2008 (1) TMI 97

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....the extent of Rs. 3,45,120 ?" 3 In the instant case, the respondent preferred an appeal against the order of the Assessing Officer before the Commissioner (Appeals). The Commissioner (Appeals) held that the export profits for the purpose of deduction under section 80 HHC(1) shall be the profit related to the export of goods manufactured by the respondent computed by allocating over all profits of the business in the ratio of export turnover of the manufactured goods to the total turnover of the manufactured goods. The Commissioner (Appeals) also noted that the working of profit for the purpose of deduction under section 80 HHC (1) of the Income-tax Act has been introduced by the Finance (No. 2) Act 1991, and the provision has been clarif....

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....imum performance of the connected machineries and the development charges and service charges are collected by the assessee against rendering of such services. The Tribunal held that the consultancy and advisory activities carried on by the assessee is part and parcel of the business and, therefore, the Assessing Officer was not justified in excluding 90 per cent. of such charges from the computation of eligible business profits for the purpose of section 80 HHC and accordingly directed the assessing authority to compute the benefits available to the assessee under section 80 HHC with out excluding the development and service charges from the computation of the business profits of the assessee-company 5 On behalf of the appellant, learne....

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....he business profits. The court then observed as under (page 241): "In other words, receipts constituting independent income having no nexus with exports were required to be reduced from business profits under clause (baa). A bare reading of clause (baa) (1) indicates that receipts by way of brokerage, commission, interest, rent, charges, etc., formed part of gross total income being business profits. But for the purposes of working out the formula and in order to avoid distortion of arriving at the export profits, clause (baa) stood inserted to say that although incentive profits and 'independent incomes' constituted part of gross total income, they had to be excluded from gross total income because such receipts had no nexus with the ex....