1988 (8) TMI 122 - AT - Income Tax

Summary

Issues:
- Treatment of license premium as income from other sources instead of business income
- Disallowance of deduction under section 80HHC
- Reduction of deduction under section 80HHC by 10% of license premium
- Disallowance of car expenses and depreciation for personal use
- Charging of interest under section 234B

Analysis:

1. The appeals involved the treatment of license premiums as income from other sources instead of business income. The Tribunal allowed the appeals by holding the license premium amounts as business income for both assessees, as per the decision in a similar case.

2. The second issue concerned the deduction under section 80HHC. The AO reduced the deduction by 10% of the profits earned on the sale of self-generated import licenses. The CIT(A) upheld this decision, but the assessees argued that the deduction should be allowed at 100% as per the relevant provisions. The Tribunal agreed with the assessees, allowing the deduction at 100%.

3. Regarding car expenses and depreciation for personal use, the Departmental authorities disallowed these expenses. Since personal use of the car was not denied, the Tribunal upheld the disallowance of these expenses and dismissed the related grounds.

4. The final issue was the charging of interest under section 234B. The Tribunal directed the AO to recalculate any interest chargeable under this section after giving effect to the Tribunal's order.

5. In conclusion, the Tribunal partly allowed both appeals, ruling in favor of the assessees on the treatment of license premiums and the deduction under section 80HHC. The disallowance of car expenses and depreciation for personal use was upheld, and a recalculation of interest under section 234B was ordered.