TMI Blog2022 (2) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... ered that receipts from hiring barges would be in the nature of rent or similar to rent and, therefore, would fall in items specified in clause (baa) of Explanation to section 80HHC. It has been observed, the assessee has not been able to show that such an activity had any nexus to the export activity and, thus, the decision in Ravindranathan Nair's case [ 2007 (11) TMI 10 - SUPREME COURT ] had been followed. In the present matter as well, the assessee is not at loggerheads with the revenue that the amount sought to be deducted from the profits of business, under section 80HHC is not an income earned from export. It is the income earned by hiring plant and machinery. The situation thus as has been observed by the authorities hit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant to High Court,the High Court by common Judgment and order held that CPC manufactured by the appellant is not mineral oil within the meaning of section 80HHC (2) (b) (i). 2. While giving effect to aforesaid order, the Assessing Officer partially allowed the claims of the appellants under section 80HHC of the IT Act under his orders, restricting the deduction to lesser amounts as against the claims for deduction made by the assessee. Reduction in deduction was on account of Explanation (baa) to section 80 HHC being income received from leasing out its plant and machinery. Said orders of the Assessing Officer were taken in appeal by the Assessee before Commissioner of Income Tax (Appeals)(CIT (A)) who has remanded for re-compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent-revenue that, it is undisputed position, income earned from hiring plant and machinery has no nexus to the export by the appellant and that it is only the net income and not the gross one is to be deducted pursuant to Explanation (baa) to Section 80HHC. 5. She submits, the Assessing Officer has found that not entire income earned by the appellant is from export of its product, certain portion of the profit is earned by the appellant by leasing and hiring out its plant and machinery referring to the same as rent (rentals) and thus does not appear to have committed any error in disallowing certain deduction for the concerned assessment years. 6. It would be pertinent to refer to that, section 80HHC of the IT Act, allows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with Explanation clause (baa)). 10. The Revenue is not in appeal so far as 90% of income, from leasing plant and machinery, is to be taken into account for exclusion from profits of business. 11. The assessee has derived income from leasing out plant and machinery. The Supreme Court in Ravindranathan Nair's case (2007) 15 SCC 1, has considered in paragraph 19 as under: In our view, for the above reasons, the said processing charges, which was part of gross total income, was an independent income like rent, commission, brokerage etc. and, therefore, 90% of the said sum had to be reduced from the gross total income to arrive at the business profits and since the said processing charge was an important component of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances, there is no point in remitting the matter to the authorities. The income earned from hiring out plant and machinery would have to be deducted pursuant to Explanation (baa) to Section 80 HHC. 16. Having regard to emerging position, what has been disallowed pursuant to Explanation (baa) to Section 80HHC is the income from hiring out plant and machinery which is independent of exports. The substantial questions of law as have been framed, having regard to the decisions of the Supreme Court in CIT Vs. K. Ravindranathan Nair (supra) and this High Court's decision in Sesa Goa (supra) and further the decision of M/s. ACG Associated Capsules Pvt. Ltd Vs. CIT, 2012 (3) SCC 321 dated 30/7/2018 are answered in the affirmati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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