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Kirti Chand Dhadda Versus Union of India & anr.

2016 (3) TMI 732 - RAJASTHAN HIGH COURT

allowability of 80 HHC in respect of the interest income - Held that:- The issue is no more res-integra as the Larger Bench of this Court in the case of Reliance Trading Corporation Vs. ITO (2015 (5) TMI 689 - RAJASTHAN HIGH COURT ) has answered the questions in favour of the Revenue. Consequent thereto this Court in the case of CIT & ors. Vs. Vimal Chand Surana and ors. (2016 (3) TMI 681 - RAJASTHAN HIGH COURT), had also gone into the issue at length and after considering the arguments raised b .....

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for short, 'Act') is directed against the order dt.31/05/2004, passed by the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (for short, 'Tribunal') and is relevant for the Assessment Year 1992-93. 2. The appeal was admitted by the Court vide order dated.31/01/2005 on the following substantial questions of law:- 1.Whether the ITAT was justified in having restored the order of the AO even though the ground raised in the Memo of Revenue's Appeal claimed a relief only to the .....

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in favour of the Revenue and accordingly in the light of the Larger Bench judgment of this court referred to supra, the matter has been listed for answering the substantial questions of law raised in the instant case as aforesaid. 4. Brief facts noticed are that the appellant-assessee claims that it derives income from the business of manufacturing and trading of precious and semi-precious stones including exports and also derives income from property and other sources. A return declaring loss .....

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was of the view that the interest received on advance to various persons (debtors) had no direct nexus with the business of export and these were idle funds lying with the assessee which was advanced to various persons which was not immediately needed in the business and accordingly held that it is income from other sources. 5. The matter travelled before the Commissioner of Income Tax (for short, 'CIT(A)') who was pleased to allow claim of the assessee that it had large number of transa .....

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ing which has been advanced to various concerns and it had no direct nexus with the export business. 7. Ld. counsel for the appellant contended that there was a regularity of the transaction and even the AO as well as CIT(A) both have accepted that there were several innumerable transactions of receipt of income which was a continuous process, it had the character of business income and therefore, once it is business income, then deduction u/Sec. 80-HHC on the export activity including interest, .....

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imple advance and does not partake character of business income and it is income from other sources and that thus the view of the Tribunal is well justified. 9. We have considered the arguments advanced by counsel for the parties and in our view, the issue is no more res-integra as the Larger Bench of this Court in the case of Reliance Trading Corporation Vs. ITO (supra) has answered the questions in favour of the Revenue. Consequent thereto this Court in the case of CIT & ors. Vs. Vimal Cha .....

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