TMI Blog2008 (8) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... oyees was an essential part of the business and these expenses has been incurred for the welfare of the staff for sound commercial purposes enabling the company to retain the services of competent staff located at a remote place like, Rewa. The contention of the assessee did not find favour with the AO. He disallowed 1/6th of such expenses. Before the CIT(A), the assessee reiterated the arguments taken before the AO. The CIT(A) in the interest of justice restricted the disallowance to 1/10th of the total claim, thus reducing the disallowance to Rs. 22,771. 4. Before us, the learned Authorised Representative contended that these expenses has been incurred for the purposes of business and during the course of business. The AO has merely disallowed the expenses on ad hoc basis observing that the expenses might have been incurred for fun and frolic but not even a single instance of such expenses was pointed out although the details of all the expenses were duly filed before the AO. 5. The learned Departmental Representative on the other hand relied on the order of the AO and contended that the AO has made the disallowance rightly to the extent of 1/6th. The CIT(A) was not correct i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 29 items at Rs. 1,13,904 disallowing a sum of Rs. 45,702. The assessee went in appeal before the CIT(A). Before the CIT(A) it was contended that the articles presented were not distributed as advertisement and, therefore, the limitation of Rs. 1,000 per article under r. 6B is not applicable. These items did not engrave the name of the company. When the matter went before the CIT(A), the CIT(A) on the submission of the assessee restricted the disallowance to Rs. 10,000. 8. The learned Authorised Representative contended that the CIT(A) on ad hoc basis restricted the disallowance to Rs. 10,000 without looking into the legal provisions available for such disallowance. The maximum amount for the distribution of the articles is restricted to Rs. 1,000 each article. Rule 6B is applicable for the allowance of the expenditure incurred on the advertisement. The articles did not, contain the name of the assessee and, therefore, were not presented for the advertisement and publicity of the assessee. Engraving name of the assessee is necessary to advertise the company, therefore, r. 6B is not applicable and thus expenditure were allowable under s. 37(1) of the IT Act. 9. The learned Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the deduction under ss. 80HH and 80-I as claimed by the assessee as under: "4. The appellant has further agitated that the AO erred in disallowing deduction under ss. 80HH and 80-I on gross interest of Rs. 4,05,19,169. In this regard, I direct the AO to follow the directions given to him by learned Tribunal vide their order in ITA Nos. 431/Jab/1997 and 330/Jab/1998 (by Department) for asst. yrs. 1995-96 and 1996-97 and 291/Jab/1998 (by appellant dt. 29th June, 1999, wherein it was held that only the net interest income should be disallowed for the purpose of allowing deductions under ss. 80HH and 80-I." 15. The learned Departmental Representative was fair enough to concede that there was no direction to allow the deduction under ss. 80HH and 80-I but the ground of appeal is against the direction that, only the net interest income should be disallowed for the purpose of allowing the deduction under ss. 80HH and 80-I. The learned Departmental Representative could not be able to file any amended ground of appeal before us. The appeal has been filed by the CIT. All the grounds are to be approved by the CIT, Jabalpur. The Departmental Representative could not amend the grounds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t successful. The genuinenity of the expenditure has not been looked by the AO as all the details, etc. were duly filed. Therefore, the CIT(A) was correct in law in deleting the disallowance made by the AO. 18. We have carefully considered the rival submission and perused the materials on record. The AO in this case did not deny the visit of the director for the business purpose. It is a fact that the director of the company is more than 60 years old and at this age it is quite natural that an attendant is required to maintain the good health of the person whose visit for the business of the assessee is necessary to discharge his duties in the foreign country. The learned Departmental Representative did not bring to our notice any cogent material or evidence which may compel us to take a different view that has been taken by the CIT(A) in this case. The decision of the Hon'ble Kerala High Court as cited by the CIT(A) is equally applicable to the facts of the case before us. No contrary decision was cited before us by the learned Departmental Representative. Under these facts and circumstances we confirm the order of the CIT(A) and dismiss this ground of appeal of the Revenue. