2020 (2) TMI 582

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.... excluded from the eligible profits of business for section 80HHC of Income Tax Act. ii) Whether on true and correct interpretation of Section 80HHC read with Section 10B(6)(iii) of the Income Tax Act the tribunal has erred in holding that report turnover of the unit whose profits are allowed a deduction under Section 10B of the Income Tax Act is not to be included in the export turn over for the purpose of calculating the deduction under Section 80HHC of the Income Tax Act, 1961? iii) Whether on true and correct interpretation of Section 80HHC read with Section 80-IA/80-IB of Income Tax Act, the Income Tax Appellate Tribunal erred in holding that amounts of profits of Auro Unit V, eligible for deduction under Section 80-IB of Income Tax Act are to be excluded while calculating eligible profits for deduction under Section 80HHC of Income Tax Act? iv) Whether the Income Tax Appellate Tribunal is correct in law in holding that gross interest received from suppliers without adjusting interest paid on working capital borrowings should be excluded from eligible profits for deduction under Section 10B of Income Tax Act? v) Whether the Income Tax Appell....

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....its of the business" means the profits of the business as computed under the head "Profits and gains of business or profession" as reduced by-- (1) ninety per cent of any sum referred to in clauses (iiia), (iiib), (iiic), (iiid) and (iiie) of section 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and (2) the profits of any branch office, warehouse or any other establishment of the assessee situate outside India:" The explanation provides for reduction from the "profits and gains of business or profession", receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature. Depreciation is not receipt of a similar nature as mentioned in the explanation. Supreme Court in Acg Associated Capsules P. Ltd.'s case (supra) held that the explanation is to be construed as per the plain natural meaning of the words in it. Relevant portion is reproduced below: 9. Explanation (baa) extracted above states that "profits of the business" means the profits of the business as computed under the head "Profits and Gains of Business....

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....planation (baa) has to be construed on its own language and as per the plain natural meaning of the words used in Explanation (baa), the words "receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits" will not only refer to the nature of receipts but also the quantum of receipts included in the profits of the business as computed under the head "Profits and Gains of Business or Profession" referred to in the first part of the Explanation (baa). Accordingly, if any quantum of any receipt of the nature mentioned in clause (1) of Explanation (baa) has not been included in the profits of business of an assessee as computed under the head "Profits and Gains of Business or Profession", ninety per cent of such quantum of the receipt cannot be deducted under Explanation (baa) to Section 80HHC." The receipts mentioned in the explanation are the actual payments received like brokerage etc. The phrase "receipt of similar nature" will not increase its scope to include depreciation which is not on same footing as brokerage, commission etc. The finding recorded by the Tribunal on the said issue is upheld. The question....

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....undertaking begins to manufacture or produce articles or things or computer software as the case may be, shall be allowed from the total income of the assessee. xx xx xx (4) For the purposes of sub-section (1), the profits derived from export of articles or things or computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking." Sub-section (4) to Section 10B of the Act gives a formula for working out the profits from export of articles. Once it is held that interest on delayed payment relating to export is eligible under Section 10B of the Act, thereafter the calculation is to be done as per sub-section (4) to Section 10B of the Act. The decision of the Tribunal allowing only interest relating to export sales under Section 10B of the Act is upheld, however, the directions for verification are modified to the extent that the Assessing Officer shall assess the interest received on delayed payments as per provisions of Section 10B(4) of the Act. The q....