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TMI Blog2012 (5) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated that they had earned interest income on FDRs from bank for availing various facilities availing like margin money, packing credit, etc , the Tribunal has not examined the factual matrix and has merely affirmed the decision of the CIT(Appeals)that interest received is assessable under the head “other sources” - remit to the Tribunal to factually examine the aforesaid aspect - in favour of assessee. Applied Explanation (1)(iv) to Section 115JB while computing the book profits – Held that:- As per Explanation (1)(iv) to Section 115JB, it is clear that the book profit shall be reduced by the amount of profits eligible for deduction under section 80HHC as computed under clause (a) or clause (b) or clause (c) of sub-section (3) or sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit which is utilized is covered under Section 28 (iiic) and profits of sale of DEPB are covered by Section 28 (iiid) of the Income Tax Act, 1961 ( Act‟, for short). The Tribunal was, therefore, wrong in holding that the DEPB credit was covered by Section 28 (iiid) of the Act. The computation and appeal effect will be made by the Assessing Officer by applying the ratio in the case of Topman Exports (supra). 3. As regards question no.(ii) findings of the Tribunal are as under: - 8. We have heard both the parties. We find that this issue is covered by the decision of Hon‟ble High Court of Delhi in the case of CIT Vs. Sri Ram Honda Power Equip (Delhi) 289 ITR 475 (Del.) wherein it has been held that the interest received from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Explanation (baa). Thus, profits of the business of an Assessee will have to be first computed under the head "Profits and Gains of Business or Profession" in accordance with provisions of Section 28 to 44D of the Act. In the computation of such profits of business, all receipts of income which are chargeable as profits and gains of business under Section 28 of the Act will have to be included. Similarly, in computation of such profits of business, different expenses which are allowable under Sections 30 to 44D have to be allowed as expenses. After including such receipts of income and after deducting such expenses, the total of the net receipts are profits of the business of the Assessee computed under the head "Profits and Gains of Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 80HHC . 5. In this case, the assessee has stated that they had earned interest income of Rs.11,31,088/- on FDRs from bank for availing various facilities availing like margin money, packing credit, etc. The Tribunal has not examined the factual matrix and has merely affirmed the decision of the CIT(Appeals) that interest received is assessable under the head other sources . Accordingly we pass an order of remit to the Tribunal to factually examine the aforesaid aspect and if it is found that the interest income earned on the FDRs is assessable under the head business income , netting off the same against interest paid will be permitted and allowed in terms of the directions of the Supreme Court in the case of ACG Capsules ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B) deals not with eligibility but with the extent of deduction . As earlier stated, section 115JB is a self-contained code. It taxes deemed income. It begins with a non obstante clause. Section 115JB refers to computation of book profits which have to be computed by making upward and downward adjustments. In the downward adjustment, vide clause (iv) it seeks to exclude eligible profits derived from exports. On the other hand, under section 80HHC(1B) it is the extent of deduction which matters. The word thereof in each of the items under section 80HHC(1B) is important. Thus, if an assessee earns Rs.100 crores then for the assessment year 2001-02, the extent of deduction is 80 per cent thereof and so on which means that the princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per clause (iv) of the Explanation to section 115JB, it is clear that the book profit shall be reduced by the amount of profits eligible for deduction under section 80HHC as computed under clause (a) or clause (b) or clause (c) of sub-section (3) or sub-section (3A), as the case may be, of that section and subject to the conditions specified in that section, thereby meaning that the deduction allowable would be only to the extent of deduction computed in accordance with the provisions of section 80HHC. Thus, according to the Department, both eligibility as well as deductibility of the profit have got to be considered together for working out of the deduction as mentioned in clause (iv) of the Explanation to section 115JB. We find no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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