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o earned furniture rent Rs. 12,562 and other income amounting to Rs. 63,650. The AO was of the opinion that these incomes totalling to Rs. 82,46,117 were not derived from the industrial activities, therefore, they were not eligible for deduction under s. 80HH. The AO relied on the judgment of jurisdictional High Court in the case of CIT vs. Paras Oil Extraction Ltd. (1998) 230 ITR 266 (Mad) in which it was held that the assessee was not entitled to deduction under ss. 80HH and 80-I in respect of the weighment charges and industrial receipts included in miscellaneous receipts. 24. Before the CIT(A) the assessee contended that the AO did not follow the order of the CIT(A) of the past assessment order which relates to asst. yr. 1997-98 in which the CIT(A) following the directions of the Hon'ble Tribunal Jabalpur Bench, Jabalpur vide their order in ITA Nos. 431/Jab/l997 and 330/Jab/l998 for the asst. yrs. 1995-96 and 1996-97 and in ITA No. 291/Jab/l998 dt. 29th June, 1999 and directed the AO that only the net industrial income should be excluded for the purpose of allowing deduction under ss. 80HH and 80-I. The assessee also pointed out that Hon'ble Tribunal Jabalpur Bench, Jabalpur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresentative relied on the order of the CIT(A) and reiterated the submissions made before the CIT(A). It was further contended that this issue was duly covered by the decision of this Tribunal in ITA Nos. 431/Jab/1997 and 330/Jab/l998 for the asst. yrs. 1995-96 and 1996-97 and also in ITA No. 291/Jab/l998 in which this Tribunal has directed the AO to exclude only the net interest income for the purpose of working out the income derived from the industrial undertaking eligible for deduction under s. 80HH. This decision of the Tribunal has not been reversed by the Hon'ble High Court. There is no change in the facts of the case and, therefore, this Tribunal is bound to follow its own judgment. 26. We have considered the rival submission and perused the materials on record. We find that the assessee has claimed the deduction under s. 80HH in respect of miscellaneous income which include the interest income also. The miscellaneous income is amounting to Rs. 82,46,117 which includes the interest receipt amounting to Rs. 81,69,905. It is a settled law that the interest received by the assessee cannot be regarded to be the income derived from the industrial undertaking. The CIT(A) has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1997) 227 ITR 172 (SC), Pandian Chemicals Ltd. vs. CIT (2003) 183 CTR (SC) 99 : (2003) 262 ITR 278 (SC) and CIT vs. Bokaro Steel Ltd. (1999) 151 CTR (SC) 276 : (1999) 236 ITR 315 (SC), answered that for the purpose of applying Expln. (baa) below sub-s. (4)(b) of s. 80HHC and while reducing 90 per cent of the receipt by way of interest from the profit of the business it is only the 90 per cent of the net interest remaining after allowing the set off of interest paid which has nexus with interest received that can be reduced and not 90 per cent of the gross interest. We are of the view that this issue is equally applicable for the purpose of excluding the interest income while working out the income derived from the industrial undertaking. We, therefore, did not find any illegality or infirmity in the order of the CIT(A) and we confirm the order of the CIT(A) by which the CIT(A) has directed the AO to exclude the net interest from the income of the assessee for determining the income derived from the industrial undertaking eligible for deduction under s. 80HH. Thus the ground Nos. 3, 4, 5 and 7 of the Revenue's appeal stands dismissed. 27. Ground Nos. 8 and 9 are general in nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erly incorporated those in his proposed order and are not being repeated here, in my order, for the sake of brevity. 5. Learned AM in his proposed order has concluded to hold, in view of Special Bench, Tribunal Delhi Bench, decision in the case of Lalsons Enterprises vs. Dy. CIT (2004) 82 TTJ (Del)(SB) 1048 : (2004) 89 ITD 25 (Del)(SB), that net interest income of the assessee to be excluded for computing deduction under s. 80HH while agreeing with the view of learned CIT(A) which was against the order of AO in this regard. 6. No doubt, Lalsons Enterprises vs. Dy. CIT case which is delivered in the context of s. 80HHC deduction, is in support of the view taken by learned AM but there is Punjab Haryana High Court's decision in the case of Rani Paliwal vs. CIT (2003) 185 CTR (P H) 333 : (2004) 268 ITR 220 (P H) which has further been followed by Madras High Court decision as reported in the case of K.S. Subbiah Pillai Co. (India) (P) Ltd. vs. CIT (2003) 179 CTR (Mad) 522 : (2002) 260 ITR 304 (Mad) in favour of the Revenue. Relevant portion of Punjab Haryana High Court's judgment as contained in last but one para of the said judgment reads as under: "This issue relates to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal is concerned, I find that same relates to exclusion of interest income for computing deduction under ss. 80HH and 80-I and learned CIT(A) directed the AO to exclude only net interest income for computing such deduction. Since facts and issues are same as decided by me for asst. yr. 1998-99 in earlier part of my order and deduction under s. 80-I is allowable in the same manner as under s. 80HH, so following and applying the same basis and reasoning, I direct the AO to exclude gross amount of interest in computing the deduction under ss. 80HH and 80-I of IT Act. As such this ground of the Revenue gets accepted. 