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2014 (4) TMI 822 - AT - Income TaxValidity of re-computation of deduction u/s 80HHC of the Act – Inclusion of income from sale of DEPB license in the profits – Held that:- The CIT(A) had rightly held that DEBP entitlement is available to the importer only after making the initial payment of custom duty and the credit of an amount equivalent to the duty paid is the available to the importer - Relying upon M/s Topman Exports Versus Commissioner of Income Tax, Mumbai [2012 (2) TMI 100 - SUPREME COURT OF INDIA] – The CIT(A) also rightly held that the credit of DEPB can be used to offset custom duty payable in respect of further imports - As per accounting principle, at the time of initial import, custom duty paid was debited to P&L account, therefore, when the corresponding credit was availed, a matching amount was shown as revenue receipt in the P&L account - the DEPB credit should be considered as a sum covered by the provisions of section 28(iv) of the Act –Decided against Revenue. Re-computation of deduction u/s 80HHC of the Act - Non-exclusion of interest from profits – Held that:- As decided in assessee’s own case for the previous year, it has been held that the context of Section 80HHC the interest income earned on fixed deposits having to be kept by the assessee for availing of credit facilities from bank, does not qualify as business income - The matter is remitted back to the AO for examination – Decided in favour of Revenue. Inclusion of interest income received from AEPC and banks – Held that:- As decided in assessee’s own case for the previous year, it has been held that, the expression "any profits and gains derived from any business of an industrial undertaking or an enterprise" appearing in sec. 80IA(1) has been referred to the business specified in sub section (4) of the said section. Sub section (4) does not include the business from earning of interest on FDRs - the interest income though may be in the nature of business income cannot be said to have been derived from the business of industrial undertaking within the meaning of sub section (4) of section 80IA - The decision in Pandian Chemicals Ltd. Versus Commissioner of Income-Tax [2003 (4) TMI 3 - SUPREME Court] followed – CIT(A) wrongly allowed the claim of the assessee treating the interest income as eligible business income – Decided in favour of Revenue. Reduction of book profits – Held that:- The decision in Ajanta Pharma Ltd. v Commissioner of Income Tax [2010 (9) TMI 8 - SUPREME COURT] followed - section 115J of the Act was a self-contained code and applied notwithstanding any provisions in the Act - section 115JB of the Act is the successor section to section 115JA and section 115JB of the Act continues to remain a self-contained code - 100% export profits earned by the assessee as computed u/s 80HHC(3) of the Act was eligible for deduction under clause (iv) of the explanation to section 115JB of the Act - the CIT(A) rightly directed the AO to recompute the income taxable u/s 115JB of the Act after allowing deduction u/s 80HHC of the Act as per earlier decision of the Tribunal – Decided against Revenue.
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