TaxTMI 
TaxTMI 
2019 (4) TMI 371
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....ing goods for the purpose and in the context of computation and quantification of deduction under Section 80 HHC of the Act with reference to export of cured coffee? 2. Whether the Tribunal is correct in concluding that the principles of Latin Maxim "qui per alium facit" per seipsum facere Videtur" would be applicable to the facts of the present case to further conclude that the Appellant engaged in export of cured coffee even though the raw coffee was cured by others with a view to re-compute the deduction under Section 80 HHC of the Act applying the statutory formula applicable to the exporter of processed goods as against the formula adopted by the Appellant applicable to the export of trading goods? T.C.A.No.2675 of 2006 (i) Whether the Tribunal is correct in reversing the order of the First Appellate Authority in accepting the claim of bad debts deductible in the computation of taxable total income? (ii) Whether the Tribunal is correct in concluding the interest income and lease income should not be reckoned in the computation of eligible profits in the ultimate quantification of deduction under Section 80 HHC of the Act on the ground of no direct nexus of the said depo....
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....in the circumstances of the case?" 5. The learned counsel for the Assessee Mr.Sridhar has mainly raised the two contentions in support of the present appeals, filed by the Assessee. The learned counsel submitted that the Revisional proceedings undertaken by the Commissioner of Income Tax (Administration) under Section 263 of Income Tax Act (for short "The Act") for A.Y.1996-1997 (T.C.A.No.2676 of 2006) were not justified because the bifurcation of direct and indirect costs were not properly computed by Assessee while computing the benefit u/s 80HHC, whereas Assesee submitted that the same was accepted by the Assessing Authority as well as CIT (Appeals). Therefore, the view of the CIT (Administration), while issuing impugned Revision notice under Section 263 of the Act was just another possible view and therefore where two views are possible, the order passed by the assessing authority cannot be said to be erroneous. 6. The learned Tribunal has upheld the order of the Assessing Officer vide para 13 of the impugned Order of the Tribunal. The relevant para 12 to 14 are quoted below for ready reference. "12. ITA.No.782/Mds/2000: This appeal by the Assessee is against the order of C....
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....l for the Assessee relied on the judgmnet of the Hon'ble Bombay High Court in the case of CIT V.Gabriel India Ltd (203 ITR 108). " 6. The other contention raised by the learned counsel for the Assessee is that the Assessee is the exporter of coffee in two forms viz., to purchase of the coffee from the market and export it as such. Secondly, the export of cured coffee for which the processing was undertaken on behalf of the Assessee by the third parties i.e. by the sister concerns Viz.M/s.K.R.Ramanujam and Co. and M/s.Sarathy Coffee Co. The learned counsel for the Assessee Mr.Sridhar contended that such processing on behalf of the Assesee by the third party did not change the character of cured coffee as 'traded goods' and Assessee was entitled to benefit under Section 80HHC(3)(B) with regard to said cured coffee also as traded goods. 7. On the other hand, the learned counsel for the Revenue supported the order passed by the learned Tribunal on both these aspects of the matter. 8. We have heard the learned counsels at length and perused the materials placed on record. 9. Section 80HHC3 (a) and (b) is quoted below for ready reference: "(3) For the purposes of Sub-Se....
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....ction 263 of the Act. The learned CIT (Administration) has clearly given reason in the Show cause notice u/s. 263 issued by him that the Assessing Authority has adopted indirect cost as per the clause (b) to the extent of Rs. 2,89,563/- only as against Rs. 9,52,932/- and therefore excess deduction u/s. 80 HHC to that extent has been allowed by the Assessing Authority. Hence, Section 263 was invoked by CIT (Administration) to revise the said assessment order. Upon the query made by the Court about the working of two figures of indirect costs i.e., sum of Rs. 2,89,563/- as taken by the Assessee and a sum of Rs. 9,52,932/- as taken by the CIT (Administration), the learned counsel for the Asssessee was unable to give the details with regard to the same, except submitting that the Assessee has maintained separate Books of Accounts for both type of goods and therefore the figures of indirect costs as disclosed by the Assessee and accepted by the Assessing Authority, ought to have been accepted by the CIT (Administration) as well. We are not impressed by the said submission made on behalf of the Assessee. On the contrary, we feel that the computation of exact amount of deduction under Sec....
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....ision to extend credit facilities was linked more to the business prospects of the Assessee and confidence of the Bank in the integrity of the Assessee and the Assessee's capacity to run the business. In the case of Acit V.Madras Motors Ltd. (257 ITR 60 )(Mad.) in the context of interest received from Bank deposit made for obtaining letters of credit, the Hon'ble Madras High Court has held that there was no nexus of income with the industrial undertaking and as such, it cannot also be taken into account in computing the special deduction. When a plain meaning has to be given to the opening part of the section, it is clear that the word "business" means the business relating to the goods to which the section applies and the thrust is on the work "exclusively". The sub section considers the situation where the Assessee's business is of exports and the Assessee's business has to be only in respect of goods or merchandise to which the section applies. In the case of Nanji Topanbhai & Co (243 ITR 192)(Ker), the Kerala High Court has held that the nature of the business carried on by the Assessee was export business as such interest received by the Assessee from the fix....
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....dent and the earlier year's decision cannot be correlated while completing the Assessment of another year. The direction is further aggravated for the reason that it is against the provisions governing the issue. 34. In our opinion, the interest received on deposits has to have direct nexus with the business of the Assessee to say that interest income is attributable to the export business. Hence, we have no hesitation in reversing his orders on this issue. The ground taken by the Revenue is allowed. 35. Further, with regard to the argument that lease income as business income, we observe that there is no evidence to show that the Assessee took a decision to carry out leasing of machinery as the business activity of the Assessee. Hence, the plea of the Assessee at this stage that the business of the Assessee is leasing which is permitted by the Partnership Deed, cannot be accepted. Admittedly, the business of the Assessee is export of coffee and not leasing of machinery. In the present case, the Assessee claims leasing business as one of the businesses of the Assesssee, but the Department challenges the claim of the Assessee that the leasing business was one of the busine....
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....and the cases relied upon by him. The Scheme of computing the total income under various heads in Chapter IV of the Act and an analysis of Section 56 of the Act itself would clearly reveal that "Income from Other Sources" is only that income which cannot be brought to tax under any of the specified heads of Income in the provisions preceding Section 56 of the Act in the said Chapter IV of the Act, namely under the Head of "Salary", "Income from Business or Profession", "Income from House Property" and "Income from Capital Gains". The Head "Income from Other Sources" is like a residuary clause and the income which cannot be attributed or related to any specified and defined Head of income, then only such income can be brought to tax under Section 56 of the Act, which itself provides both an inclusive and exclusive definition. It is a long provision and enumerates several such incomes which can be included therein and within such inclusions, the exclusions are also made. 23. As far as the interest income is concerned, Clause (id) of Sub-section (2) of Section 56 clearly provides that income by way of interest on securities will be taxable under Section 56, if only such interest inc....