COMMISSIONER OF INCOME TAX Vs. MYSORE FINE AGARBATI

JUDGEMENT

(1.) THIS appeal u/s. 260A of the Income Tax Act, 1961 is filed against the judgment and order dated 24.03.2006 passed by the Income Tax Appellate Tribunal, Rajkot Bench in ITA No. 661/RJT/05 for the A.Y. 1999 -2000 whereby, the appeal filed by the Revenue was dismissed.

(2.) THE facts in brief are that the assessee is a manufacturer and export of incense sticks operating from the erstwhile Kandla Free Trade Zone. The assessee had filed the return of income on 22.10.1999 declaring total taxable income at Rs. 73,220/ -. Since the turnover exceeded the prescribed limit, the tax audit report was duly filled -in along with the return of income. The assessee, being an exporter, had claimed deduction u/s. 80HHC. Assessment scrutiny was undertaken and ultimately, the Assessing Officer passed the order of assessment u/s. 143(3) of the Act on 27.03.2002.

(3.) MR . Pranav Desai learned Standing Counsel appearing for the Revenue submitted that the Appellate Tribunal overlooked that deduction u/s. 80HHC of the Act relates to profits of the business as computed under the profits and gains of the business or profession and the said interest is not attributable to business activity of export. It was submitted that since the said amount was deposited in the bank, the interest was earned and therefore, the explanation (baa) of the Act was rightly invoked.