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2016 (12) TMI 1073 - AT - Income TaxComposite income - Sale consideration in respect of DEPB license - nexus with the business of growing and manufacturing of tea - application of rule 8 - Held that:- All incomes (including DEPB receipts ) excluded by the AO from the composite income but taxed as Income from business separately have to be regarded as part of business income u/s.28 to 44 of the Act. We are also of the view that in the light of interpretation of Rule 8 the ratio laid down by the Hon’ble Supreme Court in the case of Liberty India (2009 (8) TMI 63 - SUPREME COURT ) which was rendered in the context of Sec.80IA which speaks of a direct nexus with the eligible business cannot be applied. As already observed, the tests to be applied while computing composite income under Rule 8, is to see whether the receipts fall within the ambit of receipts under Sec.28 to 44 of the Act. We therefore hold that income set out in Ground No. 1 & 3 have to be included as part of the composite income - Decided in favour of assessee Interest subsidy not considered as part of composite income for the purpose of Rule 8 - Held that:- The reasoning given while deciding Gr.No.1 & 3 in the earlier part of this order will equally apply to this ground also. As far as this ground of appeal is concerned, we also find that the CIT(A) has observed that the income in question was assessed as business income. In such circumstances, there is no reason why this income should not be considered as part of the composite income before apportionment between income from agriculture and income from nonagricultural income. We therefore direct the AO to consider the aforesaid receipt also as part of the composite income. - Decided in favour of assessee Disallowance of expenses u/s 14A - Held that:- It can be seen from the computation of total income done by the AO that he has added disallowance u/s.14A of the Act twice. Once while computing adjusted composite income and again while computing Balance business income (as part of the sum of ₹ 1,23,17,727). The quantum of disallowance u/s.14A of the Act is not in dispute. We are of the view that the disallowance has to be made only at the stage of arriving at the composite income and the further addition to the balance business income is not warranted. In this regard the conclusions while deciding ground No.1 and 2 above will equally apply to this ground of appeal also. - Decided in favour of assessee
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