TaxTMI 
TaxTMI 
2006 (6) TMI 89
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....ribunal has allowed the appeal of the assessee and held that the interest and other income aggregating to Rs. 451.4 lakhs was includible under the head "Profits and gains of business" and was to be taken into consideration for computing deduction under section 80HHC of the Income-tax Act, 1961. The Revenue objected to the order of the Tribunal and reference was accordingly made. Admittedly the income was sought to be included under the head "Profits and gains of business" and computed in terms of section 80HHC of the Income-tax Act, 1961 (for short "the Act"). Section 80HHC of the Act lays down : "80HHC. (1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of expor....
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....is able to show that the income received by way of interest from the fixed deposit is derived from the export business, it will not be entitled to claim deduction under section 80HHC in respect of it" In another judgment reported in CIT v. Cochin Refineries Ltd. [1985] 154 ITR 345 the Kerala High Court held: "Profits and gains are well understood to mean only the business income, and not any other income. So long as the company has no business of lending money, and so long as the admitted case of the company is that the income derived is only on account of the peculiar situation arising from the time schedule for repayment of the loans, it cannot be stated that the income yielded by the deposits or investments was received in the course of....
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.... in business. Further, the assessee is an existing concern and it is not the case of receipt of interest during the pre-commencement period; nor is it a case of investment of share capital funds in the pre-commencement period. This is a case of investment of funds generated in the business as well as from out of the funds borrowed in the course of the business and, therefore, the income arising from such investments is to be properly set off against the interest payments made by the assessee in the course of its business. The transactions of interest payments and interest receipts in the context of a continuing business are interlinked and interrelated to each other and therefore they have to be looked upon as both sides of the same coin or....
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....der and the foreign buyer for which the assessee would get one per cent. commission named as reassortment. The said reassortment charges were essentially the commission received by the assessee from the local parties in India from their sale. The question before the court was whether these profits could be given the benefit under section 80HHC of the Act. This judgment held that such income could not be included in the business profits under the formula prescribed under section 80HHC of the Act. Learned counsel for the assessee has drawn our attention to clause (baa) of the Explanation to section 80HHC of the Act inserted by the Finance (No.2) Act, 1991, which was added by way of an amendment after the assessment order in question. This wa....
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....d./M. M. Forgings Ltd. [2002] 257 ITR 60 I the Madras High Court gave the following reason: "Let us now consider the interest earned by the assessee on the belated payments. There can be no doubt that this interest would, however, be directly relatable to the business of the assessee of forgings. If the purchasers of the forgings did not make the payments for the forgings and then agree to pay the interest on the delayed payments, the said interest would have direct nexus with the business of forgings. The true test would be whether such interest would be available to the assessee otherwise also. The answer to the question would be certainly in the negative. The interest being directly relatable only to the amounts receivable by the assess....