TMI Blog2006 (1) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax case filed by the Revenue - - - - - Dated:- 18-1-2006 - Judge(s) : K. RAVIRAJA PANDIAN., P. P. S. JANARTHANA RAJA. JUDGMENT The judgment of the court was delivered by P.P.S. Janarthana Raja J.-This appeal has been preferred by the Revenue under section 260A of the Income-tax Act, 1961, against the order of the Income-tax Appellate Tribunal, "C" Bench, Chennai, in I.T.A. No. 1594/Mds./1998 dated July 24, 2002 and the appeal was admitted in terms of the following substantial question of law: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in holding that the assessee is eligible for full deduction under section 80HHC without restricting to the amount received by way of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer was of the view that the relevant provisions referred to the exclusion of 90 per cent, of "receipts" in the nature of, inter alia, interest and not income of that nature. Hence he had not taken into account the interest payment of Rs. 9,24,969, but reduced the deduction under section 80HHC by 90 per cent, of the income of Rs. 2,65,019. Aggrieved by the order of assessment, the assessee filed an appeal to the first appellate authority who confirmed the order of the Assessing Officer. Against that order, the assessee preferred an appeal before the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal held that, in this case on hand, the net figure of interest is only the payment in a sum of Rs. 6,59,946 and not recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the assessee had not deducted for the purpose of section 80HHC, and further stressed the fact that in the present case the net figure of interest, is only the payment in a sum of Rs. 6,59,946 and not receipt and hence there is no question of excluding any amount out of such net interest payments while computing the deduction under section 80HHC of the Act. We heard the contention advanced by both the parties. The entire controversy centres around the meaning to be assigned to the language employed in clause (baa) of the Explanation to section 80HHC of the Act. The said clause reads as follows: "(baa) 'Profits of the business' means the profits of the business as computed under the head 'Profits and gains of business or profession' as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003] 260 ITR 304, held as follows: "The clause does not refer to net interest. It refers, inter alia, to the interest included in the profits and gains of the business or profession.... Clause (baa) under the Explanation to section 80HHC defines profits of the business as computed under the head 'Profits and gains of business or profession'. The deductions to be made are from the amount of profit so computed and not from the amount computed under any other head of income of that assessee. The reference to 'such profits' in sub-clause (1) of clause (baa) can only be to the profits of the business computed under the head 'Profits and gains of business or profession'. Addition of prefix 'the' to 'profits' in clause (baa), while referring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the amount of interest paid by the assessee could not be deducted therefrom. A plain reading of clause (baa) of Explanation to section 80HHC of the Act makes this aspect quite clear and we are of the view that the Tribunal was right in disallowing the claim of the assessee in this regard." The above two judgments support the case of the Revenue. The appellant in the present case had received interest of Rs. 2,65,019 and hence the receipt of interest is alone relevant and the same is to be taken into consideration for the purpose of deduction for the claim under section 80HHC of the Act. No expenditure or any other deduction is permissible from the receipt of interest income. Section 80HHC stipulates a deduction in respect of export prof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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