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TMI Blog2009 (6) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act, 1961, has been admitted by formulating the following three questions on August 2, 2004 : "(1) Whether on facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in setting aside the order passed by the Commissioner under section 263 of the Income-tax Act, relying on the decision of the Bombay High Court in the case of Alfa Laval India Ltd. v. Deputy CIT [2004] 266 ITR 418, which is not applicable to the facts of the case ? (2) Whether on the facts and in the circumstances of the case the Income-tax Appellate Tribunal was legally correct in placing reliance on the decision of the Bombay High Court in the case of Alfa Laval India Ltd. v. Deputy CIT [2004] 266 ITR 418, which has held that "having accepted interest income as part of the business profits, the same could not be excluded from business profits, while calculating deduction under section 80HHC of the Income-tax Act", which is not the question involved in the present case ? (3) Whether the Income-tax Appellate Tribunal ought to have held that the order passed by the Assessing Officer allowing deductions under section 80HHC(1) and (1A) of the Income-tax Act, by not exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other question fell for consideration. He points out that in the present matter the Commissioner of Income-tax has specifically recorded a finding that income under the above mentioned three heads was non-business receipts, i.e., non-operational income and, therefore, needed to be excluded while computing the eligible profits. In this background, he states that the questions, as framed, need to be answered in favour of the present appellant and the present appeal needs to be allowed and the orders passed by the Commissioner of Income-tax need to be restored. 5. Advocate Srinivasan, on the other hand, has relied upon the judgments of the hon'ble apex court in R. J. Singh Ahluwalia v. State of Delhi [1970] 3 SCC 451 and in G. M. Contractor v. Gujarat Electricity Board [1972] 4 SCC 764 and a Division Bench judgment of this court in Inventors Industrial Corporation Ltd. v. CIT [1992] 194 ITR 548 (Bom) to state that the issue which goes to the root of jurisdiction can be raised at any point of time. He points out that in R. J. Singh Ahluwalia (supra) before the hon'ble apex court, a point not raised earlier before any of the lower courts was allowed to be raised and as sanction was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vonkar during his reply has invited attention to the provisions of section 260A to state that the question of jurisdiction under section 263 has not been framed in the present matter as a substantial question of law and, therefore, in view of the provisions of sub-section (4) thereof, the appellant cannot be heard on the said question. He further stated that if this court finds that such a question is involved, the question needs to be formulated and opportunity needs to be given to the present appellant to assist this court by arguing the said question on the next date. Advocate Srinivasan has contended that as the respondent has raised that issue, the provisions of section 260A(3)(4) are not applicable and the assessee can argue the said substantial question of law. A perusal of the order passed by the revisional authority clearly shows that the said authority has found that income under the above three heads could not have been retained as business receipts and, therefore, was not operational income. It is apparent that if income under the three heads is not operational income, the same needs to be treated in the manner as stipulated in section 80HHC(4C), Explanation (baa)(1). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80HHC was found to be unjustified as the Assessing Officer himself treated it as part of profits and gains of business. In this background, it has been held that it was not open to the Assessing Officer to treat these incomes as if assessed under "Income from other sources". Thus, this contradictory treatment by the Assessing Officer was found sufficient to allow the appeal of the assessee by setting aside the order of the Income-tax Appellate Tribunal. The propriety or otherwise of the finding of the Income-tax Appellate Tribunal that the said incomes had no nexus with the business activity of the assessee and, therefore, were not to be included in the business profits for the purpose of computation of relief under section 80HHC of the Act, was, therefore, not required to be gone into. In the present matter, the treatment given to expenditure included under three heads, namely, truck lease income, machinery lease income and service charges has been corrected by the Commissioner of Income-tax in revision with the specific finding that said income did not constitute a business receipt. Hence, unless and until the Income-tax Appellate Tribunal in appeal found that profits fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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