9911796707
TMI Blog2007 (5) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... andigarh (for short "the Tribunal"), in MA No.181/Chandi/2005 in ITA No. 539/Chandi/2000, for the assessment year 1996-97, raising the following substantial question of law:- "1. Whether, on the facts and circumstances of the case, the Hon'ble ITAT was right in law in directing not to reduce 10% of the interest income from the profit of business for the purpose of computation of deduction under Section 80HHC of the I.T. Act." 2. Briefly the facts are that the assessee in the present case is engaged in the business of manufacture of cotton, acrylic yarn and textile in hosiery. The return for the assessment year in question was filed on December 2, 1996 declaring its income at Rs. 16,00,37,520/-. The same was processed under Section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of Rs. 6,37,40,902/- be assessed as business income. And further erred in not increasing business income by Rs. 6,37,40,902/- being amount of interest earned on FDRs for the prupose of computing deduction under section 80HHC. Directions be given to assess the interest of Rs. 6,37,40,902/- under the head "business income" and recomputed deduction under section 80HHC of IT Act. Without prejudice in alternative, ld. CIT(A) (C) erred in law and on facts in not giving directions that if interest income is assessed under the head ; Other Sources' then interest paid Rs. 54,21,210/- may be allowed as expenditure to earn interest of Rs. 6,37,40,902/- and resulting thereby business income be enhanced by Rs. 54,21,210/-." 4. The iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application for rectification, which was accepted by the Tribunal and the concluding para was replaced in following terms by the Tribunal vide order dated October 24, 2005:- "In view of the above, we direct the Assessing Officer to allow the claim by considering the aforesaid order of the Tribunal dated 23.4.04 for the assessment year 92-93 in assessee's own case." 6. From perusal of the order passed by the Tribunal, it is evident that the assessee did not raise any argument with regard to treating of income from interest, under the head 'Income from Business and Profession' as against the treatment thereof under the head 'Income from Other Sources' at the time of passing of assessment order, which was confirmed by the CIT (A) in appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of deduction under Section 80HHC of the Act, which are included in such profits and not otherwise. As is evident from the facts on record, that the interest income earned by the assessee, which was sought to be claimed by him to be dealt with as income from business or profession, was in fact assessed as income from other sources, which order was upheld in appeal by the CIT(A). Even though, in the ground, the assessee had raised the issue for consideration of the interest income as part of the profits of business but the issue was never argued. 8. Once the conceded position on record is that the interest income earned by the assessee does not form part of income from business or profession, as computed at the time of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imself had treated the interest income as part of the income from business, there was no occasion to treat the same differently for the purpose of calculation of deductions under Section 80HHC of the Act. The relevant para from the judgment in M/s Avery Cycle Inds. Ltd.'s case [2008] 296 ITR 393 (P H), is extracted below:- "Once at the time of passing of the assessment order in computing the income from business or profession, the amount of receipt of interest, as mentioned above, has been shown and assessed as income from business or profession, there is no reason for reducing the same out of the income from business or profession for the purpose of calculation of deduction under Section 80HHC of the Act, as after including the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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