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2012 (9) TMI 17 - DELHI HIGH COURTDisallowance of claim of Section 80HHC(3)(b) - inclusion of rent and interest in the computation of the profits - Held that:- As decided in P. R. Prabhakar Vs. Commissioner of Income Tax (2006 (7) TMI 121 - SUPREME COURT) that the amendment made to clause (baa) of the Explanation to Section 80HHC which defines “profits of the business” in such a manner as to exclude receipts like interest, commission etc. which did not have an element of turnover, was introduced prospectively by the Finance (No.2) Act, 1991 w.e.f. the assessment year 1992-93 and did not operate retrospectively - as assessment year in question was 1991-92 it was therefore held that it would not be permissible to exclude interest receipts even if the business from which interest arose did not have an element of turnover. As it is not permissible to exclude the domestic profits from the profits of the business in order to arrive at the export profits and that even if the domestic business (the money lending activity in the present case) was not capable of having any “turnover”, the deduction under Section 80HHC cannot be denied and it had to be computed proportionately from the formula prescribed by the sub-section (3) of Section 80HHC, which was : Export Profits = Profits of Business x (Export Turnover ÷ Total Turnover) - in favour of assessee.
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