2016 (12) TMI 358

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....st of Rs. 5,12,574/- and also made payment of interest of Rs. 5,00,395/-. The AO and the ld. CIT(A) held that there is no nexus between the business income and income from the interest. Therefore, they held that interest is to be assessed under head income from the sources. The ld. CIT(A) observed at page 2 of her order that the assessee did not borrow any money for business purposes during the year under consideration and the interest outgoings relate to the borrowings made in the earlier years. The loans given during the year are out of the surplus income generated out of the export sales. There is no organized activities of borrowing and lending money. The ld. CIT (A) placed reliance on the case of CIT Vs. Rejasthan Land Development Corp....

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....e, the ld. Tribunal was right in observing that interest u/s.244A cannot be withdrawn but in directing to rectify under Section 154 of the I.T. Act?" 4. Counsel for the appellant contended that the issues No.1 to 3 are required to be decided together in view of the provisions Section 80HHC of the Income Tax Act, in explanation (baa) which reads as under: "profits of the business" means the profits of the business as computed under the head "Profits and gains of business or profession" as reduced by- (i) ninety per cent of any sum referred to in clauses (iiia), (iiib) [(iiic), (iid) and (iiie)] of section 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar natu....

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....be deducted under clause (1) of Explanation (baa) to section 80HHC for determining profits of business- Held, yes [In favour of assessee] 2. Section 80HHC, read with sections 28(iiid), of the Income Tax Act,1961- Deductions -Exporters- Assessment year 2003-04- Whether not entire amount received by assessee on sale of DEPB by assessee under section 28(iiid) for purpose of Explanation (baa) to section 80HHC- held, yes [In favour of assessee]." 6. Counsel for the department has relied on decision of this Court in case of Kushal Kishore Agarwal vs. The Income Tax Officer & Ors. in DB Income Tax Appeal No.124/20026, decided on 09.11.2016 and in case of Dhadda Exports vs. I.T.O. Jaipur in DB Income Tax Appeal No.62/2003, decided on 08....