TMI Blog2001 (9) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... is hundred per cent exporter. It has export sales of Rs. 138.82 lakhs and owned net profit of Rs. 232.82 lakhs. The said net profit in inclusive of net income from interest credited to the P L a/c at Rs. 1,76,930. The assessee has taken loans from the bank and the said borrowings have been utilised in the export business. The surplus borrowings and the sale proceeds from the export business, which were (sic-not) required immediately, were lent out by the appellant and earned interest thereon instead of letting them lie idle. The total interest receipts are Rs. 2,28,727 as against which interest paid is Rs. 51,799. The AO vide para 3 of his order required the appellant to explain as to why its claim for deduction under s. 80HHC in respect of interest income amounting to Rs. 1,76,930 should not be disallowed because income has not been derived by it from export of goods or merchandise as per provisions laid down in s. 80HHC. The explanation was duly furnished but the claim of the deduction in respect of interest income has been disallowed by him. The learned CIT(A) has also erred in upholding the action of the AO despite the fact that the findings of the AO were duly disputed. The CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (1948) 16 ITR 325 (PC); 2. Mrs. Backa F. Guzdar vs. CIT (1955) 27 ITR 1 (SC); 3. CIT vs. Rajasthan Land Dev. Corpn. (1995) 125 CTR (Raj) 261 : (1995) 211 ITR 597 (Raj); and 4. Hindustan Lever Ltd. vs. CIT (1999) 157 CTR (SC) 506. (1999) 239 ITR 297 (SC). It was further contended that in Sharda Gums and Chemicals, heavily relied upon by the appellant's counsel, the decision in the case of Hindustan Lever was not considered. Under such circumstances, it cannot be said that the assessee had carried on money-lending business and the interest earned by him was his business income and not income from other sources, as has been held by the authorities below. The ground so raised by the assessee needs to be rejected. However, if at all the assessee is found to have been carried business, then also, the amount so earned by the appellant is not qualified for deduction under s. 80HHC. Reference has been drawn to the decision of Madras High Court in the case of CIT vs. Pandian Chemicals Ltd. (1998) 147 CTR (Mad) 5 : (1998) 233 ITR 497 (Mad). The learned Departmental Representative has also urged that in any event as the facts are different, the Tribunal can take different view in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1991, w.e.f. 1st April, 1992, which Explanation is not applicable to asst. yr. 1989-90, the year under appeal before us. We do find that this Explanation was duly considered by the Jodhpur Bench of the Tribunal in the case of Sharda Gums Chemicals for the purpose of interpretation of the word 'receipt' while concluding it to mean as net receipt. This was done by observing that Expln. (baa) requires 90 per cent of interest receipt which is included in profits of business, will be excluded. Though such an issue is not in appeal before us, we, therefore, are not inclined to deal with in details. However, as an obiter we may say that such a receipt on account of interest shall be reduced even if it is in the nature of profits and gains of business and that is why the specific meaning appears to have been assigned to the 'profits and gains of business' for the purpose of s. 80HHC by reducing 90 per cent of certain items as specified therein. 7. In the decision of the Hon'ble Rajasthan High Court in the case of Murli Investment Co. Ltd. vs. CIT referred by the CIT(A) in his order, the Hon'ble Court confirmed the finding of the Tribunal. In that case, the assessee was found to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the assessee, and the connected material placed on record, we find that the appellant before us derives income from manufacturing and exporting of precious and semi-precious stones besides it has also declared net interest income of Rs. 1,76,930 as interest received from 18 parties during the year under appeal. The gross amount of interest received is Rs. 2,28,727 and the payments made to the bank and one another person on account of interest are aggregating to Rs. 51,799. It has been explained by the assessee before the authorities below that the amounts on which the interest of Rs. 2,28,727 was earned by the assessee represented the assessee's money required for its business. Since, however, the moneys were not required immediately, the assessee made short-term deposits of these moneys and earned interest thereon, instead of letting them lie idle. Appellant has exploited its commercial asset which has yielded as profits of the business to it irrespective of the manner in which assets have been exploited. The said explanation, however, was not accepted by the authorities below holding that the interest earned by the appellant on the deposits made out of funds not required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of wills and other documents, means the sense and meaning of it, as gathered from the words used therein. When used with reference to civil and criminal responsibility, a person who contemplates any result, as not unlikely to follow from a deliberate act of his own, may be said to intend that result, whether he desires or not. It is, therefore, the design, resolve or determination with which a person acts. It is also to be kept in mind that 'intent' and 'motive' are two different things and should not be confused. Motive is what prompts a person to act. Intent refers only to the state of mind with which the act is done or omitted. 11. After careful consideration of the above situation and position as well as the entire connected matters and precedents relied upon by both the parties, we find that there is no dispute to the fact that the surplus funds have emerged with the appellant out of export business carried on by him and that the said business of export is its regular business. The appellant invested only those funds in making advances/deposits which were not immediately required by him in the regular business of export carried by it and not that the investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has exceeded his jurisdiction. Recently, the Hon'ble Delhi High Court in the case of CIT vs. Union Tyres (Del) (1999) 157 CTR (Del) 286 : (1999) 240 ITR 556 (Del) has considered the powers of the first appellate authority in the light of the various Supreme Court decisions and has held at p. 560 as under: "A question regarding powers of the first appellate authority came up for consideration before the Supreme Court recently in CIT vs. Nirbheram Daluram (1997) 139 CTR (SC) 484 : (1997) 224 ITR 610 (SC). Following their earlier decisions in CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) and Jute Corporation of India vs. CIT Ors. (1990) 88 CTR (SC) 66 : (1991) 187 ITR 688 (SC) though their Lordships reiterate that the appellate powers conferred on the AAC under s. 251 could not be confined to the matter which had been considered by the ITO, as the AAC is vested with all the plenary powers which the ITO may have while making the assessment, but did not comment on the issue whether these wide powers also include the power to discover a new source of income. Therefore, the principle of law laid down in CIT vs. Shapoor Ji Pallanji (1962) 44 ITR 891 (SC) and CIT vs. Rai ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
