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TMI Blog2013 (10) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... l barge freight arose in the subsequent year on the basis of the letter from GMOEA, even though the appellant follows mercantile system of accounting ? (b) Whether the Tribunal is right in law in holding that the higher rate of depreciation is available only to trucks given on hire basis and not to trucks given on lease ? (c) Whether on a proper interpretation, the Tribunal has misdirected itself in not following the guidelines laid down by the Bombay High Court in Bangalore Clothing Co. 260 ITR 371 which decision was rendered after Explanation (baa) was inserted in section 80HHC and subsequent to decision in 246 ITR 439 ? 2. Re Question (a) : The assessee is engaged in the business of mining and export of ore. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed for Assessment Year 1998-99. In both the order of the CIT(A) and of the Tribunal it has been consistently held that since the liability accrued on 09.05.1997 the claim was allowable only for Assessment Year 1998-99. Hence, though the assessee would not be entitled to claim for Assessment Year 1997-98 it would be so entitled for Assessment Year 1998-99. That disposes of question (a). 4. Re Question (b) : The assessee had leased out 19 trucks to M/s Damodar Mangalji & Company Limited for a period of five years who in turn hired the trucks to drivers with the condition that they would transport the ore of the assessee. The Assessing Officer held that the assessee was entitled to normal depreciation of 25% as against the claim to a depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e asset is utilized for the purpose of business of the assessee, the requirement of section 32 will stand satisfied, notwithstanding nonusage of the asset itself by the assessee. In the present case before us, the assessee is a leasing company which leases out trucks that it purchases. Therefore, on a combined reading of section 2(13) and section 2(24) of the Act, the income derived from leasing of the trucks would be business income, or income derived in the course of business, and has been so assessed. Hence, it fulfills the aforesaid second requirement of section 32 of the Act, viz., that the asset must be used in the course of business." In the circumstances, it has been held that what has been postulated is that the assessee must use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits of any branch, office, warehouse or any other establishment of the assessee situate outside India;]" 10. Under section 80HHC, a deduction is allowed to the extent of profits derived by the assesee from the export of goods or merchandise to which the section applies. The provisions of section 80HHC and more particularly Explanation (baa) have been construed in the judgment of the Supreme Court in Commissioner of Income Tax V/s K. Ravindranathan Nair, (2007) 295 ITR 228. Sub-section 3 of section 80HHC stipulates the manner in which the profits derived from such export would be computed. Sub-section 3 provides as follows : "(3) For the purposes of sub-section (1)- (a) where the export out of India is of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held as follows : "In other words, receipts constituting independent income having no nexus with exports were required to be reduced from business profits under clause (baa). A bare reading of clause (baa)(1) indicates that receipts by way of brokerage, commission, interest, rent, charges, etc., formed part of gross total income being business profits. But for the purposes of working out the formula and in order to avoid distortion of arriving at the export profits, clause (baa) stood inserted to say that although incentive profits and "independent incomes" constituted part of gross total income, they had to be excluded from gross total income because such receipts had no nexus with the export turnover." 12. The view which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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