10. As regards ground No. 1(iii) of Revenue's appeal is concerned, it is seen that the AO made disallowance of 50 per cent of the foreign travelling expenses claimed at Rs. 12,23,248 on account of expenditure with respect to wife of the managing director, Shri R.G. Mundra and it is main contention of the assessee before the AO that Shri Mundra is 60 years old. The presence of his wife was necessitated to look after his health, comforts and appointments. She was attending to all his needs right from reservation to food so that Shri Mundra can look after the company's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee company and his participation in the foreign tour was for the business purpose. Therefore, it was pleaded for reversal of the order of CIT(A). 14. Learned counsel for the assessee relied upon the order of CIT(A) and pleaded for confirmation of the same. 15. I have heard both the sides and considered the material on record as well as the orders of authorities below in this regard. The assessee in this case has not been able to show that wife of the managing director of the assessee company, who went on foreign tour, was in anyway qualified for the purpose of the business of the assessee or was connected with the business of the assessee company. So AO disallowed the claim of the assessee to the extent of 50 per cent on foreign tour expenses which was claimed on account of expenditure of managing director as well as his wife. CIT(A) deleted the addition in view of peculiar circumstances without spelling out such peculiarity while relying upon the Kerala High Court decision in the case of in CIT vs. Appollo Tyres Ltd. (1998) 149 CTR (Ker) 538 : (1999) 237 ITR 706 (Ker) but there is latest decision of Kerala High Court in the case of Ram Bahadur Thakur Ltd. vs. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at was referable to the expenditure incurred for the wife of the managing director. The AAC, however, allowed the expenditure, but the Tribunal agreed with the view taken by the ITO that the expenditure could not be said to have been incurred towards or for the business of the assessee company. On a reference by the assessee, it was argued that the services of the wife of the managing director was necessary during the foreign tour in view of the indifferent health of the managing director and the expenses incurred for her should be allowed as a business expenditure. Relying upon the observation of the Supreme Court in State of Madras vs. G.J. Coelho (1964) 53 ITR 186 (SC) at 192, this argument was repelled and it was held that the need of the managing director of the assessee company to have the services of his wife, who was not a qualified or trained nurse, either to attend on him for his indifferent health or to prepare food for him, would not entitle the assessee company to claim the proportionate expenses as business expenses. In this case also, it does not appear that the wife of the partner of the assessee who undertook the foreign tour with the partner of the assessee, was q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eign travel is wholly and exclusively for the business purpose. Applying this principle to the facts of this case, I do not find that any material is available to establish that the expenditure incurred on the foreign tour of the wife of the managing director of the assessee company was for its business purposes. Therefore, in view of facts and circumstances and discussion as held above and in the light of precedents noted, I am of the considered view that AO is justified in making disallowance of 50 per cent of the foreign travel expenses claimed on account of having expended the amount on the wife of the managing director of assessee company and CIT(A)'s action in deleting the addition is not justified. While accepting this ground of appeal of Revenue, I reverse the order of CIT(A) and restore that of the AO. 18. Except above, other portion of the order in these appeals and cross-objection, I fully agree with the finding as well as conclusion of learned AM. REFERENCE UNDER S. 255(4) OF THE IT ACT, 1961 19th May, 2006 Since there is difference of opinion between the Members constituting the Bench who have heard these matters, therefore, following points of difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med without ascertaining the facts of the case." 4. When the matter came before the Tribunal, the learned AM rejected the above ground of the Revenue's appeal on the finding that the ground of appeal taken by the Revenue is infructuous as the CIT(A) has not directed the AO to allow deduction under ss. 80HH and 80-I as claimed by the assessee. However, the learned JM following his own order for asst. yr. 1998-99. directed the AO to exclude the gross amount of interest in computing the deduction under ss. 80HH and 80-I of the Act. Thus so far as asst. yr. 1997-98 