2000 (7) TMI 247

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....ts bye-products. The assessee filed its return of income on 31st Jan., 1997, showing therein nil income which was processed under s. 143(1)(a) of the IT Act determining total income at Rs. 1,52,596. While processing the return of income the AO by way of prima facie adjustment excluded the interest income for determination of allowable deduction under s. 80HHC. Being aggrieved by that order the assessee carried the matter in appeal before the learned CIT(A) and it was contended that the interest on the fixed deposits in the bank were, in fact, had nexus with the export business. It was said that from the disclosed turnover and business profit the assessee-firm made fixed deposits in the banks. The interest income was part and parcel of the e....

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....89 of 24th Aug., 1994, complied at pp. 1 and 2. He particularly drew the attention of the Bench towards item in which it was clarified that the items of the disallowance should be such that no two opinions are possible of their inadmissibility. According to him, the matter was debatable issued. He referred to the decision of the Bombay High Court in the case of Tanna Exports & Ors. vs. M.G. Kamat, Asstt. CIT & Anr. He also referred to the decision of the Tribunal, Hyderabad Bench, in the case of National Mineral Development Corporation Ltd. vs. Dy. CIT (1999) 63 TTJ (Hyd) 353 in which it has been held that disallowance of the deduction under s. 80HHC cannot be prima facie adjusted having recalculated the same. The learned authorised represe....

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....rdingly to him, in any case the disallowance of the deduction under s. 80HHC of the IT Act related to the debatable issue, was not justified. 5. Smt. Anita Sinha, the learned Departmental Representative of the Revenue, supported the order of the learned CIT(A). 6. I have heard the rival submissions and gone through the appeal records including the CBDT Circular No. 689, dt. 24th Aug., 1994, and the various decisions as referred to above, including letter dt. 17th Feb., 2000 for UCO Bank and also the P&L a/c. In my considered view, the matter in controversy as to whether the interest income on fixed deposits which has direct nexus with the export business has to be considered as business income or not, is a disputed point. Naturally no....