S. 80HH & 80-I do not require maintenance of accounts unit wise and deduction can be claimed on the basis of consolidated accounts. To avoid litigation, the assessee should get the working of unit wise net profits certified by the Chartered Accountant

Explanation 5 to s. 271(1)(c) is a deeming provision which provides that if, in the course of search u/s 132, the assessee is found to be the owner of unaccounted assets and he claims that such assets have been acquired by him by utilizing, wholly or partly, his income for any previous year which has ended before the date of search or which is to end on or after the date of search, then, in such a situation, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the particulars of his income for the purposes of imposition of penalty u/s 271(1)(c). Sub-clause (2) confers an immunity from penalty if three conditions are fulfilled, namely, (i) the assessee must make a statement u/s 132(4) in the course of search stating that the unaccounted assets and incriminating documents found from his possession during the search have been acquired out of his income, which has not been disclosed in the return of income to be furnished before expiry of time specified in s. 139(1), (ii) the assessee should specify in the s. 132(4) statement the manner in which such income stood derived and (iii) the tax together with the interest has to be paid. There is no time limit prescribed in the third condition for the payment of the tax & interest. As the assessee had fulfilled the first two conditions and paid the tax & interest (before the completion of the assessment), it was entitled to immunity under Explanation 5 to s. 271(1)(c)

S. 35AB provides for the amortisation of any lump sum consideration for acquiring any know-how for use for the purposes of his business in 6 installments. Though because of certain disputes which arose between the parties, the balance amount was not paid by the assessee to the American company, the word “for” in s. 35AB, which is a preposition in English grammar, has to be emphasised while interpreting s. 35AB. S. 35AB says that the expenditure should have been incurred for the purposes of the business of the assessee. The Technical Assistance Agreement was entered into between the assessee and the American company for acquiring know-how which was, in turn, to be used in the business of the assessee. Once s. 35AB comes into play, then s. 37 of the Act has no application

The assessee has been following consistently the method of valuation of closing stock which is “cost or market price whichever is lower.” Also, while the AO revalued the closing stock, he did not make any adjustment to the opening stock. Excise duty is on the manufacture of the finished product though it is quantified and collected on the selling price. Valuation of unsold stock at the close of the accounting period is a necessary part of the process of determining the trading results of that period. It cannot be regarded as source of profits. The true purpose of crediting the value of unsold stock is to balance the cost of the goods entered on the other side of the account at the time of the purchase, so that on cancelling out of the entries relating to the same stock from both sides of the account would leave only the transactions in which actual sales in the course of the year has taken place and thereby showing the profit or loss actually realized on the year’s trading. The entry for stock which appears in the trading account is intended to cancel the charge for the goods bought which have remained unsold which should represent the cost of the goods” (Chainrup Sampatram 24 ITR 481 (SC) & Hindustan Zinc Ltd 291 ITR 391 SC) followed.

We are satisfied that 0.50% to 4% discount given to the Stamp Vendors is for purchasing the stamps in bulk quantity and the said discount is in the nature of cash discount. In the circumstances, we concur with the impugned judgement that the impugned transaction is a sale. Consequently, Section 194H of the Income-tax Act, 1961, has no application

The findings given by ITAT and the High Court are findings of fact. We are not concerned with the interpretation of Section 80IA of the Act. On facts, we find that the assessee ought to have maintained a separate account in respect of raw material which it had sold during the assessment year. If the assessee had maintained a separate account, then, in that event, a clear picture would have emerged which would have indicated the income accrued from the manufacturing activity and the income accrued on the sale of raw material. We do not know the reason why separate accounts were not maintained for the raw material sold and for the income derived from manufacture of yarn