is concerned, there is no finding by the learned AM whether the gross interest or the net interest is to be excluded. The only finding in this regard is by the learned JM. Therefore, the question proposed by the Bench does not bring out the controversy between both the learned Members correctly. He stated that for asst. yr. 1997-98 vide ITA No. 319/Jab/2000, question No. 1 referred to Third Member should be modified as under: "Whether on the facts and in the circumstances of the case the Hon'ble JM was justified in directing the AO to exclude the gross amount of interest for computing the deduction under ss. 80HH and 80- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the orders of the learned Members. The AM nowhere decided whether the gross or net interest income is to be excluded. He dismissed the Revenue's ground on the basis that the same is infructuous. Therefore, in my opinion, the correct controversy which arises out of the orders of the learned Members is as under: "Whether, on the facts and in the circumstances of the case, the learned AM was justified in treating the ground No. 1 (ii) of the Revenue's appeal as infructuous and dismissing the same or the learned JM was justified in directing the AO to exclude gross amount of interest while computing deduction under ss. 80HH and 80-I?" In view of the above, I substitute question No. 1 proposed by the learned Members for asst. yr. 1997-98 by the above question. 8. Coming to the merit of the above question, I find that in asst. yr. 1997-98 the AO has allowed deduction under ss. 80HH and 80-I to the assessee excluding the gross amount of interest from the profits and gains of the assessee so as to compute the eligible profit of the industrial undertaking for the purpose of ss. 80HH and 80-I. On appeal, the CIT(A) held as under: "6. Learned counsel and the Authorised Representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inks fit." Thus, as per s. 254(1), the Tribunal has to pass such order "thereon" as it thinks fit. The word "thereon" refers to the grounds of appeal raised by the appellant. Thus the Tribunal has to pass orders as it thinks fit on the ground of appeal raised by the appellant. The decision of the Tribunal cannot go beyond the ground raised by the appellant. Of course the Tribunal has a power to permit the appellant to modify or amend the ground. However, in this case no attempt was made by the Revenue to either modify or amend the ground raised by it. Therefore, the jurisdiction of the Tribunal was limited to adjudicate the ground raised by the Revenue. In view of the above, I agree with the learned AM and hold that he was justified in rejecting the Revenue's ground being infructuous. 11. Question No. 2 in ITA No. 319/Jab/2000 reads as under: "2. Whether expenditure on foreign tour of wife of the managing director of the assessee company, in view of facts and circumstances of the case, could be allowed or not?" 12. At the time of hearing before me, it is submitted by the learned Departmental Representative that no evidence is produced by the assessee to establish that the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the relief following the above decision of Hon'ble Kerala High Court. That the learned JM has referred to several other decisions which were not relied upon or argued by the Revenue at the time of hearing of the appeal. The learned JM also did not confront the assessee with those decisions and did not allow any opportunity to distinguish the same. That as per rule of natural justice, if any decision which has not been relied upon by the parties, comes to the knowledge of the learned Members of the Bench and they want to rely upon the same for deciding the appeal before them, it is necessary that the parties should be confronted with those decisions and should be given an opportunity to distinguish the same. Since no opportunity has been given by the Bench in this case. the decision relied upon by the learned JM needs to be ignored. He further stated that even otherwise the facts in all those cases were altogether different than the facts in the case of the assessee and, therefore, the same are not applicable. He further submitted that the AO has disallowed 50 per cent of the expenditure on foreign travel which, according to him, was attributable to Sri Mundra's wife holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleting the disallowance out of travelling expenses. In this case, their Lordships of Kerala High Court held as under: "that it was the case of the assessee company that the wife of the chairman-cum-managing director of the company accompanied him on his business tour and that the accompaniment was for, the purpose of enabling him to discharge his social-cum-business obligations in an effective manner. The authorities below did not, have a case that the accompaniment of the wife, of the chairman-cum-managing director did not, result in any advantage to the assessee. It was also relevant to note that, the board of directors of the company, by resolution had permitted the same. The Tribunal was justified, in allowing the deduction." The facts of the assessee's case are identical