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TMI Blog2001 (1) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... alia the following amounts: (i) Income from bank interest Rs. 0.57 lakhs (ii) Other income (interest on income-tax refund) Rs. 11.75 lakhs (iii) Dividend from investments Rs. 64.53 lakhs --------------- Rs. 76.85 lakhs &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Departmental Representative was that income from interest on deposits, interest on IT refund and dividends was liable to be assessed under the head "income from other sources" and, if that was so, it was not eligible for deduction under s. 80HHC of the Act. The learned Departmental Representative relied on the apex Court decision in the case of CIT vs. Sterling Foods (1999) 153 CTR (SC) 439 : (1999) 237 ITR 579 (SC) to submit that interest and dividend were not profits "derived" from export of goods. A reference was also made of the Kerala High Court decision in the case of Nanji Topanbhai & Co. vs. Asstt. CIT (1999) 157 CTR (Ker) 225 : (2000) 243 ITR 192 (Ker). Madras High Court decisions in the cases of South India Shipping Corpn. Ltd. vs. CIT (2000) 163 CTR (Mad) 617 : (2000) 240 ITR 24 (Mad) and ACE Investments (P) Ltd. vs. CIT (1999) 157 CTR (Mad) 185 : (2000) 244 ITR 166 (Mad). Assessee's plea for set off of interest receipts against interest payment was opposed on the strength of apex Court decision in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT (1997) 141 CTR (SC) 387 : (1997) 227 ITR 172 (SC). 6. We have carefully considered the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the case of R.B. Jodhamal Kuthiala is in the context of provisions of Excess Profits Tax Act and it has no application to assessee's case. 6.4. In our considered opinion, the dividend income which is assessable under the head "other sources" in view of specific provisions of s. 56(1)(i) of the IT Act cannot be held to be the business income and that too "derived from exports", merely because the investment in shares is stated to have been made for safeguarding the source of income from business. 7. In view of the aforesaid decision we would uphold the order of the learned CIT(A) in disallowing deduction under s. 80HHC on the two types of interest and dividends. The two grounds of appeal referred to above, are rejected. 8. The ground at Sl. No. 3 reads as under: "That the CIT(A) I, New Delhi has grossly erred on facts and in law in confirming the action of the AO in rejecting the claim for deduction of Rs. 5,39,893 being the loss on account of foreign exchange fluctuations resulting from the payments of foreign currency loans during the year to Hongkong & Shanghai Banking Corporation by invoking the provisions of s. 43A of the IT Act, 1961." 9. The facts concerning the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions, it was submitted that as the investment in shares was made in the course of assessee's business, the loss on account of foreign currency fluctuation was allowable. Certain further facts in this behalf were also brought to the notice of the learned CIT(A), including the fact that his predecessor had allowed the loss for the asst. yr. 1989-90. The learned CIT(A) was, however, of the view that the AO was correct in holding that the loss was with respect to a capital asset in the form of equity shares in the German company and as such not a revenue loss. He distinguished the facts of the judicial decisions relied upon by the assessee. 11. Before us, besides reiterating the plea advanced before the authorities below, the learned counsel for the assessee explained that the investment in EicherGermanywas lost as that company went into liquidation. He submitted that the loss was written off in the books of account relevant to asst. yr. 1985-86. However, the lower authorities and the Tribunal held in asst. yr. 1985-86 that the claim for business loss was "premature" in that year. It was stressed that thereafter the loss was allowed by the AO in asst. yr. 1986-87. In this connect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the fact that the CIT(A) had held the loss on account of foreign exchange fluctuation to be a revenue loss against which finding the Department was not in appeal. In this connection. Paras 6.5 & 6.24 of the order was specifically referred to. The learned counsel also submitted that even in the subsequent asst. yr. 1990-91, loss of Rs. 14.30 lacs claimed in the P&L a/c on account of foreign exchange fluctuation has been allowed by the AO himself. In this connection, the relevant P&L a/c and assessment order dt.29th Jan., 1993, copies placed at pp. 173 & 174-76, were referred to. It was argued that in the circumstances, the Department could not take a different stand and disallow the loss of Rs. 5,39,893 relating to the year under consideration. It was reiterated that the Courts have held that the deductibility of loss on account of exchange fluctuation depends upon the answer to the question whether the foreign exchange loan was for obtaining a capital asset or a trading asset. It is held that if the loan is taken in connection with obtaining a trading asset, as was the position in the assessee's case, then the loss arising on account of fluctuation is a revenue loss. The apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,017 as a casual and non-recurring receipt under s. 10(3) of the IT Act, 1961, instead of a capital receipt not chargeable to tax." 14. An amount of Rs. 6,83,017 received by the assessee on surrender of tenancy rights was assessed by the AO as a casual and non-recurring receipt assessable under s. 10 of the IT Act, 1961. In doing, so reliance was placed on the Allahabad High Court decision in the case of CIT vs. Gulab Chand (1992) 101 CTR (All) 226 : (1991) 192 ITR 495 (All). In appeal, the learned CIT(A) upheld the action of the AO. 15. The learned counsel for the assessee, referred to certain decisions of the High Court. He placed strong reliance on the Tribunal Delhi (Special Bench) decision in the case of J.C. Chandiok vs. Dy. CIT (1999) 64 TTJ (Del) (SB): (1999) 69 ITD 75 (Del) (SB) to plead that the amount received on surrender of tenancy rights was a capital receipt not liable to tax. It was also submitted that the aforesaid decision of the Special Bench has been followed by the Tribunal B Bench,New Delhiin assessee's own case for the asst. yr. 1994-95 in ITA No. 1125/Del/99, dt.27th Oct., 1999, a copy of which was filed. 16. Learned Departmental Representative was heard. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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