TaxTMI 
TaxTMI 
2004 (9) TMI 565
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....t payment and further erred in upholding the addition without appreciating the fact that the borrowed funds for the business were lent as and when funds were not required and in order to reduce the cost of interest and as such, the net interest was accounted in profit and loss account. (ii)That the learned CIT(A) ought to have considered the decision of the Special Bench of Delhi Tribunal in International Research Park Laboratories Ltd. v. Asstt. CIT [1994] 50 ITD 37 and also the decision in A.M. Shamsudeen v. Union of India [2000] 244 ITR 266^1 (Mad.). (iii)That the learned CIT(A) ought to have considered that the Assessing Officer had no ground to reopen the assessment and to disturb the rebate claimed which is legitimate and in acc....
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....ly. He further contended that the learned first appellate authority travelled beyond his jurisdiction by saying that nexus is not established. On the other hand, Mr. Rajender the learned Senior DR in nutshell supported the orders of the first appellate authority and placed reliance upon the decision of the Hon'ble Special Bench of the Delhi Tribunal pronounced in Lalsons Enterprises v. Dy. CIT [2004] 89 ITD 25 , which was again controverted by the learned counsel for the assessee by arguing that the amount was borrowed for business purpose only and the assessee is having no other business. We have considered the rival contentions. 4. On perusal of record and after hearing the rival contention, we have found that the Assessing Officer ded....
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....92, the formula that existed before that date for computing the export profits on which deduction was to be allowed gave a distorted figure "when receipt like interest, commissions, etc., which do not have element of turnover are included in the profits and loss account" and it was with a view to remove the distortion that it was clarified through the Explanation that 'profits of the business' for the purpose of section 80HHC will not include receipts by way of brokerage, commission, interest, rent, charges or another receipt of a similar nature. As some expenditure might be incurred in earing these incomes, which in the generality of cases is part of common expenses, ad hoc 10 per cent deduction from such incomes is provided to account for....
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....rred in relation thereto. The word 'profits' conveys the same meaning as 'net income' i.e., 'gross receipts minus expenses having a nexus'. The principle of netting is pressed into service not on the basis of the theory of real income but on the basis of the computation provisions relating to the business income. If the interest received is found to have a nexus with the business, still it remains to be excluded from the profits of the business by virtue of Explanation (baa)(1), but the claim is that the quantum of such interest income to be excluded must be determined in accordance with the computation provisions relating to business by allowing expenditure by way of interest. The word 'profits' itself implies the principle of netting (gro....