Case Law Details
ACG Associated Capsules Pvt. Ltd Vs. CIT (Supreme Court)- Memorandum explaining the clauses of the Finance Bill, 1991 contained in 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 included in the profits of business of the assessee.
FULL TEXT OF THE JUDGEMENT IS AS FOLLOWS:-
Report able
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
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The apex court has upheld the view taken by the Special Bench of the Tribunal in Lalsons case on the issue of “netting” of interest, rent etc.That decision was authored by Sri R V Easwar, Judicial Member(as His Lordship then was) and the reasoning given by the apex court is exactly the same as given by the Tribunal.
The apex court has also explained the scope of its earlier decision in Ravindran Nair”s case which has been wrongly relied on by the Dept to deny many a legitimate claim of manufacturers.