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2016 (11) TMI 727 - RAJASTHAN HIGH COURT

2016 (11) TMI 727 - RAJASTHAN HIGH COURT - TMI - Disallowance of the deduction u/s 80HHC relating to the interest income - Held that:- The assessees, in our view, in present matters, have thoroughly failed to establish beyond doubt that the interest earned on the deposit or advance was income from the export business. Hence, extending the benefit of deduction as per computation provided in Clause (baa) to Explanation to section 80HHC cannot be made available to the assessees. - Decided against a .....

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er of CIT(A) which has partly allowed the appeal preferred by the assessee. 2. Though the question of law was framed but this Court vide order dated 10/10/2007 has reframed the question of law which reads as under:- Whether on facts and circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in confirming the disallowance of the deduction claimed under Section 80HCC relating to the interest income of ₹ 6,18,208/-? 3. Counsel for the appellant has contended tha .....

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6,18,208/- were rightly reduced by the Respondent No.1 i.e. Assessing Officer.? 4. He has also relied upon the decision of Punjab & Haryana High Court in the case of Vishal Tools Industries vs. CIT reported in (2012) 81 CCH 0097 PHHC and contended that in view of the decision of Punjab & Haryana High Court the assessee is entitled for benefit of netting off and he has also relied upon decision in the case of CIT vs. High Polymer Labs Ltd. reported in (2012) 81 CCH 0046 (Delhi HC). and c .....

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and has been answered in the case of ACG Associated Capsules Pvt. Ltd. vs. Commissioner of Income Tax, Central-IV, Mumbai (2012) 3 SCC 321. Relied. In this decision, it has been held:- 12.Explanation (baa) extracted above states that profits of the business means the profits of the business as computed under the head Profits and Gains of Business or Profession as reduced by the receipts of the nature mentioned in clauses (1) and (2) of the Explanation (baa). Thus, profits of the business of an a .....

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ncluding such receipts of income and after deducting such expenses, the total of the net receipts are profits of the business of the assessee computed under the head Profits and Gains of Business or Profession from which deductions are to made under clauses (1) and (2) of Explanation (baa). 13. Under Clause(1) of Explanation {baa}, ninety per cent of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in any such profits are to .....

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on, interest, rent ,charges or any other receipt of a similar nature is allowed as expenses under Sections 30 to 44-D of the Act and is not included in the profits of business as computed under the head Profits and Gains of Business or Profession , ninety per cent of such quantum of receipts cannot be reduced under Clause (1) of Explanation (baa) from the profits of the business. In Other words, only ninety per cent of the net amout of any receipt of the nature mentioned in clause (1) which is a .....

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e 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 the head Profits and Gains of Business or Profession referred to in the first part of the Explanation (baa). Accordingly, if any quantum of any .....

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siness and chargeable to tax under Section 28 of the Acts, and if any quantum of the rent or interest of the assessee is allowable as an expense in accordance with Sections 30 to 44-D of the Act and is not to be included in the profits of the business of the assessee as computed under the head Profits and Gains of Business of Profession , ninety per cent of such quantum of the receipt of rent or interest will not be deducted under clause (1) of Explanation (baa) to Section 80-HHC. In other words .....

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Revenue. The appeal is disposed of. No order as to costs. 5. Counsel for the respondents contended that there is concurrent finding and in view of decision of this Court in case of CIT & Ors. vs. Vimal Chand Surana & Ors. decided on 11/9/2015 and another decision in case of Reliance Trading Corporation & Ors. vs. The ITO, Jaipur & Ors. decided on 1/5/2015, the order of the Tribunal is required to be confirmed. 6. We have heard counsel for the appellant and counsel for the respon .....

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as under:- In the present case, however, the principle of netting is pressed into service not on the basis of the theory of real income (we did not hear any of the learned counsel or learned representatives for the assessee/intereveners raise the plea) but on the basis of the computation provisions relating to the business income. If the interest received is found to have a nexus with the business, still it remains to be excluded from the profits of the business by virtu of Explanation (baa) (1) .....

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