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2013 (10) TMI 1180 - HC - Income TaxExplanation (baa) of section Section 80HHC of the Income Tax Act – Computation of profit from business for deduction u/s 80HHC – Held that:- Reliance has been placed upon the case of K. Ravindranathan Nair, [2007 (11) TMI 10 - Supreme Court of India], wherein it was held that formula in section 80HHC(3) provides for a fraction of export turnover divided by the total turnover to be applied to business profits calculated after deducting 90% of the sums mentioned in clause (baa) of the Explanation. Hence, profit incentives and items such as rent, commission, brokerage charges etc., though they form part of the gross total income have to be excluded as they are “independent incomes” which have no element of export turnover. In K. Ravindranathan Nair, the Supreme Court has held that where charges, though part of the gross total income, constitute independent incomes like rent, commission and brokerage 90% of the said sum has to be reduced from gross total income to arrive at business profits and has to be included in the total turnover in the said formula to arrive at the business profits in terms of Explanation (baa) – Relying upon the above judgment, the instant case has been decided against the Assessee.
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