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2012 (12) TMI 582 - HC - Income TaxDeduction u/s 80IA & 80HHC - Interest Income, Commission Income, Export incentives and Currency Exchange Gain - Held that - Tribunal has not considered the judgment of the Supreme Court in Liberty India v. CIT 2009 (8) TMI 63 - SUPREME COURT regarding the deduction u/s 80IA on Interest Income thus restore the issue back to the Tribunal for a fresh decision after duly considering all the relevant aspects of the matter. As decided in CIT v. Rachna Udyog 2010 (1) TMI 38 - BOMBAY HIGH COURT & CIT Tax 8 Versus M/s Syntel Limited 2009 (12) TMI 689 - BOMBAY HIGH COURT the difference on account of exchange rate fluctuation is liable to be allowed under s. 80IB. Deduction u/s 80HHC - As the interest income in the present circumstances as Business income , it will merit inclusion at the first instance and thereafter 90% of the net interest is to be allowed as decided in the ACG Associated Capsules Pvt. Ltd. v. CIT 2012(2) TMI 101 - SUPREME COURT OF INDIA As in terms of the judgment of the Supreme Court in Topman Exports v. Commissioner of Income Tax (2012 (2) TMI 100 - SUPREME COURT OF INDIA) AO directed to compute the deduction under Section 80HHC.
Issues:
1. Allowance of deduction under section 80IA for various incomes. 2. Allowance of deduction under section 80HHC for various incomes. 3. Restoration of the issue regarding allowance of claim under section 80HHC. Analysis: Issue 1: Allowance of deduction under section 80IA for various incomes The High Court addressed the first issue concerning the allowance of a deduction under section 80IA for different types of income. The Revenue contended that the Tribunal did not consider the Supreme Court judgment in Liberty India v. CIT. Both parties agreed on this point. Consequently, the High Court restored the issue to the Tribunal for a fresh decision, except for currency exchange gain. The Court clarified that the rights and contentions of the parties were kept open, except for the currency exchange gain. The Court referenced its previous decision in Commissioner of Income Tax v. Rachna Udyog, emphasizing that exchange rate fluctuation should be allowed under section 80IB. The issue of currency exchange gain was deemed in favor of the assessee based on previous court decisions. Issue 2: Allowance of deduction under section 80HHC for various incomes Regarding the second issue of allowing a deduction under section 80HHC for different types of income, both the Revenue and the assessee's counsel requested the High Court to restore the matter to the Assessing Officer in light of the Supreme Court judgment in ACG Associated Capsules Private Ltd. v. Commissioner of Income Tax. The High Court ordered accordingly, leaving it to the Assessing Officer to determine if the deduction falls within the purview of Explanation (baa) to Section 80HHC. However, the issue of foreign exchange gain was excluded from the remit to the Assessing Officer, as it was already decided in favor of the assessee. Issue 3: Restoration of the issue regarding allowance of claim under section 80HHC The third issue involved the restoration of the matter regarding the allowance of the claim under section 80HHC. Both the assessee's counsel and the Revenue's counsel referred to the judgment of the Supreme Court in Topman Exports v. Commissioner of Income Tax. Accordingly, the High Court directed the Assessing Officer to compute the deduction under Section 80HHC, in line with the Supreme Court's judgment. In conclusion, the High Court disposed of the appeal after addressing the specific issues related to the allowance of deductions under sections 80IA and 80HHC, as well as the restoration of the claim under section 80HHC, in accordance with relevant legal precedents and judgments.
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