2013 (1) TMI 139 - HC - Income Tax

Deduction u/s 80HHC - Assessment years 1990-91 and 1992-93 - Whether income from godown rent to be treated as export profit for computing the relief u/s 80HHC - Held that - The assessee s claim relates to the use of its godown by other exporters for storing goods till despatch. This cannot at all be termed to be a profit derived by the assessee from the export of such goods or merchandise coming within Section 80HHC. In favour of revenue

Summary

Issues:
- Deduction of interest income for computation of eligible relief under Section 80HHC of the Income Tax Act
- Exclusion of rent in the computation of eligible deduction under Section 80HHC of the Income Tax Act

Analysis:
1. The appellant challenged the orders of the Tribunal for the assessment years 1990-91 and 1992-93, claiming deduction of interest income received from a sister company, two banks, and godown rent as export profit under Section 80HHC of the Income Tax Act.

2. The assessing officer rejected the claims, but the first appellate authority allowed them. The Revenue appealed before the Tribunal, where the appellant conceded that interest income could not be included for deduction under Section 80HHC, focusing the arguments on godown rent.

3. The High Court raised two questions of law in both appeals: the exclusion of interest income and rent for computation of eligible relief under Section 80HHC. The Court refused to answer the first question as it was not an issue before the Tribunal.

4. The main issue argued was the eligibility of godown rent to be treated as export profit under Section 80HHC. The appellant relied on a previous case but the Tribunal found that the rent for storing goods was not export profit as defined under the Act.

5. Section 80HHC allows deduction for profits derived from export business. The Tribunal correctly determined that the use of the godown by other exporters did not constitute profit derived from export of goods, thus rejecting the appellant's claim.

6. The High Court upheld the Tribunal's decision, answering the second question against the appellant and in favor of the Revenue. Consequently, both appeals were rejected based on the findings regarding the exclusion of rent in the computation of eligible deduction under Section 80HHC.