TMI Blog2010 (1) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... cer in scrutiny assessment right since the inception. (b) The warranty provision is made in accounts on the basis of technical evaluation and the previous experience based on the category wise actual warranty expenses in the last preceding three years. (c) The warranty is a simultaneous obligation undertaken in year of sale and the appellant also considers the estimated warranty cost in the sales price quoted. 2.1 The Learned Commissioner of Income Tax (Appeals) erred in not considering the Keyman insurance premium paid ₹ 96,99,410 (at 80.6% of ₹ 1,20,34,008) cumulative upto the previous year end or in the alternate ₹ 17,51,282 (At 80.6% of ₹ 21,72,807) paid during the previous year in considering the disallowance if Keyman insurance claim income received of ₹ 241,00,000 (at 80.6% of ₹ 3,00,00,000) under section 80IA. 2.2 Alternatively, the Learned Commissioner of Income Tax (Appeals) failed to direct the recomputation of the deduction under section 80IA for the assessment years 1995-96 to 1999-2000 on the eligible profits without considering the respective Keyman insurance premium expenses for each of these years. 3.1 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the ratio of the Supreme Court decision in the case of Sterling Foods is squarely applicable in this case (237 ITR 579). 2. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the decision of the AO. 3. It is, therefore, prayed that the order of the CIT(A )may kindly be cancelled and that of the AO may be restored to the above extent. ITA No.1182/Ahd/2005[[Revenue] 1. The Learned Commissioner of Income Tax (Appeals) erred in law and on facts of the case in directing to further reduce the Keyman insurance claim of ₹ 2,41,80,000/- by an amount of ₹ 17,51,282/- while excluding it from profit eligible for deduction under section 80I and then compute the deduction under section 80HHC. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the decision of the AO. 3. It is, therefore, prayed that the order of the CIT(A )may kindly be cancelled and that of the AO may be restored to the above extent. AY 2001-02 ITA No.988/Ahd/2005[Assessee] 1.1. The Learned CIT(A) has erred both in law and on facts in confirming the disallowance of warranty provision expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aneous obligation undertaken in year of sale and the purchase order includes warranty as part of the sales contract and appellant also considers the estimated warranty cost in the sales price quoted . Apart from the aforesaid grounds, the assessee also raised an additional ground in the appeal for the AY 2000-01 in the following terms: The Learned CIT(A) has erred both in law and on facts in holding the keyman insurance claim receipt on the life of the managing director of the appellant is not the income derived from the industrial undertaking within the meaning of section 80I and is not eligible for deduction thereunder. 2. Adverting first to ground nos.1.1 1.2 relating to the disallowance of provision for warranty expenses in the appeal of the assessee for these three assessment years, facts, in brief, as per relevant orders are that returns declaring income of ₹ 4,67,67,104/- for the Assessment Year 2000-01, ₹ 4,69,93,442 for the Assessment Year 2001-02 and ₹ 13,31,77,740/- for the Assessment Year 2003-04 filed respectively on 28.11.2000, 29.8.2002 and 22.10.2003 by the assessee, manufacturing induction furnaces, after being processed u/s 143(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Hon'ble Supreme Court in Bharat Earthmovers Ltd. (Supra) was not relevant to the facts of the case . Accordingly, the AO disallowed the claim for the warranty expenses in these three assessment years. 3. On appeal, the assessee while relying upon the decision of the Hon'ble Supreme Court in the case of Metal Box Company of India Ltd., 73 ITR 53 ,Bharat Earthmovers Ltd., 234 ITR 428 and, Amrish and Co,. 257 ITR 180 contended that deduction was admissible, the liability being not contingent one. However, the ld. CIT(Appeals), while distinguishing these decisions, observed that the estimation of warranty provision cannot be determined with accuracy. The plea of the assessee that the liability is inbuilt as soon as sale is made is not tenable, since the expenditure to be incurred depended on a future event, which may take place or may not take place .Accordingly, the ld. CIT (Appeals) upheld the findings of the AO. 4. The assessee now in appeal before us against the aforesaid findings of the ld CIT(Appeals). The ld. AR on behalf of the assessee contended that a similar provision made in preceding assessment year beginning from AY 1987-88 until AY 1999-2000 has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only those obligations