Income Tax : Supreme Court clarifies Section 80HHC deduction for Export-Oriented Units, emphasizing that profits eligible for deduction must be...
Income Tax : In the last quarter of the financial year 2000-0 1, a serious controversy arose in the Income-Tax Department and export circles of...
Income Tax : In the present case, according to the Finance Minister presenting the Bill, a valid piece of legislation has been wrongly interpre...
Income Tax : ITAT Bangalore held that interest on bank deposits from operational funds of a co-operative credit society is eligible for deducti...
Income Tax : Tribunal directed allocation of common head-office expenses (and common income) to eligible industrial undertakings when computing...
Income Tax : The High Court ruled that sales tax exemption retained by an industrial unit was capital in nature because it was granted to encou...
Income Tax : The Court held that losses already set off in earlier years cannot be notionally carried forward for computing deduction under Sec...
Income Tax : ITAT Bangalore held that at the relevant time co-founder of Flipkart stayed in India for 141 days and balance days in other countr...
Addl. CIT v Weizmann Ltd. ITAT, Mumbai * As long as the assessee has sufficient interest free funds, the presumption to be taken is that the investments are made out of such interest free funds. Mere fact of allowing interest free advance at a rate lower than the rate on which borrowings are made, cannot justify the disallowance of interest on borrowed funds. The CIT(A) was justified in making ad-hoc disallowance on account of foreign travelling expenses since the complete details of expenses were not provided by the assessee.
We hold that Section 80IA(9) does not affect the computability of deduction under various provisions under heading ‘C’ of Chapter VIA, but it affects the allowability of deductions computed under various provisions under heading ‘C’ of Chapter VIA, so that the aggregate deduction under Section 80IA and other provisions under heading ‘C’ of Chapter VIA do not exceed 100% of the profits of the business of the assessee. Our above view is also supported by the C.B.D.T. Circular No.772 dated 23121998, wherein it is stated that Section 80IA(9) has been introduced with a view to prevent the taxpayers from claiming repeated deductions in respect of the same amount of eligible income and that too in excess of the eligible profits.
Whether on the facts and in the circumstances of the case and in law, the Tribunal was erred in holding that while computing direct cost attributable to export the freight and insurance amounting to Rs.1,71,87,614/should be excluded for arriving at export profits while computing the deductions u/s. 80HHC.
These appeals were heard together and are being disposed of by this common judgment inasmuch as the question of law framed in both the appeals is identical and the circumstances are also virtually identical. The question of law that has been framed in these appeals is as under
CIT Vs. Kalpataru Colours and Chemicals – section 28(iiid) covers only the “profit” (difference between sale consideration and face value of the DEPB credit) and that the “face value” is assessable u/s 28(iiib) is not correct. The entire amount received on transfer of the DEPB credit is “profits” and falls under s. 28(iiid). There was no basis or justification for the Tribunal to hold that the face value of the DEPB credit can be reduced from the sale consideration. It is not permissible to bifurcate the proceeds of the DEPB into “face value” and “excess of face value”. The approach of the Tribunal is misconceived and unsustainable. As the assessee had an export turnover exceeding Rs.10 crores and did not fulfill the conditions set out in the third proviso to s. 80HHC (3), it was not entitled to a deduction u/s 80HHC on the amount received on transfer of DEPB.
section 80HHC, Deduction under Section 80HHC, Bombay High Court, export turnover,deduction under section 80HHC
Explanation (baa) to s. 80HHC defines the term “profits of the business” to mean business profits as reduced by 90% of .. “receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature“. The Tribunal took the view, on the basis of Bangalore Clothing 260 ITR 371 (Bom) that receipts towards recovery of freight, insurance
In the present case the assessee had taken loans from the bank on which the interest was paid and as a security for those loans, FDRs in question were kept with the bank and, therefore, the assessee was entitled to the netting of interest for the interest income and expenses thereto. This is also categorically answered in Shri Ram Honda (supra). The Court was of the opinion that even in a case where the exporter is required to mandatorily keep monies in fixed deposit, in order to avail credit facility for the export business, and interest earned on fixed deposits for the purpose of availing of credit facilities from the bank, it was held that the interest income has to be treated as “income from other sources” and not business income as it does not have an immediate nexus with the export business.
Assessing Officer has not made out any case for disallowing even a part of deduction allowable under Section 80IA. Once any condition laid down under Sub Section 10 of Section 80IA are not satisfied that Sub Section cannot be invoked and therefore no disallowance of deduction under that section can be made.
Explore the intricacies of Section 263 under the Income Tax Act with the Supreme Court’s perspective in Commissioner Of Income-Tax vs. Max India Limited (2007) 295 ITR 282. The retrospective amendment in 2005, addressing the complexities of Section 80HHC, does not trigger Section 263. The court emphasizes the existence of two plausible views on ‘profits’ at the time of the Commissioner’s order in 1997. Uncover the nuanced interpretation of ‘prejudicial to the interests of the revenue’ and the significance of the 2005 amendment in this insightful judgment.