to the above case, because in the assessee's case also the board of directors of the company by resolution had permitted that wife of Sri Mundra would accompany him on the foreign tour. Similarly it, was claimed that she accompanied Sri Mundra for the purpose of enabling him to discharge his social-cum-business obligation in an effective manner. Moreover, the assessee is a public limited company which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest income and not from gross interest. The learned JM did not dispute the facts mentioned by the learned AM in his proposed order. He, however, following the decision of Hon'ble Punjab Haryana High Court in the case of Rani Paliwal vs. CIT and Hon'ble Madras High Court in the case of K.S. Subbiah Pillai Co. India (P) Ltd. vs. CIT held that gross amount of interest is to be excluded for computing deduction under s. 80HH of the Act. 15.3. At the time of hearing before us, the learned Departmental Representative supported the order of the learned JM, whereas the assessee's learned counsel relied on the order of AM. The learned counsel further submitted that the issue is squarely covered in favour of the assessee by the following two decisions: (a) CIT vs. Shri Ram Honda Power Equip Ors. (2007) 207 CTR (Del) 689 : (2007) 289 ITR 475 (Del); (b) Tata Sponge Iron Ltd. vs. CIT (2007) 292 ITR 175 (Ori). 15.4. I have heard the rival contentions of the parties. I have also gone through the proposed orders of the learned Members on this issue and perused the material placed before me. According to the assessee, the issue is covered by the Delhi Special Bench decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the above appeals by the Divisional Bench constituting Shri D.B.S. Bedi, Hon'ble JM and Shri P.K. Bansal, Hon'ble AM. This appeal has been decided by the learned AM vide paras 2 to 11. From the para 18 of the order of the Hon'ble JM, Shri D.B.S. Bedi, it appears there was no difference in respect of this appeal. 2. As regards others appeals i.e. ITA No. 319/Jab/2000, ITA No. 69/Jab/2002 and cross-objection of the assessee vide CO. No. 19/Jab/2002, the Hon'ble Vice President (KZ), Shri G.D. Agrawal as Third Member has decided the appeals, cross-objection and also issued a corrigendum dt. 7th July, 2008 to the order dt. 28th Dec., 2007 which reads as under: "Before Shri G.D. Aggarwal Vice President as Third Member Since there was a difference of opinion between the learned Members constituting the Divisional Bench of Tribunal, Jabalpur in respect of the aforesaid appeals and cross-objection, I was nominated as Third Member by the Hon'ble President, Tribunal under s. 255(4) of IT Act, 1961 on the following issues: '(1) While computing deduction, under s. 80-HH/80-I, whether gross amount of interest income is to be excluded or the net interest income? (2) Whether expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case the Hon'ble JM was justified in directing the AO to exclude the gross amount of interest for computing the deduction under ss. 80HH and 80-I in asst. yr. 1997-98 or whether the Hon'ble AM was justified in treating the ground as infructuous and dismissing the grounds of appeal as grounds filed by the Department were incorrect and as they are not modified even during the course of hearing.' 5. The learned Departmental Representative. on the other hand stated that the ground raised, by the Revenue before Tribunal was wide enough to cover the controversy whether the gross interest is to be excluded or net interest is to be excluded while computing the profit of the industrial undertaking for the purpose of ss. 80HH and 80-I of the Act. He, therefore, suggested that the question proposed by the Bench need not be modified. 6. I have carefully considered the arguments of both the sides and perused the material placed before me. ITA No. 319/Jab/2000 was the appeal filed by the Revenue against the order of learned CIT(A) dt. 24th May, 2000 for asst. yr. 1997-98. In the Revenue's appeal, the ground No. 1 (H) reads as under: 'Learned C1T(A) erred in directing the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible profit of the industrial undertaking for the purpose of ss. 80HH and 80-I. On appeal, the learned CIT(A) held as under: '6. Learned counsel and the Authorised Representative reiterated the arguments as they had advanced before the AO. They also relied upon the judgment of Hon'ble Kerala High Court in the case of CIT vs. Appollo Tyres Ltd. (1998) 149 CTR (Ker) 538 : (1999) 237 ITR 706 (Ker). I have gone through the assessment order and considered the submissions of learned counsel and the Authorised Representative and I find force in the submissions of learned counsel and the Authorised Representative. Considering the peculiar circumstances of the case in this year, the claim of expenditure on foreign travelling is allowed fully. Thus, the appellant gets a further relief of Rs. 6,60,997.' 