2007 (5) TMI 173 - HC - Income Tax

Sales tax and Central sales tax not includible in the total turnover for the purpose of deduction u/s 80HHC and another matter remanded to tribunal to decided afresh whether Income from other sources can be claimed as Income from business or profession for the purpose of deduction u/s 80HHC

Summary

Issues:
1. Whether sales tax and central sales tax should be excluded from the total turnover of the assessee while computing deduction under section 80HHC?
2. Whether 10% of the interest income should be excluded from the profit of business for the purpose of computation of deduction under section 80HHC of the Income Tax Act?

Issue 1:
The revenue appealed against the order of the Income Tax Appellate Tribunal (ITAT) regarding the exclusion of sales tax and central sales tax from the total turnover of the assessee for calculating deduction under section 80HHC. The High Court noted that a similar issue had been decided against the revenue in a previous judgment. Consequently, the High Court only considered the second question raised by the revenue for final disposal.

Issue 2:
The case involved the treatment of interest income declared by the assessee under the head 'Income from Other Sources' as business income for the purpose of calculating deduction under section 80HHC of the Income Tax Act. The Commissioner of Income-Tax (Appeals) accepted the plea raised by the assessee, directing the Assessing Officer to exclude 90% of the interest income. However, the revenue appealed this decision before the Tribunal. The Tribunal, while misdirecting itself by referring to an irrelevant judgment, failed to address the core issue of whether the interest income could be considered business income for deduction under section 80HHC. Consequently, the High Court remitted the matter back to the Tribunal for a fresh order after considering this crucial issue and hearing both parties.

In conclusion, the High Court disposed of the appeal by directing the parties to appear before the Tribunal for further proceedings on the specified date, emphasizing the need for a proper consideration of the issue regarding the treatment of interest income for deduction under section 80HHC.