arising from past events existing independently of the future conduct of the business of the enterprise that is recognized as provision . For a liability to qualify for recognition there must be not only present obligation but also the probability of an outflow of resources to settle that obligation. Where there are a number of obligations (e.g. product warranties or similar contracts) the probability that an outflow will be required in settlement, is determined by considering the said obligations as a whole ; iv) In the case of a manufacture and sale of one single item the provision for warranty could constitute a contingent liability not entitled to deduction u/s 37 of the said Act. However, when there is manufacture and sale of an army of items running into thousands of units of sophisticated goods, the past event of defects being detected in some of such items leads to a present obligation which results in an enterprise having no alternative to settling that obligation ; v) On facts, the assessee has been manufacturing and selling Valve Actuators in large numbers since 1983-84 onwards. Statistical data indicates that every year some Actuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived from the business of the industrial undertaking while distinguishing of the decisions of the Hon'ble Apex Court in the Sterling Foods Ltd.,237 ITR 579 and in Hindustan Lever Ltd., 239 ITR 297. The assessee pleaded that the Keyman Insurance claim of ₹ 3 Crores was derived from and was part of the integrated manufacturing operations of the industrial undertaking and is eligible for pro-rata deduction under section 80IA of the Act. The said receipt could not arise without conduct of the industrial undertaking. In this connection, the assessee relied upon a decision of the Hon'ble Madras Court in the case of CIT Vs. Wheeler Club Ltd.,107 ITR 168 .Alternatively the assessee claimed that if Keyman insurance premium of ₹ 1,20,34,000/- is not to be reduced from the eligible profits u/s 80I of the Act, then the aforesaid premia paid in the respective assessment years 1995- 96 to 1999-2000, should be added to eligible profits for the purpose of deduction under section 80I in those assessment years. The fact that such premia has been reduced from the eligible profits under section 80I during the earlier year, establishes the direct nexus of the Keyman insurance claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 80I on Keyman insurance is not considered then in earlier years the premium paid for Keyman insurance policy should not have been reduced for working out eligible profit under section 80I. The expense claimed by the assessee was allowed as business expense however the same will not make the insurance claim as income derived from the industrial undertaking. Assessee s alternative argument has no basis and is not relevant for this assessment year. Accordingly, the AO disallowed claim of deduction under section 80IA of the Act on the interest income of ₹ 52,50,979/- and on the amount of ₹ 3 crores received in terms of the Keyman Insurance policy. 7. On appeal, the assessee reiterated their submissions before the AO and contended that amount of ₹ 3 crores under Keyman insurance policy was received from the insurance company on the demise of Mr.Vyas, who was Keyman of the assesseecompany and the amount had been received by them after his death. Since the amount has direct nexus with the industrial undertaking, deduction under section 80IA of the Act is admissible, the assessee argued. In the light of these submissions, the ld. CIT (Appeals) concluded that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss in case of untimely death of the Keyman. Mr. Vyas expired due to cardiac problem while doing official duties. The death of Mr. Vyas is proximate cause of the Keyman insurance receipt and the industrial undertaking directly yielded the Keyman insurance guarantee. Keyman insurance claim receipt could not arise without the conduct of the industrial undertaking and has been very much a part of the integrated manufacturing operations of the industrial undertaking . The ld.. AR pleaded that Keyman insurance receipt be held as income derived from the industrial undertaking. Alternatively, it was pleaded that the assessee had claimed deduction on Keyman insurance receipt only on the amount of ₹ 241.80 lacs, which is prorata amount of claim received under insurance claim while the AO disallowed the claim for deduction u/s 80IA on the entire amount of ₹ 3 crores. It was further pointed out that Keyman insurance premium of ₹ 1,20,34,000/- paid hitherto which has been reduced from the eligible profits while computing deduction u/s 80I of the Act in the Assessment years 1995-96 to 1999-2000, has to be considered in case the Keyman insurance receipts are held as