TMI Blog2006 (9) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 4487/Ahd/1992 with respect to Assessment Year 1986-87, at the instance of the Revenue; "Whether on the facts and circumstances of the case and in law, the Income-tax Appellate Tribunal was right in allowing the assessee's claim regarding deduction under section 80HHC by holding that the receipts such as interest, export incentive, octroi refund and sales in India should form part of the total profits to work out the total turn-over and qualifying profit ?" 3. The facts in nutshell are as under : 4. The assessee claimed deduction under Section 80HHC of Rs. 1,13,060/-considering the receipts like interest income, export incentive, sales excluding such receipts arrived at a business loss of Rs. 2,02,398/-. The Assessing Officer wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provision on Bonus written 2,832/- 7. Sales in India 17,817/- Total 3,07,157/- 6. The assessee claimed relief under Section 80HHC of the Income Tax Act with respect to the interest received, export incentive, octroi refund, and sales in India. The Assessing Officer disallowed the claim of the assessee under Section 80HHC of the Act by holding that the aforesaid income cannot be considered as business income. Therefore, the short question, which is required to be considered by this Court is whether the income of interest on deposits, amount of export incentive, octroi refund, and sales in India are forming part of the total profits to work out the total turnover and qualifying profit and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-Tax (Assessment) And Another, [2005] 279 ITR 72 (Ker) as well as the decision of the Allahabad High Court in the case of Commissioner of Income Tax vs. Himalaya Cutlery Works, (2006) 201 CTR (All) 167 in support of his above submissions. 8. So far as 'income derived from sales in India' is concerned, he has relied upon sub-section (1) of Section 80HHC and has submitted that only in a case where an assessee being an Indian Company or a person resident in India who is engaged in the business of export out of India of any goods or merchandise, the provisions of Section 80HHC would be applicable and only that assessee can claim a deduction under Section 80HHC. It is submitted that the assessee Company was not an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the industrial undertaking itself and was not profits or gains derived by the undertaking for the purpose of the said deduction under Section 80HH. In G.T.N. Textiles Ltd., vs. Deputy Commissioner of Income-Tax (Assessment) And Another, [2005] 279 ITR 72 the Kerala High Court held that interest on Bank deposits was not profit derived from export of goods. The Kerala High Court has further held that the interest earned by the assessee on fixed deposits, commission received on sale of machinery, etc., were not business income and consequently the assessee was not entitled to computation of eligible deduction under Section 80HHC of the Act by including those receipts under business income. Therefore, considering the aforesaid two d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and gain derived from the assessee's industrial undertaking. The receipts from the sale of import entitlements could not be included in the income of the assessee for the purpose of computing the relief under section 80HH of the Income-tax Act, 1961". 11. In Commissioner of Income Tax vs. Himalaya Cutlery Works, [supra], the question before the Allahabad High Court was whether the incentives received by the assessee are part of export turnover and therefore entitled to relief under Section 80HHC or not, and the Allahabad High Court has held that, amount received as duty drawback, cash incentive and on transfer of import licence do not form part of export turnover and, therefore, not entitled to relief under Sec. 80HHC. Considering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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