TaxTMI 
TaxTMI 
2007 (5) TMI 172
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....ether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that for the purpose of computation of deduction under section 80HHC of the Income-tax Act, 1961, sales tax and Central sales tax cannot be included in the total turnover ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in directing computation of interest income, portfolio income and rental income for the purpose of deduction under section 80HHC as per clause (baa) of the Explanation to section 8OHHC for computing the eligible profits and gains of business ?" 3 Briefly the facts are that the assessee in the present case is engaged in the business of manufacture, trading and export of cotton ....
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....ytex Ltd. [2008] 296 ITR 382 (P & H)) decided on May 22, 2006. Accordingly, for the reasons stated in Vardhman Polytex Ltd.'s case [2008] 296 ITR 382 (P & H), this question is answered against the Revenue and in favour of the assessee. Question No. 2 5 As far as question No. 2 is concerned, the dispute is with regard to inclusion of ("portfolio income" and "investment income") in the profits and gains of business while computing deductions under section 8OHHC of the Act. As is evident from the order of assessment, these two receipts were classified by the assessee itself as non-trade income in the balance-sheet, however, same were included under the head "Income from business" while computing deductions under section 80HHC of the Act, whi....
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....come and the assessment thereof under the head "Income from other sources" having been accepted by the assessee, there is no reason for inclusion of these two types of income in the income from business and profession for the purpose of computation of deduction under section 80HHC of the Act. The question of similar in nature as to whether the income which though does not form part of income from business and profession but still be considered under the same head for the purpose of calculation of deduction under section 80HHC of the Act was considered by this court in a separate order passed today in I. T. A. No. 153 of 2004 (CIT v. Nahar Exports Ltd. [2008] 296 ITR 419 (P & H)) and it was held therein as under (page 424) : "Relevant claus....
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....terest income earned by the assessee does not form part of the income from business or professions as computed at the time of assessment, there arises no question of deduction of 90 per cent. thereof for the purpose of calculation of deductions under section 80HHC of the Act. The question of deduction of 90 per cent. of the income in terms of clause (baa) of the Act would arise only if the same forms a part of the income from the business or profession. Any enabling provision for deduction of a part thereof pre-supposes inclusion of the entire under that head without which the pro vision cannot be given effect to. The interest income cannot be given two different treatment, i.e., while computing the income under various heads at the time o....
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....e of calculation of deduction under section 80HHC of the Act, as after including the same in the income from business or profession, the reduction, as envisaged under that provision, would be carried out. This is clear even from what the Tribunal has directed. Accordingly, we do not find any merit in this contention of the Revenue and hold that once the income is assessed as income from business or profession, the same has to be taken as such for the purpose of calculation of profits of the business in terms of clause (baa) of section 80HHC of the Act after reducing therefrom 90 per cent. of the amount, so referred in the clause.' In view of our above discussion, we find that the assessee having not raised any issue with regard to treatmen....