2014 (6) TMI 152 - HC - Income Tax

Computation of deduction u/s 80HHC of the Act - Exclusion of scrap sale from turnover Interest on late payment from customers Held that - In so far as the exclusion of 90% of the net interest and net commission as against gross amounts under these heads from the profit of the business for the purpose of computing deduction u/s section 80HHC of the and the deletion of the disallowance u/s.43B to be paid beyond the limit as provided u/s.36(1)(va) of the Act, is concerned, the decision in ACG Associated Capsules Pvt.Ltd. Vs. Commissioner of Income Tax 2012 (2) TMI 101 - SUPREME COURT OF INDIA - Ninety per cent of not the gross interest/rent but only the net interest/rent, which has been included in the profits of the business of the assessee as computed under the heads PGBP is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business - the issue raised stands answered in favour of the assessee and against the Revenue thus, no substantial question of law arises for consideration Decided against Revenue.

Summary

Issues:
1. Exclusion of sale of scrap from total turnover for deduction u/s. 80HHC.
2. Treatment of interest on late payment and investment with Central Excise for deduction u/s. 80HHC.
3. Computation provisions of capital gain tax and taxability of capital gains.
4. Justification of relying on a previous tribunal decision.

Analysis:

1. The High Court admitted the appeal based on substantial questions of law, including whether the Tribunal was correct in directing the Assessing Officer to exclude the sale of scrap from the total turnover for the purpose of computing deduction u/s. 80HHC. This issue raised concerns about the interpretation of relevant provisions and their application to the case at hand.

2. Another issue in the appeal was the treatment of interest on late payment from customers and investment with Central Excise for the purpose of computing deduction u/s. 80HHC. The Court examined whether the Tribunal's decision to not exclude these amounts from the profit of the business was legally sound and aligned with the provisions of the Income Tax Act.

3. The Court also considered the computation provisions of capital gain tax and the taxability of capital gains in the case under review. This issue involved analyzing the correctness of the Tribunal's decision regarding the application of capital gain tax provisions and whether any capital gains could be brought to tax based on the facts and circumstances of the case.

4. Additionally, the Court evaluated whether the Tribunal was justified in relying on a previous decision of the Mumbai Tribunal in a different case. The issue was whether the facts of the current case were distinguishable from the precedent cited by the Tribunal, and if such reliance was appropriate in the given circumstances.

In conclusion, the High Court admitted the appeal on specific substantial questions of law related to the exclusion of certain items from turnover for deduction, treatment of interest amounts, capital gain tax computation, and the validity of relying on a previous tribunal decision. The Court's analysis focused on interpreting relevant legal provisions and assessing their application to the facts of the case to determine the correctness of the Tribunal's decisions.