2011 (7) TMI 1119 - AT - Income Tax

Assessee's Appeal Partially Allowed; High Court Rules on Interest Income

Shri Ramu S. Deora, Versus The Deputy Commissioner of Income Tax 12 (3), Mumbai

Shri Ramu S. Deora, Versus The Deputy Commissioner of Income Tax 12 (3), Mumbai - TMI Issues involved: Appeal against order reducing interest earned from EEFC account for relief u/s.80 HHC, reduction of sundry balance written off for deduction u/s.80 HHC, exclusion of amount from export turnover, and not granting relief as per CIT(A) directions.Reduction of Interest Earned from EEFC Account for Relief u/s.80 HHC:The issue pertains to the reduction of 90% of interest earned by the assessee from the EEFC account for computing relief u/s.80 HHC. The Tribunal found that the Jurisdictional High Court's decision in the case of CIT vs. Shah Originals (327 ITR 19) is against the assessee. The High Court held that the profit arising from exchange fluctuations in the EEFC account does not have a direct nexus with the export transaction to be considered as business income for deduction u/s.80HHC. Consequently, the interest from the EEFC account cannot be treated as business income. Therefore, the appeal of the assessee on this issue was dismissed.Reduction of Sundry Balance Written Off for Deduction u/s.80 HHC:The next issue raised was regarding the reduction of 90% sundry balance written off from the profits of business for calculating deduction u/s.80 HHC. Although this issue was previously set aside by the Tribunal, there was no specific discussion by the Assessing Officer on this amount. The Tribunal directed the Assessing Officer to re-work the relief u/s.80 HHC concerning the written-off balance of &8377; 2,65,804 based on the direction provided.Exclusion of Amount from Export Turnover:Another issue raised was the exclusion of &8377; 27,26,275 from the export turnover. The Tribunal noted that there was no detailed discussion by the lower authorities on this matter. The amount in question represented delayed receipt of export proceeds, and the assessee had sought condonation of the delay. The Tribunal set aside this issue to the Assessing Officer to determine whether the delay had been condoned by the Commissioner. The Assessing Officer was directed to re-examine this issue and provide a fresh order after giving a reasonable opportunity to the assessee. The appeal was treated as allowed for statistical purposes on this issue.Non-Granting of Relief as per CIT(A) Directions:The final ground of appeal was against the non-granting of relief in respect of the directions of the Commissioner of Income Tax (Appeal) in the computation of income. The Tribunal noted that this issue arose from grounds set aside in a previous round of appeal. As the matter of giving effect to the CIT(A) order was not under appeal, the Tribunal directed the Assessing Officer to implement the relief granted by the appellate authorities earlier while passing an order in compliance with the Tribunal's decision. The appeal on this issue was dismissed.In conclusion, the appeal filed by the assessee was partly allowed for statistical purposes, with specific directions given for each issue raised in the appeal.