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TMI Blog2022 (1) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... nai, in I.T.A.No.2114/Mds/2007, relating to the assessment year 2002-03. 2. By order dated 24.11.2009, this court admitted the aforesaid tax case appeal on the following substantial questions of law: "1. Whether the Appellate Tribunal is correct in law in concluding that the re-assessment framed was correct and valid on the facts and in the circumstances of the case even though there was no escapement of income as well as the computation of deduction u/s 80 HHC of the Act was in accordance with the provisions of the Act while filing the return of income disclosing the total taxable income for the Assessment year under consideration? 2. Whether the Appellate Tribunal is correct in law in sustaining the action of the respondent in frami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax (Appeals), who confirmed the order of the Assessing Officer excluding ninety per cent of the gross interest and gross rent received by the assessee while computing the profits of the business for the purposes of Section 80HHC. Aggrieved, the assessee filed an appeal before the Income Tax Appellate Tribunal (for short 'the Tribunal'). The Tribunal held, relying on the decision of the Delhi High Court in CIT v. Shri Ram Honda Power Equip (2007) 289 ITR 475 / 158 Taxman 474, that netting of the interest could be allowed if the assessee is able to prove the nexus between the interest expenditure and interest income and remanded the matter to the file of the Assessing Officer. The Tribunal also remanded the issue of netting of the ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in Commissioner of Income-Tax v. K.Ravindranathan Nair [(2007) 295 ITR 228/165 Taxman 282 (SC)] in which the issue raised before this Court was entirely different from the issue raised in this case. In that case, the assessee owned a factory in which he processed cashew nuts grown in his farm and he exported the cashew nuts as an exporter. At the same time, the assessee processed cashew nuts which were supplied to him by exporters on job work basis and he collected processing charges for the same. He, however, did not include such processing charges collected on job work basis in his total turnover for the purpose of computing the deduction under Section 80HHC (3) of the Act and as a result this turnover of collection charges was left ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems 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 the head profits and gains o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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