2002 (9) TMI 56 - HC - Income Tax

Whether on a true construction of the Explanation (baa) to section 80HHC of the Income-tax Act, 1961, interest, rent and commission are to be deducted from export profits or only net receipts, if any, after taking into account the payments? Interest paid and claimed as deduction in the computation of profits and gains for business, cannot be set off against interest received and computed under income from other sources . What has been said about interest is equally applicable to rent and commission included in the computation under the head Profits and gains of business or profession . The question is answered against the assessee and in favour of the Revenue.

Summary

The High Court of Madras ruled on the interpretation of Explanation (baa) to section 80HHC of the Income-tax Act, 1961. The court clarified that deductions should be made from the profits computed under the head "Profits and gains of business or profession," not from other income heads. Interest, rent, and commission claimed as deductions must be from the profits of the business, not from other sources. The judgment favored the Revenue in answering the first question. The second question was not addressed as it did not arise from the Tribunal's order.