TaxTMI 
TaxTMI 
2006 (9) TMI 97
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....ribunal was right in allowing the assessee's claim regarding deduction under section 80HHC by holding that the receipts such as interest, export incentive, octroi refund and sales in India should form part of the total profits to work out the total turn-over and qualifying profit ?" 3. The facts in nutshell are as under : 4. The assessee claimed deduction under Section 80HHC of Rs. 1,13,060/-considering the receipts like interest income, export incentive, sales excluding such receipts arrived at a business loss of Rs. 2,02,398/-. The Assessing Officer was of the opinion that the aforesaid sum was assessable under the head "other sources" and was not income from business activity and therefore he did not accept the assessee's plea to inclu....
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....e claim of the assessee under Section 80HHC of the Act by holding that the aforesaid income cannot be considered as business income. Therefore, the short question, which is required to be considered by this Court is whether the income of interest on deposits, amount of export incentive, octroi refund, and sales in India are forming part of the total profits to work out the total turnover and qualifying profit and the aforesaid receipts are required to be considered for deduction under Section 80HHC of the Act. 7. Shri Manish Bhatt, learned counsel appearing on behalf of the Revenue, has submitted that receipts such as interest, export incentive, octroi refund etc., cannot be considered to be an income out of business so as to claim deducti....
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....n (1) of Section 80HHC and has submitted that only in a case where an assessee being an Indian Company or a person resident in India who is engaged in the business of export out of India of any goods or merchandise, the provisions of Section 80HHC would be applicable and only that assessee can claim a deduction under Section 80HHC. It is submitted that the assessee Company was not an Indian Company and therefore they could not have claimed the deduction under Section 80HHC of the Income Tax Act. The sum and substance of the submissions on behalf of the learned counsel appearing for the Revenue is that any income derived by interest on deposit, the benefit of export incentive, amount received by way of octroi refund cannot be considered to b....
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....la High Court has further held that the interest earned by the assessee on fixed deposits, commission received on sale of machinery, etc., were not business income and consequently the assessee was not entitled to computation of eligible deduction under Section 80HHC of the Act by including those receipts under business income. Therefore, considering the aforesaid two decisions, we must hold that the Tribunal as well as the Commissioner of Income Tax (Appeals), both committed an error in treating the interest on deposits as 'business income' and granting the assessee the deduction under Section 80HHC of the Act. 10. In Commissioner of Income-Tax vs. Sterling Foods, [1999] 237 ITR 579, the assessee was engaged in processing prawns and other....
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.... incentives received by the assessee are part of export turnover and therefore entitled to relief under Section 80HHC or not, and the Allahabad High Court has held that, amount received as duty drawback, cash incentive and on transfer of import licence do not form part of export turnover and, therefore, not entitled to relief under Sec. 80HHC. Considering the aforesaid two decisions, one of the Apex Court and another of Allahabad High Court, we hold that the Tribunal as well as the C.I.T. (A) has committed an error in holding export incentive and octroi refund as business income and eligible for deduction under Section 80HHC of the I.T. Act. 12. So far as the amount received by the assessee for sales in India, and the claim of the assessee....