TMI Blog2005 (11) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 80HHD." The relevant facts, briefly stated, are that the assessee is entitled to deduction under section 80HHD of the Income-tax Act. The Assessing Officer computed allowable deduction in the following manner: ---------------------------------------------------------- Particulars Amount (Rs.) Amount (Rs.) ---------------------------------------------------------- Total Turnover 64,34,23,313 Foreign Exchange earnings 28,53,58,302 Total assessed business income 8,81,96,788 (Less) Interest income 19,92,561 Assessed business income for the purposes of deduction under section 80HHD 8,62,04,227 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owable to the assessee under section 80HHD. 3. The ld. DR contended before us that section 80HHD allows deduction in respect of earnings in convertible foreign exchange. As per this section, deduction is allowable with regard to profit derived by the assessee from services provided to foreign tourists. It is argued that interest income is neither received in convertible foreign exchange nor it is for the services provided to foreign tourists. It is, therefore, contended that interest income has to be ignored while computing deduction under section 80HHD. He relied on the following cases: (i) CIT v. Ravi Ratna Exports (P.) Ltd. [2000] 246 ITR 443 (Bom.) (ii) CIT v. Kantilal Chhotalal [2000] 246 ITR 439 (Bom.) (iii) CIT v. Gimpex (P.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved by the prescribed authority or of travel agents. In respect of the assessment year under appeal, such deduction under sub-section (1) is allowable at the rate of 50 per cent of the profits derived by the assessee from services provided to foreign tourists. Sub-section (2) further stipulates that this section applies only to services provided to foreign tourists. The receipts in relation to which are received in or brought into India by the assessee in convertible foreign exchange within a period of six months from the end of the previous q year or within such further period as the competent authority may allow in this behalf. The modality of determining of the relevant profit described under sub-section (3) reads as under: "(3) For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l undertaking. In the case of Gimpex (P.) Ltd., it was held by the Madras High Court that interest earned from Fixed Deposit by investing surplus fund is income from other sources and not income from business. The question of deduction under Chapter VI-A was not involved in this case. In the case of Nirma Industries Ltd., the ITAT, Ahmedabad Special Bench held that interest from delayed payment on sale proceeds and interest on deposits with banks and other companies is not in the nature of income derived from the industrial undertaking for the purposes of allowing deduction under section 80-I of the Act. In our view, the cases relied upon by the ld. DR are not relevant for deciding the issue which is the subject-matter of this appeal. As me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the income as derived by the assessee in convertible foreign exchange from services rendered to foreign tourists is relevant for the purpose of sub-sections (1) and (2) of section 80HHD. However, sub-section (3) refers to profits of the business as computed under the head 'Profits gains of business or profession' for the purpose of determining proportion of the profits which is eligible for deduction under subsection (1). Admittedly, in the present case, interest income has been assessed under the head 'Profit gains of business or profession'. Having done this, in our view, the Assessing Officer is legally precluded from treating such interest income as non-business income for the purposes of sub-section (3) of section 80HHD. In our v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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