Section 80HHC computation included fixed deposit interest for the earlier assessment year, as the exclusion applied only prospectively.

For assessment year 1991-92, interest earned on fixed deposits was treated as part of business profits when recomputing deduction under section 80HHC. The later insertion of Explanation (baa) to section 80HHC indicated that interest and similar receipts were excluded from the deduction only from 1 April 1992, so the amendment did not apply to the earlier year. On that basis, the interest income remained includible in the business income computation for the relevant year, and the Revenue's challenge failed.

---

---

Issues: Whether interest earned on fixed deposits had to be included in business income while recomputing deduction under section 80HHC for the assessment year 1991-92.

Analysis: The issue was governed by the prevailing legal position for the relevant assessment year. The later insertion of Explanation (baa) to section 80HHC showed the legislative intent to exclude receipts such as interest and rent from the benefit of section 80HHC only with effect from 1 April 1992. For the year under consideration, the interest income formed part of the business profits for the purpose of computing the deduction.

Conclusion: The interest on fixed deposits was required to be included while recomputing deduction under section 80HHC, and the Revenue's challenge failed.

---