TMI Blog2007 (4) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... has taken the following ground of appeal : "The Ld. CIT(A) erred in facts and circumstances of the case and in law: (A) in directing the Assessing Officer to withdraw the depreciation allowed by him following the decision of Supreme Court in the case of M/s. Mahendra Mills Ltd. 243 ITR 56 ignoring the fact that the said decision was given while the provision of clause ( vi ) to section 32(2) were in statute books and after the omission of the said clause from 1-4-1988 position of law has substantially changed; (B) in directing the Assessing Officer to exclude excise duty and sales tax from the total turnover for the working out the deduction under section 80HHC of the Income-tax Act, 1961." 3. In support of appeal, the ld. Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valli Textiles (P.) Ltd. s case ( supra ), Kerala Electric Lamp Works Ltd. s case ( supra ). As regards ground No. 1(B), he submitted that the issue was covered against the Department by the decision in Sudarshan Chemicals Industries Ltd. s case ( supra ). 5. We have heard the parties. As rightly submitted by the Ld. Departmental Representative, the decision of a Special Bench of this Tribunal in Vahid Paper Converters case ( supra ) is clearly in favour of the Department. Contrary decisions taken by Division Benches of this Tribunal cannot prevail over the decision of a Special Bench of this Tribunal. Similarly, the decisions of other High Courts referred to by the Ld. Authorized Representative for the assessee cannot prevail o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in confirming the action of the Assessing Officer: Deduction under section 80HHC is computed and the figure of Profits Gains of business is arrived at by reducing 90 per cent of the gross amount on account of rent and interest received instead of net amount. The respondent prays that the Assessing Officer be directed to grant deduction under section 80HHC by reducing from the profits and gains of business 90 per cent of the net amount of rent and interest." 9. We have heard the parties. In our view, both the issues, namely, netting off of interest income and rental income need to be decided afresh by the Assessing Officer in the light of the decision of Hon ble jurisdictional High Court in CIT v. Bangalore Clothing Co. [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an element of turnover are also included in the Profit Loss Account and therefore the Government thought it appropriate to clarify through the aforesaid Explanation that the profits of the business for the purposes of section 80HHC would not include receipts by way of brokerage, commission, interest, rent charges or any other receipt of similar nature. In other words, the Explanation maintains a clear distinction between operational business income and non-operational business income. What is included in the turnover is treated as operational business income and what is not included in the turnover like brokerage, commission, interest, rent, etc. is treated as non-operational business income. It is 90 per cent of the receipts constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Special Bench in Lalsons Enterprises case ( supra ). This is more so when we are also persuaded by the reasoning given by the Special Bench for coming to the aforesaid conclusion. In this view of the matter, we restore the issue with regard to netting off of interest income to the file of the Assessing Officer with the direction to re-examine the issue and decide it afresh in the light of the decision in Lalsons Enterprises case ( supra ) that it is only 90 per cent of the net interest remaining after allowing a set-off of interest paid, which has a nexus with the interest received, that can be reduced and not 90 per cent of the gross interest. The burden shall be on the assessee to establish the requisite nexus to the satisfaction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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