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2015 (2) TMI 115 - HC - Income TaxComputation of income under Section 80 HHC - exclusion of scrap sales from the total turnover - Held that:- As regards the issue of scrap sales, it is covered by the decision of the Hon'ble Madras High Court in the case of Fenner (India) Ltd. - Vs - CIT (1998 (4) TMI 67 - MADRAS High Court) therefore the Appellate Tribunal was right in law in holding that the scrap sales is to be excluded from the total turn over for the purpose of computing the income under Section 80 HHC - Decided against revenue. Expenditure on earning exempt income - restricted to 2% by ITAT when the assessing officer has proved on a scientific basis that the interest paid on loans taken for investment in the exempt bonds was much larger - Held that:- the assessee has claimed exemption from interest on tax free bonds. It is fact that the assessee has made systematic huge investments resulting in income and no expenditure in the form of expenditure and management have been made by the assessee. As the income is exempted, proportionate expenditure in this regard to be disallowed but as to how much. This issue has to be considered. It is to be noted that reasonable disallowance can be made i.e., to the extent of 2% of the exempted income. Accordingly, the Assessing Officer is directed to disallow proportionate expenditure to the extent of 2% of the exempted income as relying on Southern Petro Chemical Industries - Vs - DCIT [2004 (10) TMI 308 - ITAT MADRAS-C] - Decided against revenue.
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