(1.) THIS appeal has been preferred by the Revenue, under Section 260-A of the Income Tax Act against the order of the Income Tax Appellate Tribunal in C Bench, Chennai in ITA No. 1594/mds/1998 dated 24. 07. 2002 and the appeal was admitted in terms of the following substantial question of law:-
(2.) THE facts leading to the above question of law are as under: (i) The assessee is a specified HUF. The assessment year is 1995-96 and the corresponding accounting year ended on 31. 03. 1995. The assessee filed his return of income on 29. 11. 1995 admitting a gross total income of Rs. 9,66,389/- and claiming deduction of an amount of Rs. 9,37,057/- under Section 80-HHC. The case was proceeded under Section 143 (1) (a) and notice under Section 143 (2) was issued. The assessee is engaged in business of export of finished leather. During the year, the assessee had received interest of Rs. 2,65,019/- but he had not shown the interest receipt in the credit side of Profit and Loss account. Instead he had debited the interest (net) at Rs. 6,59,946/- and the details of interest he had shown is as under: <FRM>JUDGEMENT_773_TLMAD0_2006Html1.htm</FRM>
(3.) THE learned counsel for the Revenue submitted that the relevant provisions referred to the exclusion of 90% of "receipt" in the nature of inter alia interest and not "income" of that nature and further submitted that the intention of the legislature is that, there should be no attempt to deduct any expenditure from the receipts, howsoever related the said expenditure may be to the receipts. The expression "receipts" has been used in the Section and hence, the Assessing Officer was right in not taking into account the interest payment of Rs. 9,24,967/- and he is also right in reducing the deduction under Section 80-HHC by 90% of the interest income of Rs. 2,65,019/ -.