TaxTMI 
TaxTMI 
2012 (4) TMI 435
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....ductions under Section 80HHC read with Explanation (baa) of the Income Tax Act, 1961. 2) Whether the Income Tax Appellate Tribunal was correct in law in holding that profit from the sale of EDP receipts under the duty remission scheme cannot be excluded from the profits of business as per Explanation (baa) for purposes of computing the deductions under Section 80HHC of the Income Tax Act, 1961." 2. High Polymer Labs Ltd., the respondent-assessee is a company, which is engaged in exports. For the assessment year in question they had claimed deduction under Section 80HHC of the Act and for the purpose of computation had included (i) interest earned on FDRs which had been deposited with the bank to obtain credit facilities for the pur....
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....the head „income from business‟ and not under the head „income from other sources‟. To this extent, finding of the Tribunal is clear and lucid. 7. There is no doubt that the two incomes are not derived from exports but this aspect is not required to be examined by us. The assessee has also accepted the said position. The only question, raised is whether these two incomes can be taken into consideration while applying Explanation (baa) to Section 80HHC. The issue is no longer in dispute and has been answered in the case of ACG Associated Capsules Pvt. Ltd. Vs. Commissioner of Income Tax, Central-IV, Mumbai (2012) 3 SCC 321. In this decision, it has been held :- "11. Before we deal with the contentions of lear....
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....penses. After including such receipts of income and after deducting such expenses, the total of the net receipts are profits of the business of the assessee computed under the head "Profits and Gains of Business or Profession" from which deductions are to made under clauses (1) and (2) of Explanation (baa). 13. Under Clause (1) of Explanation (baa), ninety per cent of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in any such profits are to be deducted from the profits of the business as computed under the head "Profits and Gains of Business or Profession". The expression "included any such profits" in clause (1) of the Explanation (baa) would mean only such receipts ....
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....not only refer to the nature of receipts but also the quantum of receipts included in the profits of the business as computed under the head "Profits and Gains of Business or Profession" referred to in the first part of the Explanation (baa). Accordingly, if any quantum of any receipt of the nature mentioned in clause (1) of Explanation (baa) has not been included in the profits of business of an assessee as computed under the head "Profits and Gains of Business or Profession", ninety per cent of such quantum of the receipt cannot be deducted under Explanation (baa) to Section 80-HHC. 17. If we now apply Explanation (baa) as interpreted by us in this judgment to the facts of the case before us, if the rent or interest is a receipt chargeab....