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TMI Blog2006 (12) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... rh Bench, Chandigarh in ITA No.563/Chandi/2004, for the assessment year 1994-95, proposing following substantial question of law:- "Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in holding that for the purposes of deduction under section 80HHC, gross amount of interest has to be deducted while excluding 90% of interest income earned by the assessee except interest received from customers on account of late payment, which is to be considered as business income?" 2. With the consent of learned counsel for the parties, we have taken the appeal for final disposal for determination of above referred substantial question of law. 3. The Assessing Officer held that Income of interest received by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factured or processed by the assessee, the profits derived from such export shall be the amount which bears to the profits of the business, the same proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee; (c) where the export out of India is of goods or merchandise manufactured or processed by the assessee and of trading goods, the profits derived from such export shall,- (i) in respect of the goods or merchandise manufactured or processed by the assessee, be the amount which bears to the adjusted profits of the business, the same proportion as the adjusted export turnover in respect of such goods bears to the adjusted total turnover of the business carried on by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962): Provided that in relation to any assessment year commencing on or after the 1 st day of April, 1991, the expression "total turnover" shall have effect as if it also excluded any sum referred to in clause (iiia), (iiib) and (iiic) of section 28; (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 rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayed payment is a business income and not income from other sources. Same view was taken by Hon'ble the Supreme Court in CIT v. B.N.Agarwala Co., (2003) 259 ITR 754. In the present case also, interest received by the assessee on delayed payment by the customer has been assessed as business income. It is at the time of determination of profits of business for the purpose of clause (baa) as referred to above, that the interest component added therein is to be excluded to give effect to the provisions in its true letter and spirit. 9. Accordingly, the substantial question of law referred to above is answered in favour of the revenue and against the assessee and it is held that even the interest which is received from the customer on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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