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2012 (12) TMI 750 - AT - Income TaxInterest Income – Business Income v/s Income from Other Sources – Held that:- There is no direct nexus between interest income and income derived out of exports therefore, the lower authorities are justified in treating the interest income as income from other sources - This common ground is accordingly dismissed. Rent received from its employees against allotting them dwelling units – Held that:- Nature of the recovery made from the employees is that the recovery goes to reduce the staff welfare expenses in the hands of the assessee-company. The rent recovery made from the employees is not an independent income or a different source of income. The assessee is providing residential quarters to the employees against which a nominal rent is recovered from them. The recovery ultimately reduces the cost in the hands of the assessee. Therefore, the recovery is in the nature of business income. This is because it reduces the business expenditure - rent recoveries as business income in the hands of the assessee company – in favour of assessee. Recovery of pay for notice period and other recoveries from employees for certain facilities like telephone calls and similar utilities,these recoveries are in the nature of business income are to be treated as business income in the hands of the assessee - appeals filed by assessee are partly successful. Deduction of expenditure incurred in foreign exchange from total turnover profits from business – Held that:- As the export sales are more than 75% of total sales. CIT(A) has failed to appreciate that after the amendment to section 10B with effect from 1-4-2001, the eligible deduction would be profit proportionate to the export turnover upon total turnover. The CIT(A) has rightly held in favour of the assessee because the provision for full exemption was omitted from the statute book only with effect from the assessment year 2002-03. Therefore, the provision does not apply to the impugned assessment year 2001-02 - This issue is accordingly decided against the Revenue. Depreciation allowance – Held that:- Issue is remitted back to the AO for adjudicating the issue after examining the relevant materials afresh. The issue is remanded back to the Assessing Officer - In result,appeals filed by the assessee are partly allowed.
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