TMI Blog2018 (12) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... sion in the case of ACG Associated Capsules (P) Ltd. [2012 (2) TMI 101 - SUPREME COURT OF INDIA]. The appeal filed by the Revenue is allowed, the order passed by the Tribunal as well as the CIT(A) are set aside, the assessment order dated 31.01.2006, on this particular head alone namely, the entitlement for deduction under Section 80HHC is set aside and the matter is remanded to the Assessing Officer for a fresh consideration to proceed in accordance with law in the manner indicated above. - Tax Case Appeal No. 1168 of 2008 - - - Dated:- 19-11-2018 - Mr. Justice T.S. Sivagnanam And Mr. Justice N. Sathishkumar For the Appellant : Mrs.R.Hemalatha For the Respondent : Mr.Vijaya Raghavan for Subbaraya Aiyar Padmanabhan JUDG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was right in holding that the interest income in toto forms part of eligible business profits for the purpose of deduction under Section 80HHC of the Act and only 90% has to be excluded from the business profits by applying Explanation (baa) to Section 80HHC of the Act. 7. The Commissioner of Income Tax (Appeals) [for brevity the CIT(A)], while allowing the assessee's appeal vide order dated 26.02.2007, stated that the assessee derived income from deposits made with the banks for the purpose of obtaining Letter of Credit, Bank Guarantee and other such related services from the bank. Therefore, the assessee's contention that the interest of income partook the character of business income and accordingly, as per Clause (baa) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid case furnished the fixed deposit, which was a principal condition to enable the assessee to open a Letter of Credit for the purpose of import of critical components for manufacture of windmill and it was not the case of the Revenue that the amount was deposited in fixed deposits solely for the purpose of earning interest nor it was the case of the Revenue that the amount, which was deposited, in fixed deposits was surplus money, which was lying idle in the hands of the assessee. In the facts of the said case, this Court came to the conclusion that the whatever income accrued is merely incidental and not the prime purpose of doing the act in question, which resulted in accrual of some additional income and therefore, the said income is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is being remanded to the Assessing Officer, the assessee should be in a position to canvass the point that 90% of the net interest, which has been included in the profits of the assessee and is computed under head profits and gains of business or profession alone should be taken and not on gross interest to be taken under Clause (1) of Explanation (baa) to Section 80HHC of the Act for determining the profit of the business. 14. In this regard, reliance is placed on the decision of the Hon'ble Supreme Court in the case of ACG Associated Capsules (P) Ltd., Vs. CIT [reported in (2012) 247 CTR 0372]. 15. In the light of the findings which we have recorded in the preceding paragraphs, we are of the firm view that the matter requi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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