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TMI Blog2001 (5) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... 10CCB said to have been filed with the return of income was not in fact found on record and a copy of the report was given to the AO at the time of hearing to enable completion of assessment. The AO took a strict view of the matter while rectifying the original assessment as according to him deduction under s. 80HHC is allowable only if the audit report is filed along with the return of income and the copy filed subsequently cannot be treated as sufficient compliance with the law. The assessee's explanation was that actually the audit report was filed along with the return and this having been apparently misplaced by the office, the assessee filed a duplicate copy at the time of finalisation of assessment. The CIT(A)noted that in completing the assessment, the AO not only took the duplicate report in Form 10CCB on record, but he also applied his mind to it and reworked the deduction under s. 80HHC that he considered appropriate. The matter came up in appeal before the first appellate authority who in his order dt. 28th Feb., 1991, has given a specific direction for recomputing the deduction under s. 80HHC. In view of this order of his predecessor, the present CIT(A) who passed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. 396, where their Lordships held that the stringency and the mandatory nature of a provision of exemption must be justified by the purpose intended to be served. Their Lordships have further held that the conditions may be substantive, mandatory and based on considerations of policy and some others may only belong to the area of procedure and that the conditions which belong to the area of procedure have to be got liberally construed. We also place reliance on the ratio of the following decisions in this connection: (i) CIT vs. Shivananda Electronics (1994) 119 CTR (Bom) 94 : (1994) 209 ITR 63 (Bom); (ii) CIT vs. Gujarat Oil and Allied Industries (1993) 109 CTR (Guj) 272 : (1993) 201 ITR 325 (Guj); (iii) CIT vs. Hardeodas Agarwalla Trust (1992) 198 ITR 511 (Cal); and (iv) CIT vs. Ganga Engineering Works (1986) 52 CTR (MP) 277 : (1987) 165 ITR 795 (MP). Respectfully following the ratio of the above judgments, we uphold the order of the CIT(A) on the point in dispute in this appeal. ITA No. 249/Bang/1995-Assessee's appeal; asst. yr. 1990-91 7. Two specific issues have been raised by the assessee against the impugned order of the CIT(A), dt. 26th Dec, 1994, for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance under r. 6D is not called for in respect of travelling expenses incurred by the partners of the firm. 9. The other issue raised by the assessee in this appeal relates to computation of deduction under s. 80HHC. The AO excluded the interest income from the profit and gains of the business eligible for the deduction under s. 80HHC on the ground that interest income is assessable under the head 'other sources' and not under the head 'profits and gains of business'. The CIT(A) while relying on the decisions in the case of Collies Line (P) Ltd. vs. ITO (1982) 29 CTR (Ker) 135 : (1982) 135 ITR 390 (Ker), M.P. State Industrial Corpn. Ltd. vs. CIT (1968) 69 ITR 824 (MP), Traco Cable Co. Ltd. vs. CIT (1969) 72 ITR 503 (Ker) and CIT vs. Siddagnga Oil Extractions (P) Ltd. (1993) 109 CTR (Kar) 119 : (1993) 201 ITR 968 (Kar) agreed with the AO to the effect that interest income is not business income and the assessee is not entitled to deduction under s. 80HHC in respect of such income. 10. With regard to the claim of the assessee for treating interest income also as business income for the purpose of s. 80HHC the learned Departmental Representative has referred to the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnection for the very same assessment year. ITA No. 250/Bang/1995-Assessee's appeal; asst. yr. 1992-93 13. This appeal by the assessee is for the asst. yr. 1992-93 and is directed against the order of the CIT(A), dt. 26th Dec, 1994. In the impugned order, the CIT(A) held that assessee is not eligible for deduction under s. 80HHC in respect of interest income as such income has to be assessed under the head 'other sources' and not under the head 'business'. In thus upholding the action of the AO in an order passed under s. 154, he relied on the decisions mentioned by us in para 5 above. The assessee is aggrieved by this decision. 14. We find that the CIT(A) made a mistake in disposing of the appeals for the asst. yrs. 1990-91 and 1992-93 by a consolidated order, adopting the same reasoning for both the years. For the asst. yr. 1990-91, the question was whether there was a mistake apparent from record and whether the AO had jurisdiction under s. 154 to rectify the original order for that year. On the other hand, the question involved for the asst. yr. 1992-93 regarding the claim of the assessee under s. 80HHC arose from the order passed by the AO under s. 143(3) on 11th March, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has cancelled the order of rectification passed by the AO on 1st Oct., 1993 under s. 154. According to the CIT(A), the AO erred in law in restricting the claim of the assessee under s. 80HHC in the proceedings under s. 154. Hence, he cancelled the rectification order and restored the original order of the AO which was held as correct. Here also the issue related to the exclusion of the interest income from the business income for the purpose of computation of deduction under s. 80HHC. 18. The AO has allowed deduction under s. 80HHC to the extent of Rs. 3,52,888 in the intimation under s. 143(1)(a). Later on he was of the view that the correct deduction admissible was only Rs. 2,32,713 and, therefore, he proposed to rectify this mistake under s. 154. Overruling the objections raised by the assessee, he rectified the intimation by adding back the difference of Rs. 1,20,175 to the originally assessed income as per the intimation. Against this order of rectification the assessee approached the CIT(A) who in the impugned order found merit in the assessee's plea and cancelled the order under s. 154 and restored the original intimation as stated earlier. In doing so, the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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