2011 (9) TMI 797

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....pite the fact that only profits and gains from an industrial undertaking which manufactures articles was only allowable as per the said section? (2)  Whether the appellate authorities were correct in holding that the deduction under Section 35D of the Act is allowable despite the assessee not satisfying that an expenditure incurred before the commencement of the business or after the commencement of business in connection with the expansion of industrial undertaking or in connection with the setting up of a new industrial unit, as contemplated under Section 35D of the Act had not been complied with? 2. In so far as the first substantial question of law is concerned, a Division Bench of this Court in the case of CIT v. Gokuldas Ex....

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....computing what the profits derived from exports for the purposes of section 80HHC(1) read with section 80HHC(3) are, the nexus test has to be applied to exclude that which does not partake of profits that can be said to have been derived from the business of exports, (ii) In the specific context of clause (baa) of the Explanation to Section 80HHC, while determining the "profits of the business", the Assessing Officer has to undertake a two step exercise in the following sequence. He has to first "compute" the profits of the business under the head "Profits and gains of business or profession". In other words, he will have to compute business profits, in terms of the Act, by applying the provisions of Sections 28 to 44 thereof. (iii) In arri....

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....f any sum referred, to in clauses (iiia), (iiib) and (iiic) and section 28, i.e., export Incentives: (b) 90 per cent of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and (c) profits of any branch, office, warehouse or any other establishment of the assessee situate outside India (viii) The word "interest' in clause (baa) of the Explanation connotes "net interest" and not "gross interest". Therefore, in deducting such interest, the Assessing Officer will take into account the net interest i,e., gross interest as reduced, by expenditure incurred for earning such interest. (ix) Where, as a result of the computation of profits and gains of business and pr....