non-eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under s. 80-IA of the Act. Though the assessee had taken a keyman insurance policy on the life of Shri Vyas, the amount received on the death of the keyman from the insurance company cannot be said to have been derived from the business of the industrial undertaking. Admittedly, the immediate source of amount is keyman insurance policy and death of the keyman insured and not the business, as the industrial undertaking is removed by one step from the source of income for the amount received. In other words, the immediate and effective source of the amount received is keyman insurance policy and not the business of the industrial undertaking. As held by the Hon ble Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84, the profits or gains eligible for deduction under section 80E of the Act must be derived from the actual conduct of the business, and unless the profits or gains are derived from the actual conduct of the business, it cannot be stated that the aforesaid amount is derived from the business of the industrial undertaking. In other words, the industrial undertaking must directly yield the profit, and it cannot be the means to yield the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions (3) to (11A) constitutes a stand-alone item in the matter of computation of profits. It was further held that Ss. 80-IB/80-IA are a code by themselves as they contain both substantive as well as procedural provisions. S. 80-IB allows deduction of profits and gains derived from the eligible business. The words derived from is narrower in connotation as compared to the words attributable to . By using the expression derived from , Parliament intended to cover sources not beyond the first degree; In the light of the said decision of Hon ble Supreme Court, we are not inclined to accept the plea on behalf of the assessee that amount received from the insurance company under the keyman insurance policy on the death of Mr. Vyas is derived from the business of the industrial undertaking. The fact that the amount was assessable as business income itself would not be sufficient to hold that the said amount was derived from the actual conduct of the business of the industrial undertaking. In other words, it is not all business receipts that would qualify for the deduction and the Legislature has apparently not intended to give the benefit of deduction to all business income. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only a limited import and, therefore, the expression derived from as used in section 80IA must be understood as profit directly arising from the activities of the industrial undertaking and not incidental to it. There is no material before us suggesting that the amount received under keyman insurance policy and interest income received by the assessee is the direct result of any activity of industrial undertaking of manufacturing of any goods . As observed by the Hon ble Apex Court in Cambay Electric Supply Industrial Co. Ltd.(supra) unless the profits or gains are derived from the actual conduct of the business, it cannot be stated that the aforesaid amount is derived from the business of the industrial undertaking. In other words, the industrial undertaking must directly yield the profit. In the facts and circumstances of the case, we are of the opinion that amount received under the keyman insurance policy or interest income were not operational profits nor generated directly in the business of industrial undertaking and are beyond the first degree . 9.5 Hon ble jurisdictional High Court in the case of CIT Vs.Gaskets and Radiators Distributors, 296 ITR 440(Guj) in the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, he will have to compute business profits, in terms of the Act, by applying the provisions of sections 28 to 44 thereof. (ii) In arriving at profits of the business by the above method, the Assessing Officer will exclude all such incomes which partake of the character of income from other sources which in any event are treated under sections 56 and 57 of the Act and are therefore not to be reckoned for the purposes of section 80HHC. The Assessing Officer will apply the law as explained in the judgments of the Kerala High Court referred to above which have been affirmed by the Hon'ble Supreme Court. (iii) Where surplus funds are parked with the bank and interest is earned thereon it can only be categorised as income from other sources. This receipt merits separate treatment under section 56 of the Act which is outside the ring of profits and gains from business and profession. It goes entirely out of the reckoning for the purposes of section 80HHC. (iv) Interest earned on fixed deposits for the purposes of availing of credit facilities from the bank, does not have an