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2020 (2) TMI 582 - HC - Income TaxEligible profits of business for section 80HHC - gross rent receipts from employees without adjusting expenses incurred by the employer on running and maintenance of such accommodations - HELD THAT:- The explanation provides for reduction from the “profits and gains of business or profession”, receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature. Depreciation is not receipt of a similar nature as mentioned in the explanation. Supreme Court in Acg Associated Capsules P. Ltd.'s case 2012 (2) TMI 101 - SUPREME COURT] held that the explanation is to be construed as per the plain natural meaning of the words in it. The receipts mentioned in the explanation are the actual payments received like brokerage etc. The phrase “receipt of similar nature” will not increase its scope to include depreciation which is not on same footing as brokerage, commission etc. The finding recorded by the Tribunal on the said issue is upheld. The question is answered against the assessee. Whether tribunal has erred in holding that report turnover of the unit whose profits are allowed a deduction under Section 10B of the Income Tax Act is not to be included in the export turn over for the purpose of calculating the deduction under Section 80HHC ? - The issue is covered in favour of the assessee by a decision of the Division Bench of this Court in M/s Mahavir Spinning Mills Ltd. v. Commissioner of Income Tax, Ludhiana and another, [2016 (9) TMI 156 - PUNJAB AND HARYANA HIGH COURT] Non-allowance of exemption under Section 10B - HELD THAT:- Sub-section (4) to Section 10B of the Act gives a formula for working out the profits from export of articles. Once it is held that interest on delayed payment relating to export is eligible under Section 10B of the Act, thereafter the calculation is to be done as per sub-section (4) to Section 10B of the Act. The decision of the Tribunal allowing only interest relating to export sales under Section 10B of the Act is upheld, however, the directions for verification are modified to the extent that the Assessing Officer shall assess the interest received on delayed payments as per provisions of Section 10B(4) of the Act. The question is answered in favour of the assessee. Apportioning the Head Office expenses amongst various units claiming deduction U/s 10-B/80-IA/80-IB - HELD THAT:- Sub-section (7) of Section 10B of the Act provides that the provisions of sub-sections (8) and (10) of Section 80-IA shall apply. Subsection (10) of Section 80-IA of the Act empowers the Assessing Officer to consider a reasonable profit derived by the eligible business, in case there is a close connection between the eligible assessee and another person or the business is so arranged that the business transacted between them produces higher profit than expected. The contention raised by learned counsel for the revenue deserves acceptance that the expenditure incurred by the head office is a common expenditure for eligible and non-eligible units run by the appellant-company, the same needs to be apportioned to determine the actual profits of both the types of units. The finding recorded by the Tribunal on the said issue warrants no interference. The question is answered against the assessee.
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