TaxTMI 
TaxTMI 
2010 (12) TMI 287
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....ecember, 1993 declaring an income of Rs.58,93,970/- after set off of brought forward unabsorded investment allowance of Rs.67,91,613/-. The return was processed under Section 143(1(a) of the Income Tax Act, 1961 on12th January, 1994, without making adjustments to the income returned. The case was taken up for scrutiny by issuing notice under section 143(2) of the Income Tax. After scrutiny, the assessment was completed whereby inter-alia the interest income declared by the assessee as income from the business was assessed as income from other sources under Section 56(2) of the said Act. Similarly, the Assessing Officer included miscellaneous income, dispatch income and insurance claim in the total turnover for the purpose of computing the a....
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....mputing deduction under Section 80HHC ? 4. The learned Counsel appearing for the Appellant has submitted that the authorities below have erroneously considered the interest received from the Banks and interest received from intercorporate deposits earned out of surplus funds by the Respondent as income from the business for the purpose of deduction under Section 80HHC. She further took us through the provisions of Income Tax Act and pointed out that the Appellate authorities have totally misconstrued the provisions of the Act and as such had come to an erroneous conclusion while passing the impugned orders. She further pointed out that the interest income cannot be considered to be business income as it has no relation with the ex....
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....he CIT (A) held that the activity of earning interest on short term deposit was a business activity of the Respondent. Learned Counsel has relied upon the judgment of this Court in the case of Alfa Laval India Ltd. V/s Deputy Commissioner of Income Tax reported in (2004) 186 CTR (Bom) 390. 6. Having heard the learned Counsel for the Appellant and the Respondent and on perusal of records, we find that the CIT (A) has held at para 14.8 that though the main object of the company is to extract iron ore and export the same, yet the assessee company is not barred from carrying on activity like the present one. In such a situation, it cannot be said that the assessee has not carried on business of placing various deposits and earning int....
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....therein had come to the conclusion that monies on which the interest was earned was not in the course of the assessee's business. This is not the case in the present case. In the judgment relied upon by the learned Counsel appearing for the Respondent in the case of Alfa Laval India Ltd. ( supra ), the Division Bench of this Court has held at paras 15, 16 and 17 thus : "15. Before us, Mr. Inamdar, learned Counsel for the assessee submitted that for computation of deduction under section 80-HHC what is relevant is the profits of the business as computed under the head 'profits & gains of business or profession. In the present case, the interest from customers, sales tax set off, claims, refunds, etc. under the caption 'other income....
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.... accepted. In the present case, the Assessing Officer has computed the income by way of interest from the customers, sales tax set off, claims, refunds, etc. under the head 'profits & grains of business or profession'. To put it differently, the A.O. has not assessed the interest income from customers, sales tax set off, etc. under the head 'income from other sources' or under any other head. Having assessed these income under the head 'profits and gains of business or profession', it was not open to the A.O. to treat these income as if assessed under the head 'income from other sources', so as to exclude the same from the business profits while computing the deduction under section 80- HHC of the I.T. Act. Perusal of the assessment order c....