2011 (2) TMI 536

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....p the appeal of the assessee in ITA No.1988/M/2010. The only dispute raised in this appeal is regarding deduction of 90% of lease rental income while computing the profit of business as per Explanation to section 80HHF(6). The assessee is in the business of running T.V. channels and in connection there with has also leased out IRD Boxes to be used by the TV owners from which the assessee received lease rental income. The assessee in the return of income had claimed that lease rental income was integral part of business income and therefore entire amount was eligible for deduction under section 80HHF. The claim had been allowed by the AO in assessment. However subsequently the CIT set aside the assessment order under section 263 and restored....

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....ccordingly confirmed the order of AO aggrieved by which the assessee is in appeal. The assessee has raised the following ground of appeal:-   "1. (i) The Hon.CIT(A) has confirmed deduction 90% of Lease Rental on IRD Boxes from Profit of the business for computing deduction under section 80HHF of the Act following Hon. ITAT's order that leasing is independent business not eligible for deduction under section 80HHF.   The Hon. CIT(A) ought to have held that deduction of 90% of Net Lease Rental Income (Gross Rental on IRD Boxes reduced by depreciation on IRD Boxes) from profit of the business for computing deduction under section 80HHF of the Act.   (ii) The Hon. CIT(A) failed to decide the issue of depreciation on IRD Boxes ....

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....at the entire lease rental income should be treated as part of the operational income and 90% of the same should not be deducted as per the Explanation to section 80HHF. The only ground raised by the assessee is that 90% of net rental income after reducing the depreciation should be considered. We find that this ground of netting had also been raised before the CIT(A) who has not adjudicated the same. As regards the plea of the Learned DR that it needed to be examined whether lease rental income could at all be considered as business income. We find that the revenue has not raised any dispute on this aspect against treatment of rental income as business income by CIT(A). Therefore such plea cannot be entertained. However since CIT(A) has no....

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....income and not income from other sources. The tribunal therefore did not find any infirmity in the order of AO deducting 90% of interest from profit of business treating the interest as business income. In the fresh assessment the AO treated the interest income as income from other sources and deducted 100% of the same from profit of business. CIT(A) however following the decision of tribunal dated 29.9.2009 held that interest income has to be treated as business income and 90% of the same is required to be deducted from the profit of business. Aggrieved by the decision of CIT(A) the revenue is in appeal.   3.1 We have heard both the parties perused the records and considered the matter carefully. The Learned AR for the assessee point....