Case Law Details
RELEVANT PARAGRAPH
11. The learned counsel for the assessee has vehemently argued that in this case interest from deposit was offered as business income and was also assessed as business income and therefore, automatically once it is assessed as business income then the same becomes eligible for deduction u/s.10B.
On careful consideration we find that though these arguments look attractive but not correct. For this we have to refer to the famous decision of the Hon’ble Supreme Court in the case of CIT vs. Sterling Foods (supra). In that case the question arose whether receipt from sale of import entitlements was eligible for deduction u/s.80HH.
The Hon’ble Supreme Court noted that identical question came before the Hon’ble High Court for an earlier year and the High Court had answered the question against the assessee in Sterling Foods vs. CIT (150 ITR 292). It was further noted that in this year, the Hon’ble High Court has taken a different view. If we go through the decision of Hon’ble Karnataka High Court in the case carefully, which is reported at 190 ITR 275, then we find that a different view has taken by the Hon’ble Karnataka High Court because section 28 had itself been amended by the Finance Act, 1990 with effect from April 1, 1962 by insertion of clause (iiia) and clause (iiib) with effect from 1.4.1967. After noting this amendment the Hon’ble High Court reproduced the provisions of clause (iiia) and (iiib) and then observed as under:
“Section 28 provides for what income shall be chargeable to income tax under the head “Profits and gains of business or profession”. Therefore, by the amendment effected to section 28, what was held by this court not to be an income arising out of profits and gains of business or profession, by operation of law, has become such income. Therefore, once it becomes income, automatically, the benefits conferred by section 80HH will be attracted to the case of the assessee.”
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My Client is running a manufacturing unit in j&K AND claming Deduction 80IB During the course of BUSSINES the assess has earned interest of Rs 34.11 lacs on bank FDRS AND Rs 23.20 lacs interest now AS per assessment order interest income has not been risen from manufacturing activity and thus was not eligible for deduction under section 80IB
HOW INTEREST RS 34.11 IS RECEIVED
As the assess is importing raw material for various countries .The payment is made through letter of credit for whic Bank gurentee is required so fdrs were taken so that margin of 25% is given out of them this how rs 34.11 interest is earned
how interest Rs 23.20 is RECEIVED
AS PER TERM & AGREEMENT SUPPLIES TO DEBTOR ARE RECIVIBLE IN 180 DAYS BUT PAYMENT IS RECEIVED IN 300 DAYS OVER DUE CHARGES ARE RECEIVED FOR SUPPLIER
PLEASE LET ME NO WHETHER IT IS ALLOWED U/S80IB OR NIT