TMI Blog2004 (7) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... f total turnover for the purpose of computing the allowable deduction under section 80HHC of the Income-tax Act, 1961. 2. The ld. CIT(A) has erred on the facts and circumstances of the case and in law in upholding the order of the Assessing Officer that the interest of ₹ 3,23,038 and whole amount of Miscellaneous Receipts and Income of ₹ 3,23,038 and whole amount of Miscellaneous Receipts and Income of ₹ 38,89,189 will be reduced under clause (baa) of the Explanation to section 80HHC to work out the 'profits of the business' for the purpose of computation of deduction allowable under section 80HHC of the Act. 2. The assessee is a company which is, inter alia, engaged in export out of India of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on the part of the lower authorities to hold that excise duty and sales tax would form part of the total turnover for the purpose of computing deduction under section 80HHC of the Act. Accordingly, the assessee succeeds in the first ground. 3. The second ground relates to the action of the lower authorities in holding that the interest receipts of ₹ 3,23,038 and the entire amount of Miscellaneous Receipts amounting to ₹ 38,89,189 were deductible to the extent of 90 per cent in terms of Explanation (baa) appearing below section 80HHC for the purpose of computing deduction under section 80HHC. 4. Insofar as the facts in relation to the element of interest income is concerned, it appears from the orders of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk with the export activity. In other words, there has to be a direct nexus between the interest earned by the assessee and the outgo of interest, and in such a situation only, the net amount of interest received, if any, is liable to be excluded to the extent of 90 per cent in terms of Explanation (baa). We find that such an approach has been missing in the orders of the lower authorities and, therefore, we deem it fit and proper to restore this issue to the file of the Assessing Officer who shall carry out the exercise having regard to the decision of the Special Bench in the case of Lalsons Enterprises (supra). 6. This leaves us with the dispute pertaining to the exclusion of 90 per cent in terms of Explanation (baa) with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded in such profits; and (2)the profits of any branch, office, warehouse, or any other establishment of the assessee situated outside India; 8. Insofar as the commission income of ₹ 10,36,051 is concerned, the assessee itself has excluded 90 per cent of it from the profit of business to compute deduction under section 80HHC, hence, there is no dispute on it. As regards the remaining items, the assessee contends that the same are not excludible. It is contended that the freight recovery is basically reimbursement of expenditure incurred by the assessee as freight outwards. In fact, the amount of freight recovered from the clients has been credited in the same account where the expenditure incurred on carriage and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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