immediate nexus with the export business and therefore has to necessarily be treated as incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio of turnover of melting finance division( 80.6% ) and the total turnover of the company since the assessee is stated to have claimed deduction u/s 80IA only on 80.6 % of the keyman insurance receipt of ₹ 3 crores. Like wise, applying the same ratio, since the assessee claimed deduction u/s 80IA only on 80.6% of the interest amount, the ld. CIT(A) directed to exclude an amount of ₹ 42,32,289/-(later rectified to ₹ 32,14,120/-) out of interest of ₹ 52,56,979/- while computing deduction u/s 80IA of the Act. Since deduction had been claimed only on 80.6% of the amount received under keyman insurance policy, we do not find any infirmity in the findings of the ld. CIT(A) in restricting the disallowance to the extent of claim made by the assessee. The ld. DR did not place before us any material ,suggesting that deduction has been claimed on the entire amount of ₹ 3 crores received in terms of keyman insurance policy and not merely on 80.6% thereof.Therefore, grounds raised by the Revenue in this behalf in their appeal for the AY 2000- 01 have no force. 9.10 As regards alternate plea raised in ground no. 2.2 for allowance of deduction u/s 80IA of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned on late collection of sales prices etc.. Since the income of ₹ 12,63,236/- was exempt under section 10 of the Act, apparently it was not part of the gross total income and therefore ,deduction u/s 80IA could not be even considered. As regards interest on late collection of dues , the ld. AR pleaded that the said amount was eligible for deduction under section 80IA of the Act and in the light of the decision of the Hon'ble Gujrat High Court in the Nirma Industries Ltd. Vs. CIT, 283 ITR 402. On the other hand, Ld. DR supported the findings of the AO. 14. We have heard both the parties and gone through the facts of the case. We find that the AO did not record any findings as to whether or not the income of ₹ 12,63,236/- is exempt under section 10 of the Act. However, the ld. CIT(A) in his order dated 9.2.2005 u/s 154 of the Act excluded the amount exempt u/s 10 of the Act while computing deduction u/s 80IA of the Act. The Revenue does not appear to have disputed the matter in further appeal against the aforesaid findings. Thus, ground no. 3.1(a) in the appeal of the assessee no longer survives for adjudication and is treated as infructuous. 15. A s regards d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the industrial undertaking and thus, decided the issue in favour of the assessee. 16. In the light of view taken in the aforesaid decisions, we have no alternative but to hold that interest on late collection of dues pertaining to the Melting furnace division is eligible under section 80IA of the Act. Since there is no material before us as to whether or not interest has been received on the dues of only Melting furnace division , accordingly, the AO is directed to verify this aspect and if interest relates to dues of Melting furnace division, deduction u/s 80IA of the Act on the aforesaid amount may be allowed. 17. Since deduction had been claimed only on 80.6% of the amount of interest included in the gross total income and the assessee merely disputed the claim with regard to exempt interest income and interest on late payment by the debtors, we do not find any infirmity in the findings of the ld. CIT(A) in restricting the disallowance to the extent of claim made by the assessee in respect of deduction u/s 80IA of the Act on the remaining interest. 18. With the aforesaid directions, ground no. 3.1 in the appeal of the assessee and ground nos. 1(i) to (iii) in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds total turnover with reference to the definition of the word turnover in other laws like the Central sales tax or as defined in accounting principles. Excise duty and sales tax are indirect taxes. They are recovered by the assessee on behalf of the Government. By the Court: The principal reason for enacting a formula in section 80HHC of the Income-tax Act, 1961 is to disallow a part of the concession thereunder when the entire deduction claimed cannot be regarded as relating to exports. Therefore, while interpreting the words total turnover in the formula in section 80HHC one has to give a schematic interpretation. The various amendments made therein show that receipts by way of brokerage, commission, rent, rent etc. do not form part of business profits as they have no nexus with the activity of export. Amendments made from to time to time indicate that they became necessary in order to make the formula workable. If so, excise duty and sales tax also cannot form part of the total turnover under section 80HHC(3): otherwise the formula becomes unworkable. 