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TMI Blog2017 (8) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... le admitting the matter framed the following questions of law:- "i) Whether on the facts and circumstances of the case the order of the Tribunal approving the estimation of the gross profit by taking the gross profit for the previous Assessment Year 2003-04 @ 32% instead of 28.86 as finally held in appeal by the Tribunal was not perverse, unjust, arbitrary and contrary to material on record.? ii) On the facts and circumstances of the case and in law would the interest receipt of Rs. 9,52,067/- not constitute "business income" for the purpose of computation of deduction u/s 80HHC of the Act.?" 3. However, the order of admission of the appeal was corrected by last order dated 17th July, 2017 when after hearing both the parties following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee himself submitted the following chart, indicating the past history of the assessee:- It is clear from the above chart that there is steep decline in the GP rate of the assessee firm not in comparison to the AY 2003-04, but in comparison to all the years beginning from AY 1992-93. He has further contended that the Tribunal while considering the matter in para 1.1 observed as under:- "1.1. Confirming the trading addition of Rs. 1,59,62,022/- made by the AO by applying the G.P. rate of 26% as against 20.33% declared by the assessee." The 28.86% was considered as a basis out of which 6% is deducted and assessee was given benefit instead of 30% to 28.86% therefore, it comes to 22.86%. However, the benefit of excise is not given. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017. The question of law No. 1 is corrected by substituting gross profit @ 28.86% instead of 23.86%." 4. Even today, when the matter was argued, counsel for the appellant contended that the GP rate which has been finalised by the AO for the current year was 31%. However, ITAT for the assessment year 2003-04 of the assessee has fixed GP 28.86% which is clear from the order at Annexure-1. Out of GP rate, the following deduction was allowed by the AO itself against which the department has not preferred any appeal and extended difference is of 0.9% of the turnover and towards power & fuel expenses & machine maintenance expenses of 3.5% and declined duty draw back of 0.5% therefore, as per the order of the AO, it will come down as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44D of the Act. In the computation of such profits of business, all receipts of income which are chargeable as profits and gains of business under Section 28 of the Act will have to be included. Similarly, in computation of such profits of business, different expenses which are allowable under Sections 30 to 44D have to be allowed as expenses. After including 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). 10. Under Clause (1) of Explanation (baa), ninety per cent of any receipts by way of brokerage, com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India and Ors. (supra). Section 80M of the Act provided for deduction in respect of certain intercorporate dividends and it provided in Sub-section (1) of Section 80M that "where the gross total income of an Assessee being a company includes any income by way of dividends received by it from a domestic company, there shall, in accordance with and subject to the provisions of this Section, be allowed, in computing the total income of the Assessee, a deduction from such income by way of dividends an amount equal to" a certain percentage of the income mentioned in this Section. The Constitution Bench held that the Court must construe Section 80M on its own language and arrive at its true interpretation according to the plain natural mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and while excluding such items which are unrelated to export for the purpose of Section 80HHC, Parliament has taken due note of the fact that the exporter Assessee would have incurred such expenditure in earning the profits and to avoid a distorted figure of export profits, ninety per cent of the receipts like brokerage, commission, interest, rent, charges are sought to be excluded from the profits of the business. In our considered opinion, it was not necessary to refer to the explanatory Memorandum when the language of Explanation (baa) to Section 80HHC was clear that only ninety per cent of receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits computed under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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