TMI Blog2010 (12) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... me has been treated as income from other sources Addition of expenses attributable to the earning of exempt dividend income under clause (f) of the Explanation 1 to section 115JB(2) - The dispute is regarding addition of the expenditure relatable to the exempt dividend income under clause (f) of Explanation 1 to section 115JB(2). The AO had attributed a sum of ₹ 13,35,850/- relating to the dividend income and therefore while computing the book profit he added the same under clause (f). We have already considered the issue of attribution of expenses relating to dividend income while dealing with the earlier ground and are held that only a sum of ₹ 25,000/- will be considered against dividend income. We therefore modify the order of CIT(A) and hold that a sum of ₹ 25,000/- shall be added under clause (f) while computing the book profit. - ITA No. 4538/M/2005, CO No. 76/M/2006 - - - Dated:- 15-12-2010 - Shri D. K.Agarwal, Shri Rajendra Singh, JJ. Revenue by : Shri Naresh Kumar Balodia Assessee by : Shri Arvind Sonde ORDER PER RAJENDRA SINGH (AM) These cross appeals are directed against the order dated 18.3.2005 of CIT(A). These cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of income arisen during the carrying on of the business or which are incidental to the business have to be taken into account. In this case, the recovery of salary, air fare incentive and service charges, reversal of provision of bad and doubtful debts and scrap sale obviously have arisen during the course of carrying on of business. The sale of special import license though it will not be derived from the business of exports but this is an income incidental to business and has to be treated as profit of business. Section 28(iiia) also treats such items of income as business income. Therefore in our view all these items of income have to be taken into account while computing the profit of business under the head profit and gains of business or profession while computing deduction under section 80HHG. We therefore see no infirmity in the order of CIT(A) allowing the claim of the assessee and the same is therefore upheld. 2.2 The second dispute is regarding disallowance of Rs.13,35,850/- being the expenses attributable to dividend income. The assessee had received dividend income of Rs.267.17 lacs which included the dividend of Rs.262.15 lacs from the subsidiary company ICIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lishment expenses in relation to investment, collection and accounting of dividend income @ 5% of the dividend received from other companies of Rs.5.02 lacs. We therefore restrict the disallowance to Rs.25,000/-. The order of CIT(A) is modified accordingly. 2.3 The third dispute is regarding the disallowance of Rs.87,740/- on account of employer s contribution to provident fund. The amount had been added by the AO on the ground that the same had not been paid within the grace period. CIT(A) has however allowed the claim on the ground that in view of the amended to provision of section 43B the claim has to be allowed even if the amount was deposited before due date of filing of return of income. Accordingly he deleted the addition aggrieved by which the revenue is in appeal before the tribunal. 2.3.1 We have heard both the parties in the matter. The Learned AR for the assessee submitted that the dispute is in relation to employer s contribution to provident fund which has to be allowed even if the amount was paid before the due date of filing of return of income. The Learned DR on the other hand placed reliance on the order of AO. 2.3.2 We have perused the records and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Noida Rs. 16.55 lacs (iii) Ashoka Plaza Rs. 42.33 lacs 3.1.1 In appeal CIT(A) observed that both income/ loss in respect of the units at SEEPZ, Noida and Ashoka Plaza which were fully exempt under section 10B have to be excluded while computing deduction under section 80HHE. He therefore upheld the order of AO excluding the turnover of above units from export turnover while computing deduction under section 80HHE. Aggrieved by the said decision the assessee is in appeal. 3.1.2 Before us the Learned AR for the assessee submitted that the export turnover of 10B units should be included as the same was included in total turnover but in case it was excluded it will have to be excluded from the total turnover also. The Learned DR on the other hand placed reliance on the orders of authorities below. 3.1.3 We have perused the records and considered the matter carefully. The dispute is regarding inclusion of export turnover of other units in the export turnover of computer software business while computing deduction under section 80HHE. Under the said section, deduction is allowable in respect of profit derived from the export of computer software. The phrase profit derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Premises Pvt. Ltd. (190 ITR 259), in relation to the interest income and judgment of Hon ble High Court of Mumbai in case of CIT Vs Associated Building Co. Pvt. Ltd. (137 ITR 339) in relation to rental income and several other judgments. The Learned DR on the other hand placed reliance on the orders of authorities below. 3.2.2 We have perused the records and considered the matter carefully. The dispute is regarding nature of interest and rental income. Interest income had arisen from fixed deposits, interests on loan to employees and interest on income-tax refund. Such items of income in our view has to be assessed as income from other sources. The judgment of Hon ble High Court of Mumbai in case of Paramount Premises Pvt. Ltd. (supra) relied upon by the assessee is distinguishable as in that case, deposits received from prospective buyers of flat pending utilization in the construction of the building were kept in short term deposits and the interest was therefore held as incidental business income. No case has been made in the present appeal that the assessee had deposited the business advances taken from customers temporarily pending utilization of the amount in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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