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2014 (12) TMI 171 - GUJARAT HIGH COURTAdjustment of interest - Entitlement for claim of deduction on interest income u/s 80HH and 80I – Whether the Tribunal was right in not permitting adjustment of interest debited to the P&L Account - Held that:- The assessee received additional income towards discount of the sales of raw materials which the assessee purchased - assessee claimed such amount as part of deduction u/s 80IA/80HH - If on the basis of the discounts given by the sellers, the total profit of the assessee from the activity which was otherwise eligible for deduction 80I/80HH of the Act was to that extent increased, there is no reason why such larger sum should qualify for deduction. Transport income – Netting of the income for the exclusion from deduction - What should be excluded is net income and net gross received - Assessee contended that it would not qualify for deduction u/s 80-I/80HH of the Act - Held that:- M/s ACG Associated Capsules Pvt. Ltd. (Formerly M/s Associated Capsules Pvt. Ltd.) & Others Versus The Commissioner of Income Tax, Central-IV, Mumbai & Others [2012 (2) TMI 101 - SUPREME COURT OF INDIA] it has been held that for the purpose section 80HHC of the Act, it is not the entire amount received by the assessee on sale of DEPB credit, but the sale value of less the face value of the DEPB that will represent profit on transfer of DEPB credit by the assessee - even other amounts, such as, interest or rent when are to be excluded for the purpose of explanation (baa) to section 80HHC of the Act - Ninety per cent of not the gross rent or gross interest, but the net thereof shall have be excluded. SC has already laid down the foundation for the logic for excluding the net profit and not the gross profit from the claim of deduction when it is found that the source of income does not quality for such deduction u/s 80HHC - section 80HHC represents vastly different scheme of deduction and also provides for complex formula for deriving for the eligible profit for deduction under different situations depending on whether the exporter is also engaged in the local business or not – thus, it would be the net and not the gross income which would be excluded – Decided against revenue.
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