TaxTMI 
TaxTMI 
2016 (8) TMI 226
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....to be excluded ? 3. The facts of the case are that the assessee claimed deduction u/s 801A in respect of other income amounting to Rs. 82,79,873/- . The assessing Officer disallowed the claim for deduction under section 801A in respect of other income amounting to Rs. 8279873/- . This disallowance included an amount of Rs. 68, 11, 960/- towards service charges and Rs. 1,79,254/- towards interest income. On appeal before the CIT (A) by the assessee, the CIT(A) confirmed the disallowance. 4. Being aggrieved by the order of the first appellate authority, the assessee preferred appeal before the ITAT and the ITAT vide impugned order directed the assessing officer to allow deduction u/s 801A in respect of the amount of Rs. 46,81,021/- which was in respect of forfeiture of advance. The Appellate Tribunal restored the matter to the file of the assessing officer to decide this issue after verifying from the accounts and related documents that the interest received by the assessee has nexus with the interest paid by the assessee. Being aggrieved by the said order, the present appeal is filed by the revenue. 5. Mrs. Bhatt assisted by Mr. MM Bhatt, learned advocate for the revenue contend....
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....will not be deducted under clause (1) of Explanation (baa) to section 80HHC. In other words, ninety per cent of not the gross rent or gross interest but only the net interest or net rent, which has been included int eh profits of business of the assessee as computed under the head Profits and gains of business or profession, is to be deducted under clause (1) of Explanation (baa) to section 80HHC for determining the profits of the business. In view of such decision, question No.3 raised by the Revenue gets automatically answered since the amounts referred to in the said question are to be excluded for the purpose of deduction under section 80HHC of the Act. Learned counsel for the Revenue vehemently contended that the ratio of the decision in the case of ACG Associated Capsules Pvt. Ltd (supra) cannot be applied to a situation where the exclusion from the claim of deduction relates to section 80HH or section 80I of the Act. He strenuously urged that the language used in both the sets of provisions are different. Section 80HHC is also vitally different and that therefore the concept of netting may not be automatically applied to deduction under section 80HH and 80I of the Act. He s....
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....urt in the case of Essel Shyam Communication (supra) held referring to the decision in the case of ACG Associated Capsules Pvt. Ltd. (supra). It is true that in the case of Bloom Decor Ltd., a question was suggested by the assessee which may have some bearing on the controversy on hand. However, the entire focus of the order of the Court was regarding applicability of the decision of the Supreme Court in the case of Topman Exports (supra) and not on the question of netting. In any case, therein, the decision in the case of ACG Associated Capsules Pvt. Ltd was not noticed." 6. The learned advocate for the revenue therefore, submitted that in view of the aforesaid decision, the same is not required to be conteted. 7. As far as issue no. [B] is concerned, it is contended that the Tribunal has seriously committed error in setting aside the factual findings arrived at by the CIT ( Appeals) and the assessing officer where the advances which were received was not for a particular unit. 8. Learned advocate appearing for the revenue contended that the order of the Appellate Tribunal is erroneous as the forfeiture of the advance is only for breach of contract and cannot be stated to have....
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.... the amount was to be treated as trading receipt and therefore, it has to be added as income of the assessee. The transferring of this amount to the capital reserve account unilaterally by the assessee by means of book entry was not an appropriate step. The following observations in T.V. Sundaram Iyengar & Sons Ltd. (supra) needs to be highlighted: "...If a common sense view of the matter is taken, the assessee, because of the trading operation, had become richer by the amount which it transferred to its profit and loss account. The moneys had arisen out of ordinary trading transactions. Although the amounts received originally was not of income nature, the amounts remained with the assessee for a long period unclaimed by the trade parties. By lapse of time-barred and the amount attained a totally different quality. It became a definite trade surplus. In Jay‟s case it was pointed out that in Tattersall‟s case (1939) 7 ITR 316 (CA) no trading asset was created. Mere change of method of book-keeping had taken place. But, where a new asset came into being automatically by operation of law, common sense demanded that the amount should be entered in the profit and loss acc....