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2019 (12) TMI 217 - HC - Income TaxDeduction u/s 80HHC - Tribunal upholding the action of the AO deducting 90% of the income from truck hire charges, barge hire charges, ore processing receipts, trans-shipper loader charges, machinery hire charges and launch hire charges while computing the profits of the business in accordance with Clause (baa) of the Explanation below Section 80HHC. Such deduction ought to have been made on the basis of net receipts and not gross receipts as held in the case of ACG Associated Capsules (P) Ltd. vs. Commissioner of Income Tax 2012 (2) TMI 101 - SUPREME COURT . The impugned orders are modified accordingly. Adding of losses from export of trading goods in respect of disclaimed turnover to the profit eligible for deduction u/s 80HHC - HELD THAT - Issue covered in favour of the assessee and against the revenue in terms of our decision in the case of The Commissioner of Income Tax vs. V. M. Salgaonkar Brothers Ltd. anr. 2012 (4) TMI 344 - BOMBAY HIGH COURT . Incidentally, all these appeals were in the case of the present assessee and the ITAT had in fact held in favour of the present assessee. The appeals instituted by the revenue were accordingly dismissed.
Issues:
1. Deduction of income from various charges under Section 80HHC 2. Interpretation of Clause (baa) of the Explanation below Section 80HHC 3. Adding losses from export of trading goods to profit eligible for deduction under Section 80HHC 4. Disallowance of expenditure on brokerage/commission while computing income from House Property Analysis: Issue 1: Deduction of income from various charges under Section 80HHC The appellant questioned the Tribunal's decision to deduct 90% of the income from truck hire charges, barge hire charges, ore processing receipts, etc., while computing business profits under Section 80HHC. The High Court upheld the Tribunal's decision but clarified that the deduction should be based on net receipts, not gross receipts, as per the Supreme Court's ruling in ACG Associated Capsules (P) Ltd. vs. Commissioner of Income Tax. The impugned orders were modified accordingly. Issue 2: Interpretation of Clause (baa) of the Explanation below Section 80HHC The High Court addressed the interpretation of Clause (baa) of the Explanation below Section 80HHC. It held that the Tribunal was correct in upholding the Assessing Officer's deduction of 90% of the income from various charges. However, the deduction should have been based on net receipts, not gross receipts, as clarified by the Supreme Court. The High Court's separate judgments and orders provided the reasoning for this decision. Issue 3: Adding losses from export of trading goods to profit eligible for deduction under Section 80HHC The High Court referred to its earlier decision in the case of The Commissioner of Income Tax vs. V. M. Salgaonkar & Brothers Ltd., where it was ruled in favor of the assessee regarding adding losses from export of trading goods to the profit eligible for deduction under Section 80HHC. The High Court dismissed the revenue's appeals and answered this issue in favor of the assessee, modifying the impugned orders accordingly. Issue 4: Disallowance of expenditure on brokerage/commission while computing income from House Property The appellant did not press the substantial question of law related to the disallowance of expenditure on brokerage/commission while computing income from House Property. The High Court noted that this issue was not being pressed and, therefore, was not considered in the appeal. Consequently, the High Court disposed of the appeal with no order as to costs.
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