TMI Blog2012 (4) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... baa) to Section 80-HHC – in favour of assessee. - ITA No.133/2006 - - - Dated:- 19-4-2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr. Sanjeev Sabharwal, sr. standing counsel . For Respondent: Mr. Badri Nath, Adv. SANJIV KHANNA, J: (ORAL) In this appeal which pertains to assessment year 1996-97, the following two substantial questions of law were framed vide order dated 22.08.2006 : 1) Whether the Income Tax Appellate Tribunal was correct in law in holding that the assessee is entitled to reduce interest paid by it on bank overdrafts from the interest received on FDRs while calculating deductions under Section 80HHC read with Explanation (baa) of the Income Tax Act, 1961. 2) Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal has held that the two incomes have to be taken into consideration for the purpose of Explanation (baa) to Section 80HHC. Finding recorded is that the interest earned on FDR, which was placed with the bank for the purpose of export trade were assessable under the head income from business‟. With regard to the EDP income also it has been held that this income was chargeable under the head income from business‟ as the group companies had utilized computers and office equipment belonging to the respondent-assessee. 6. Thus, both interest income and income from EDP it has been held are assessable under the head income from business‟ and not under the head income from other sources‟. To this extent, fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the receipts of the nature mentioned in clauses (1) and (2) of the Explanation (baa). Thus, profits of the business of an assessee will have to be first computed under the head Profits and Gains of Business or Profession in accordance with provisions of Section 28 to 44-D of the Act. In the computation of such profits of business, all receipts of income which are chargeable as profits and gains of business under Section 28 of the Act will have to be included. Similarly, in computation of such profits of business, different expenses which are allowable under Sections 30 to 44-D have to be allowed as expenses. After including such receipts of income and after deducting such expenses, the total of the net receipts are profits of the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining profits of the business of the assessee under Explanation (baa) to Section 80-HHC. 8. The Supreme Court in this case also referred to the earlier decision of the constitution bench in Distributors (Baroda) (P) Ltd. Vs. Union of India (1986) 1 SCC 43 and thereafter observed in para 16 and 17 as follows : 16. Similarly, Explanation (baa) has to be construed on its own language and as per the plain natural meaning of the words used in Explanation (baa), the words receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits will not only refer to the nature of receipts but also the quantum of receipts included in the profits of the business as computed under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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