TMI Blog2010 (12) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... terest is received there from. Such an interest cannot be treated to be derived from the services provided to the foreign tourists. This interest income is not the result of services provided to those foreign tourists. Rather, further income is earned from the income generated from the services provided to those foreign tourists which source obviously becomes beyond the first degree. There is another difficulty in the way of the assessee. Such profit derived from "services provided to foreign tourists" should be in convertible foreign exchange income in question is received from banks in India in Indian currency and not in foreign exchange. By no stretch of imagination, the assessee can take benefit thereof for the purpose of Section 80HHD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia, in order to make necessary arrangements for their stay, transportation etc. Advances received in foreign exchange are deposited by the appellant in bank (s) in India in short-term deposits on which interest has been earned by the appellant. The appellant claimed deduction under Section 80 HHD of the Act by apportioning the profits assessable under the head "profits and gains of business or profession" (including interest income) in the ratio of receipts in foreign exchange (excluding interest income) to total receipts of business. The income was shown as "other income" in the tax return. The Assessing Officer accepted the interest income, in the nature of business income assessable under the head "profits and gains of business or prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), where the Tribunal has held that deduction under the said section had to be computed only in accordance with the statutory/strait jacket formula in sub Section (3). Mr. Vohra submitted that this reasoning of the Tribunal is approved by the Supreme Court in the case of P.R. Prabhakar Vs. CIT. 284, ITR 548. He also referred to another decision of Supreme Court in the case of Baby Marine Exports, 290 ITR 323 wherein the Court reiterated the position of law that deduction under Section 80 HHC had to be quantified with reference to profits computed under the head "profits and gains of business or profession", even though not strictly derived from export. In that case, it was held that export premium received by supporting manufacturer for sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Baby Marine Exports, (supra)) 9. Learned counsel for the department, on the other hand, contended that since the interest income was not "derived from" services rendered to foreign tourists, the same did not qualify for deduction under Section 80HHD of the Act. It was also argued that if the interest income was not in the nature of business income and it was described by the assessee itself as "other income" it had to be treated as "income from other sources" and, therefore, it could not qualify for deduction under Section 80 HHD of the Act on this ground also. 10. Section 80 HHD of the Act gives certain benefits to those engaged in the business of hotel or tour operator. If such assessees make earnings in convertible foreign exchan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in a more lucid manner. The Court reiterated the distinction between the expression "derived from" and considered the expression "derived from" in contra distinction the term "attributable to" and held that the connotation of the words "derived from " is narrower as compared to that of the words "attributable to". By using the expression "derived from", Parliament intended to cover sources not beyond the first degree. The Apex Court further opined that on analysis of Sections 80IA and 80IB, it becomes clear that any industrial undertaking which becomes eligible on satisfying sub-Section (2) would be entitled to deduction under sub-section (1) only to the extent of profits derived from such industrial undertaking after the specified date. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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