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2007 (8) TMI 632 - HC - Income TaxDeduction u/s 80HHC of the Income Tax Act, 1961 disallowed - Held that:- The legal fiction cannot be extended any further and the provisions of Section 80 HHC have to be understood excluding the legal fiction created by deeming provisions contained in Section 41(1) of the Act as the source of income which is chargeable cannot be related to export of goods or merchandise. If any other meaning is assigned to the aforesaid fiction created with respect to Section 41 (1), it would be against the basic purpose and object of Section 80 HHC of the Act. Further, in the present case during the course of assessment proceedings it was noticed that there were credit balance in the names of two parties amounting to ₹ 3,52,581/- appearing in the books of account of the assessee. On being asked to verify the same, the assessee agreed to surrender it. The said cessation of liability could not be treated to have been earned from business of export and, thus, shall not form part of the turnover of the export business. Aginst assessee.
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