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TMI Blog2006 (1) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal is right in holding that the assessee is eligible for full deduction under section 80HHC without restricting to the amount received by way of interest were incidental to the export business as fixed deposits is valid in law?" The facts leading to the above question of law are as under: The assessee is a specified Hindu undivided family. The assessment year is 1995-96 and the corresponding accounting year ended on March 31, 1995. The assessee filed its return of income on November 29, 1995, admitting a gross total income of Rs. 9,66,389 and claiming deduction of an amount of Rs. 9,37,057 under section 80HHC. The case was proceeded under section 143(1)(a) and notice under section 143(2) was issued. The assessee is engaged in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved by the order of assessment, the assessee filed an appeal to the first appellate authority who confirmed the order of the Assessing Officer. Against that order, the assessee preferred an appeal before the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal held that, in this case on hand, the net figure of interest is only the payment in a sum of Rs. 6,59,946 and not receipt and hence there is no question of removing any amount out of such net interest payments while computing the deduction under section 80HHC. Hence, the Appellate Tribunal set aside the order of the Revenue authorities and directed not to remove any amount towards interest by applying the Explanation (baa) to sub-section (4B) of section 80HHC as the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. We heard the contention advanced by both the parties. The entire controversy centres around the meaning to be assigned to the language employed in clause (baa) of the Explanation to section 80HHC of the Act. The said clause reads as follows: "(baa) 'Profits of the business' means the profits of the business as computed under the head 'Profits and gains of business or profession' as reduced by - (1) ninety per cent. of any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and (2) the profits of any branch, office, warehouse, or any other establishment of the assessee situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be made are from the amount of profit so computed and not from the amount computed under any other head of income of that assessee. The reference to 'such profits' in sub-clause (1) of clause (baa) can only be to the profits of the business computed under the head 'Profits and gains of business or profession'. Addition of prefix 'the' to 'profits' in clause (baa), while referring to the profits and gains of business or profession makes it clear that it is only the amounts already included in that computation which are now to be reduced to the extent of 90 per cent., if those items are included in sub-clause (1) of that definition." The Punjab and Haryana High Court judgment reported in [2004] 268 ITR 220, at pages Nos. 222 and 223, Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case had received interest of Rs. 2,65,019 and hence the receipt of interest is alone relevant and the same is to be taken into consideration for the purpose of deduction for the claim under section 80HHC of the Act. No expenditure or any other deduction is permissible from the receipt of interest income. Section 80HHC stipulates a deduction in respect of export profits. Instead of enjoining the Assessing Officer to compute such export profits from out of the consolidated amount of the assessee, which may involve income by way of interest, rent, commission etc., the Legislature has provided a simple procedure under which 90 per cent, of the receipts such as interest, rent, commission, brokerage, etc., shall be excluded as pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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