22.1 In the case of Sony India Pvt. Ltd. Vs. DCIT, in ITA no. 1181/Del/2005 dated 23/9/2008 for the AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree years. Though the AO allowed claim for deduction of bad debts of ₹ 1,03,45,401/-, he did not allow remaining amount of ₹ 5,45,954/- on the ground that the assessee did not give specific reasons for writing off these debts nor established that these debts had become bad during the year under consideration. 27. On appeal, the ld. CIT(Appeals) while examining details of the disallowance as per page 15 to 17 of the paper book ,allowed the claim of the assessee holding as under: (a) This list comprises of 22 parties where total bad debts written off are ₹ 1,79,045/-. These amounts are stated to be on account of business receipts credited in the profit and loss account and are outstanding for more than 3 years and hence written off. (b) This list comprises of 22 parties having total amount of ₹ 92,030/- given at page 16 of the paper book. The facts are similar as in (a) above. (c) This list comprises of 10 parties totaling to ₹ 1,00,443/- submitted at page 16 of the paper book. The facts in this respect are also similar as in (a) above while the list of 5 parties submitted at page 17 of the paper book comprises of ₹ 1,74,433/-. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the assessee should also prove that the debt has become bad in that part icular year. As pointed out r ight ly by the Tribunal , there was cor respondence regarding the amount in question that due to some dif ferences the amount was not paid in that part icular year. But , when cor respondence was there to the ef fect that the assessee was insist ing for payment for recovery of the debt , it cannot be said that the debt has become bad in the relevant assessment year. We, therefore, see no inf i rmi ty in the order of the Tribunal and we answer the fi rst quest ion against the assessee. 30. In a recent judgment dated 5.11.2009,Hon ble Allahbad High Court in the case of CIT Vs. Kohli Brothers Color Lab (P) Ltd., in ITA no.2 of 2007 after considering an earlier decision of the Hon ble Gujrat High in the case of CIT Vs. Girish Bhagwat Prasad, 256 ITR 772, observed as under: The intention of legislature is clear that once in assessment year in question debt or part thereof has been written off, as irrecoverable qua the same deductions are to be accorded as per provision of section 36(1)(vii) of the Act, subject to the provisions of 36(2) of the Act. Prior to amendment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of section 36(1)(vii) of the Income Tax Act, 1961, then on the strength of the amendment made on 1.4.1989 it cannot be said, that an inquiry is not permissible under the provision of Income Tax Act to see and satisfy that there is some semblance of the genuineness in the entry, which had been made, same is not at all totally fake entry as respondent- assessee would be entitled for deduction only if its bad debt, or part thereof. Hon'ble Apex Court in the case of Travancore Tea Estates Co. Ltd. Vs. CIT (1999) 151 CTR (SC) 231; (1998) 233 ITR 203 (SC) has taken the view, that as to whether a debt has become bad or at what point of time it became bad, are pure question of fact. Though standard of proof of proving the same is bad debt, is not required to be adopted and is to be decided on the wisdom of the respondent assessee and not on the wisdom of Assessing Officer, but to show that entry which had been made as bad debt there has to be some material in support of the same, giving some semblance of genuineness and truthfulness to the same in the direction of forming opinion, that said debt was arising out of trading activity, there was relationship of debtor or cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd.(supra) and Hon ble jurisdictional High Court in Dhall Enterprised and Engineers P. Ltd.(supra), mere debit ing the amount is not suf f icient. The requi rement is that the assessee should also prove that the debt has become bad in that part icular year. Since onus is on the assessee for claiming deduct ion, the assessee is required to show that entry which had been made as bad , there has to be some material in support of the same, giving some semblance of genuineness and truthfulness to the same in the direction of forming opinion, that said debt was arising out of trading activity, there was relationship of debtor or creditor, same was irrecoverable. Merely because entries have been made, in respect of bad debt or part thereof, writing it off, claiming deduction, deduction can not be allowed. The said entries can always be examined by the Assessing Officer, before proceeding to award deduction, and not by merely blindly following the same general reasons. As is evident from the view taken in aforesaid decisions, mere debiting the amount is not sufficient, the assessee has to be prove that the debt has become bad and written off as irrecoverable. In view of the foregoing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in a separate proceeding, namely, the writ proceeding before the High Court merely on the basis of an uncertain assumption that the issues must have been decided by this Court at least by implication. It is not correct or safe to extend the principles of res judicata or constructive res judicata to such an extent so as to found it on mere guesswork . 