TaxTMI 
TaxTMI 
2026 (6) TMI 1498
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.... treating the interest of Rs.1,23,569/- earned on Bank Deposit as taxable under the head "Income from other sources" and the deduction was denied under Section 80-HHC on such income. Aggrieved by the said order, the assessee had preferred appeal before the Commissioner of Income Tax (Appeals)-II, Coimbatore. The said appeal was allowed in favour of the assessee treating interest income on Fixed Deposit assessable under the head "business" and not under the head "other sources" 2. Regarding the simultaneous deduction under Section 80-IB and Section 80-HHC, the appellate authority held that the provisions of Section 18-IB(9) are only to regulate the deduction eligible under Chapter VI-A and there is no restriction contained therein to regu....
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....fter, a deduction under Section 80-IB of the Act ? 6. In the course of hearing this appeal, learned counsel on either side placed before this Court, a judgment of the Honourable Supreme Court in the case of Shital Fibres Limited Vs. CIT, reported in (2025) 174 Taxmann.com. 807 (SC), which covers the substantial questions of law involved in this appeal. The Honourable Supreme Court in the above said case, held as follows: "16. ... ... Section 80-HHC provides for a deduction in respect of profits retained for export business. The provision is applicable to a company or a person engaged in business of export out of India of any goods or mercantile to which the Section applies. In computing the total income, the assessee is entitled....
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.... assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of this Chapter under the heading "C"-Deductions in respect of certain incomes', and shall in no case exceed the profits and gains of such eligible business of undertaking or enterprise, as the case may be. Let us analyse Sub-section (9). It is applicable where any amount of profits and gains of an undertaking or enterprise is claimed and allowed under Section 80-IA. As stated earlier, the deduction is to the extent of percentage of profits and gains derived from certain category of business. Sub-section (9) of Section 80-IA provides that the deduction to the extent of profit or gain shall not be allowed under any oth....
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....', the deduction allowed under Section 80-IA should be deducted from the gross total income. The restrictions under sub-section (9) of Section 80-IA is not on computing the total gross income. It restricts deduction under any other provision under heading 'C' to the extent of the deduction claimed under Section 80-IA." 7. In view of the above authoritative pronouncement of the Honourable Supreme Court in the said Shital Fibres Limited case, the matter has to be remanded back for re-computing the tax by following the dictum laid down by the Apex Court in the said Shital Fibres Limited case. 8. Hence, in respect of the first substantial question of law, the matter is remanded back to the Assessing Officer to re-compute the tax payable b....