Interpretation of Deduction under Section 80HHC Upheld

The High Court of Bombay upheld the interpretation that 90% of net receipts should be reduced for computing the deduction under section 80HHC for labor charges in business profits calculation, disregarding clause (baa) of the explanation. The appeal by the Revenue for Assessment Year 1994-95 was dismissed, in line with the consistent view taken in appeals for subsequent assessment years.

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Issues involved: Interpretation of deduction u/s 80HHC for labor charges in business profits calculation.

Summary:

Interpretation of deduction u/s 80HHC:
The High Court of Bombay considered the appeal by the Revenue regarding the interpretation of deduction u/s 80HHC for labor charges in business profits calculation. The Tribunal's order in question pertained to Assessment Years 1994-95, 1995-96, 1996-97, and 1997-98. The specific question of law was whether 90% of net receipts or 90% of gross receipts should be reduced for computing the deduction u/s 80HHC, disregarding clause (baa) of the explanation to section 80HHC. The Court noted that appeals for the subsequent assessment years had already been dismissed by the Division Bench on the same question of law. As there was no indication that the Division Bench's order had been overturned by the Supreme Court, the High Court upheld the consistent view and dismissed the appeal by the Revenue for Assessment Year 1994-95. No costs were awarded in this matter.

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