32.1 The Hon ble Supreme Court in the case of CIT vs. Sun Engineering Works P. Ltd. (1992) 198 ITR 297 (SC) observed that the judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the Court. In this context ,Hon ble Supreme Court cautioned in their recent decision dated 6.3.2009 in the case of State of AP Vs. M.Radha Krishna Murthy,[Criminal Appeal no. 386 of 2002] 6. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs P. Ltd.(supra) and supported by the decision of the Hon ble Allahabad High Court in Kohli Brothers Color Lab (P) Ltd.(supra), we have no alternative but to reverse the findings of the ld. CIT(A) and restore the order of the AO. Therefore, ground no. 1 in the appeal of the Revenue for the AY 2001-2002 is allowed. 34. Ground no.2 in the appeal of the Revenue for the AY 2001-2002 relates to exclusion of 90% of the amount of income by way of bad debts recovered(Rs. 2,18,455/-), credit balance written back(Rs. 1,30,148/-), Kasar(Rs.17,643/-), and damages for cancellation of orders(Rs. 5,53,600/-) while computing profits of the business for computing deduction u/s 80HHC of the Act. While computing deduction under section 80HHC of the Act, the AO excluded 90% of the amount of Kasar , damages for cancellation of orders, credit balance written back and bad debt recovered. On appeal, the ld. CIT (Appeals) allowed claim of the assessee on the ground that these amounts are connected with the business of the assessee and therefore, cannot be excluded under explanation (baa) to section 80HHC of the Act. 35. The Revenue is now in appeal against the aforesaid findings of the ld. CIT (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amely, business profits, export turnover, total turnover and 90 per cent. of the sums referred to in clause (baa) to the said Explanation. In the computation of deduction under section 80HHC all four variables had to be taken into account. All four variables were required to be given weightage. The substitution of section 80HHC(3) secures profits derived from the exports of eligible goods. Therefore, if all the four variables are kept in mind, it becomes clear that every receipt is not income and every income would not necessarily include element of export turnover. This aspect needs to be kept in mind while interpreting clause (baa) to the said Explanation. The said clause stated that 90 per cent. of incentive profits or receipts by way of brokerage, commission, interest, rent, charges or any other receipt of like nature included in business profits, had to be deducted from business profits computed in terms of sections 28 to 44D of the Income-tax Act. In other words, receipts constituting independent income having no nexus with exports were required to be reduced from business profits under clause (baa). A bare reading of clause (baa)(1) indicates that receipts by way of brokerag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80HHC of the Act On a plain reading of the provision as it stands it is apparent that what the provision stipulates is that profits of the business for the purpose of section 80HHC of the Act mean the profits of the business as computed under the head Profits and gains of business or profession . While computing such profits under the head Profits and gains of business or profession if any sum referred to in clause (iiia), (iiib) or (iiic) of section 28 of the Act has been included in such profits the same has to be reduced by 90 per cent. from the profits computed as aforesaid. Similarly if any receipt by way of brokerage, commission, interest, rent, charges, or any other receipt of a similar nature is included in such profits, i.e. profits of the business, such profits have to be reduced by the said figure, i.e., by 90 per cent. while computing (profits of the business) for the purpose of section 8OHHC of the Act. Therefore, once the sums or the receipts of the nature specified in sub- clause (1) of clause (baa) of the Explanation are included while computing the profits and gains of business then such sums or receipts are to be reduced to the extent of 90 per cent. fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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