered, on account of shortage of stocks at the time of survey, to be included for the purpose of calculation of deduction under s. 80HHC of the Act. The plea raised by the assessee to the effect that as the assessee is a 100 per cent export oriented unit and is not having any other source of income, the income surrendered by the assessee on account of shortage of stocks has necessarily to be counted towards income from export earnings and consequently the assessee was entitled to the benefit thereon, was considered and rejected. Even before this Court, the assessee has raised the same plea. According to him, as the only source of income with the assessee was export, the stock found short at the time of survey has necessarily to be considered as exported and the income derived therefrom as income from export earnings. Similar arguments raised by the assessee in ITA No. 302 of 2005 - -National Legguard Works vs. CIT (2007) 207 CTR (P&H) 581 : (2007) 288 ITR 18 (P&H) was rejected by this on fulfilment of certain conditions specified therein and there can be no presumption that surrender made on account of difference found in the stock at the time of survey represents income from exports. Once that is not so, the assessee cannot be held entitled to add the surrendered income to the income from business for the purpose of calculation of deduction under s. 80HHC of the Act.
(3.) ACCORDINGLY , we do not find any merit in the present appeal and dismiss the same.;