TaxTMI 
TaxTMI 
2017 (8) TMI 1410
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.... ii) On the facts and circumstances of the case and in law would the interest receipt of Rs. 9,52,067/- not constitute "business income" for the purpose of computation of deduction u/s 80HHC of the Act.?" 3. However, the order of admission of the appeal was corrected by last order dated 17th July, 2017 when after hearing both the parties following order was passed:- "Heard counsel for the appellant. Mr. Jhanwar has pointed out the observation made by the Assessing Officer which reads as under:- "As far as the contention of the fall in the GP rate due to the increase in turnover is concerned, it is to be noted that such a huge fall in GP rate cannot be attributed to the increase in turnover. The quantifiable effect due to change in exchange rate difference and composition of trading account is 4.4% of the turnover. However, the fall in GP rate is from 28.66% to 20.33%. The assessee includes the duty draw back in the trading account. This year the duty draw back consists of 10.1% of the turnover, while this ratio was 10.6% in the AY 2003-2004. Thus, there is 0.5% fall in the GP due to the decline in the duty draw back ration. Thus, 4.9% fall in the ....
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.... the production of various items shown in the books was not verifiable due to reasons mentioned by the AO, in our view the lower authorities were justified in making and upholding the invocation of provisions of section 145(3) of the Act. Under similar circumstances in the assessment year 2003-04 the Tribunal in the above referred appeal of the assessee has sustained the application of provisions of section 145(3) of the Act. The ground no. 1 is thus rejected and ground no. 1.1 is partly allowed." Mr. Mathur requests for time to take instructions. List on 28th August, 2017. The question of law No. 1 is corrected by substituting gross profit @ 28.86% instead of 23.86%." 4. Even today, when the matter was argued, counsel for the appellant contended that the GP rate which has been finalised by the AO for the current year was 31%. However, ITAT for the assessment year 2003-04 of the assessee has fixed GP 28.86% which is clear from the order at Annexure-1. Out of GP rate, the following deduction was allowed by the AO itself against which the department has not preferred any appeal and extended difference is of 0.9% of the turnover and towards power & fuel e....
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....any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in any such profits are to be deducted from the profits of the business as computed under the head "Profits and Gains of Business or Profession". The expression "included any such profits" in Clause (1) of the Explanation (baa) would mean only such receipts by way of brokerage, commission, interest, rent, charges or any other receipt which are included in the profits of the business as computed under the head "Profits and Gains of Business or Profession". Therefore, if any quantum of the receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature is allowed as expenses under Sections 30 to 44D of the Act and is not included in the profits of business as computed under the head "Profits and Gains of Business or Profession", ninety per cent of such quantum of receipts cannot be reduced under Clause (1) of Explanation (baa) from the profits of the business. In other words, only ninety per cent of the net amount of any receipt of the nature mentioned in Clause (1) which is actually included in the profit....
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.... the circular dated 19.12.1991 of the Central Board of Direct Taxes to come to the conclusion that the Parliament intended to exclude items which were unrelated to the export turnover from the computation of deduction and while excluding such items which are unrelated to export for the purpose of Section 80HHC, Parliament has taken due note of the fact that the exporter Assessee would have incurred such expenditure in earning the profits and to avoid a distorted figure of export profits, ninety per cent of the receipts like brokerage, commission, interest, rent, charges are sought to be excluded from the profits of the business. In our considered opinion, it was not necessary to refer to the explanatory Memorandum when the language of Explanation (baa) to Section 80HHC was clear that only ninety per cent of receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits computed under the head profits and gains of business of an Assessee could be deducted under Clause (1) of Explanation (baa) and not ninety per cent of the quantum of any of the aforesaid receipts which are allowed as expenses and therefore not incl....