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2013 (5) TMI 664 - HC - Income TaxMiscellaneous income and interest income - MAT - grievance of the assessee was only that the deductions to 30% of the deduction u/s 80HHC by invoking Section 80HHC (1B) while computing the book profit under Section 115JB was allowed - Held that - The issue is no longer in dispute in view of the decision of in the case of Ajanta Pharma v. CIT (2010 (9) TMI 8 - SUPREME COURT) where it was made clear that 100% of the deduction would be allowable. Therefore AO was wrong in allowing only 30% of the deduction allowable under Section 80HHC for the purposes of computing book profits under Section 115JB. It is therefore, apparent that with regard to the issue of miscellaneous income and interest income, there was no dispute with the AO s treatment of the same as being part of business income. Consequently, the contention sought to be raised on behalf of the revenue that the miscellaneous income and interest income should be excluded does not arise at all. This is so because the assessing officer had treated the same as part of business income of the assessee - no question of law arises for our consideration.
Issues:
1. Computation of deduction under Section 80HHC for assessment years 2003-04 and 2004-05. 2. Treatment of miscellaneous income and interest income in the deduction calculation. 3. Dispute regarding limiting deductions to 30% under Section 115JB. 4. Applicability of Supreme Court decision in Ajanta Pharma v. CIT. Issue 1: Computation of deduction under Section 80HHC The High Court addressed the appeals by the revenue concerning the assessment years 2003-04 and 2004-05. The primary issue was the computation of profits derived from the export of goods under Section 80HHC. The Court clarified that the profits must be calculated by multiplying the profits of the business with the ratio of export turnover to total turnover, as outlined in the relevant sections. The profits of the business were to be computed as per the provisions of Explanation (baa) after sub-section (4) of Section 80HHC. Issue 2: Treatment of miscellaneous income and interest income The misunderstanding on the part of the revenue arose regarding the treatment of miscellaneous income and interest income in the deduction calculation under Section 80HHC. The revenue contended that these incomes should be reduced as they are not part of export profits. However, the Court emphasized that these incomes were considered part of the profits of the business, as accepted by the Assessing Officer. The Court illustrated the computation process to demonstrate that the miscellaneous income and interest income were included in the profits of the business. Issue 3: Dispute regarding limiting deductions under Section 115JB The Court addressed the grievance of the respondent/assessee concerning the limitation of deductions to 30% under Section 115JB. Referring to the Supreme Court decision in Ajanta Pharma v. CIT, the Court clarified that 100% of the deduction should be allowable, contrary to the Assessing Officer's decision to limit it to 30%. The Court held that the Assessing Officer was incorrect in restricting the deduction allowable under Section 80HHC for computing book profits under Section 115JB. Issue 4: Applicability of Supreme Court decision In light of the Supreme Court decision in Ajanta Pharma v. CIT, the High Court concluded that there was no dispute regarding the treatment of miscellaneous income and interest income as part of business income. The Court dismissed the appeals, stating that no substantial question of law arose for consideration, as the Assessing Officer had correctly treated the incomes as part of the business income. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the High Court's rulings on each matter.
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