Business income treatment for written-back trading credits preserves eligibility for section 80HHC deduction.

Unclaimed sundry credit balances written back from ordinary trading transactions retained their business character because the receipts were closely linked to the assessee's trading activities. They were therefore assessable as business income rather than income from other sources. As the income was brought under the business head, the assessee remained entitled to deduction under section 80HHC.

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Issues: Whether unclaimed sundry credit balances written back to the profit and loss account arising from trading transactions were assessable as business income or as income from other sources, and whether the assessee was consequently entitled to deduction under section 80HHC.

Analysis: The receipt was not in dispute as taxable income; the only controversy was its proper head of income. The balances arose from ordinary trading transactions and were closely linked to the assessee's business activities. The finding that the amount emanated from business dealings was supported by the material on record, and no legal infirmity was shown in the conclusion that such receipt retained its business character. Once assessed under the head business, the foundation for deduction under section 80HHC remained available.

Conclusion: The amount was rightly assessed as business income and not as income from other sources, and the assessee was entitled to the benefit of section 80HHC.

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