2013 (5) TMI 1046 - AT - Income Tax

Summary

Issues Involved:
The judgment involves an appeal against the order of the Commissioner of Income Tax (A)-I, Ludhiana dated 08.10.2010 relating to assessment year 2003-04 under section 154 of the Income Tax Act, 1961.

Issue 1: Recomputation of Deduction under Section 80HHC of the Act
The appeal challenges the action of considering TUF subsidy reimbursement as Interest from Investments Income while calculating deduction under section 80 HHC of the Income Tax Act. The original assessment was completed under section 143(3) of the Act, where the Assessing Officer recomputed the deduction under section 80HHC at a lower amount. Subsequently, a notice under section 154 was issued to the assessee regarding the interest received, leading to a further recomputation of the deduction. The Assessing Officer contended that 90% interest received needed to be deducted from the profits of the business. However, the nature of the interest credited included reimbursement under the TUF scheme and a refund of excess interest charged by the bank. The Tribunal held that the issue of computation of deduction under section 80HHC in relation to the interest received was debatable, and rectification under section 154 could not be applied. Consequently, the order passed under section 154 was cancelled, and the Assessing Officer was directed to allow the deduction under section 80HHC at the originally computed amount.

Conclusion:
The appeal filed by the assessee was allowed, and the order passed under section 154 of the Act was cancelled, directing the Assessing Officer to allow the deduction under section 80HHC at the originally computed amount.