9. On the above finding of the learned C1T(A), the Revenue has raised the following ground: 'Learned CIT(A) erred in directing the AO to allow deduction under ss. 80HH and 80-I claimed without ascertaining the facts of the case.' 10. From the above ground of the Revenue it is apparent that the Revenue challenged the allowability of deduction under ss. 80HH and 80-I per se while it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances of the case, could be allowed or not?" 12. At the time of hearing before me, it is submitted by the learned Departmental Representative that no evidence is produced by the assessee to establish that the foreign visit of Sri R.G. Mundra, managing director of the assessee company along with his wife was for the purpose of business. No report was submitted about the business transferred by Sri Mundra during his foreign visit. Despite the above facts, the AO taking a lenient view has allowed the 50 per cent of the expenses claimed and disallowed the balance 50 per cent which was attributable to the wife of Sri R.G. Mundra. He further submitted that even if a lenient view is taken and it is held that the visit of Sri Mundra was for the purpose of the company's business, no business purpose of the assessee company was served by the visit of wife of Sri Mundra, who was managing director of the assessee company at the relevant time. He, Therefore, submitted that the order of the learned JM should be sustained. 13. The learned counsel for the assessee submitted that the AO himself has allowed 50 per cent of the expenses incurred by Sri R.G. Mundra and his wife. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and, therefore, the same are not applicable. He further submitted that the AO has disallowed 50 per cent of the expenditure on foreign travel which, according to him, was attributable to Sri Mundra's wife holding the same to be personal expenses. He stated that the assessee is a public limited company which is a distinct entity than its employees or directors. Even if some personal expenses of the director or the employees have been incurred by the assessee company it cannot be said to be personal expenses of the company. On the other hand, it would be a business expenditure so far as the assessee company is concerned but it would be a perquisite in the hands of the employees/director. He further submitted that now-a-days it is a common practice that the companies, to attract and retain the talented and skilled manpower, provide not only the handsome salary but other perquisites also. In view of the above, the expenditure deserves to be allowed. 14. I have carefully considered the arguments of both the sides and perused the material placed before me. The AO disallowed 50 per cent of the expenditure claimed by the assessee assuming that expenditure towards foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m on the foreign tour. Similarly, it was claimed that she accompanied Sri Mundra for the purpose of enabling him to discharge his social-cum-business obligation in an effective manner. Moreover, the assessee is a public limited company which is a distinct assessable entity than its employees or directors. Even if some personal expenses of the director or the employees have been incurred by the assessee company it cannot be said to he personal expenses of the company. It would be perquisite in the hands of the concerned director/employee under s. 17(2) of the Act. In view of above, I agree with the learned AM and hold that he was justified in rejecting the Revenue's ground. 15. The only question put forward before the Third Member is as under: 'While computing deduction under s. 80-HH/80-I, whether gross amount of interest income is to be excluded or the net interest income?' 15.1 The facts of the case in brief are that the assessee having four units derives income from manufacture and sale of polyethylene insulated jelly filled telephone cables. Two units viz. Units I and II, are engaged in manufacture of jelly filled telephone cables. The assessee claimed deduction under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. CIT (2007) 292 ITR 175 (Ori) 15.4 I have heard the rival contentions of the parties. I have also gone through the proposed orders of the learned Members on this issue and perused the material placed before me. According to the assessee, the issue is covered by the Delhi Special Bench decision in the case of Lalsons Enterprises Ltd. and the other two decisions of Hon'ble Delhi and Orissa High Courts referred to above. Whereas according to the Department, the issue is covered by the decisions of Hon'ble Madras and Punjab Haryana High Courts, referred to above. Hon'ble Punjab Haryana High Court and Hon'ble Madras High Court in the cases referred to above have taken the view that for computing the deduction under s. 80HHC, 90 per cent of the gross rent and interest income is to be excluded from the profits and gains of the business. However, Hon'ble Delhi High Court in the case of Shri Ram Honda Power Equip. has taken the contrary view and held that 90 per cent of only interest income is to be excluded. Identical view has been taken by the Hon'ble Orissa High Court in the case of Tata Sponge Iron Ltd. No decision of the Hon'ble apex Court or of the jurisdictional High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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