COMMISSIONER OF INCOME TAX Vs. SHARADHA INDUSTRIES

JUDGEMENT

(1.) THIS appeal is directed against the order of the Income Tax Appellate Tribunal dated 26. 6. 2003 made in ITA No. 387/mds/1996 for the assessment year 1993-94, raising the following substantial question of law:

(2.) HEARD Mrs. Pusha Sitaraman, learned Senior Standing Counsel for the Revenue and Mr. T. N. Seetharaman, learned counsel for the respondent/assessee.

(3.) THE learned Standing counsel for the Revenue submitted that the issue involved in this appeal is answered in favour of the Revenue by the decision of this Court in CIT v. V. CHINNAPANDI, [2006] 282 ITR 389. Though it was submitted by Mr. T. N. Seetharaman, learned counsel for the assessee that the said decision is not applicable to the facts of the case, on going through the law laid down as under in the said decision, we are convinced that the ratio laid down in the said decision is applicable to the facts of the case on hand in all fours: "section 80hhc of the Income-tax Act, 1961, stipulates that "profits of the business" for the purpose of section 80hhc of the Act mean the profits of the business as computed under the head "profits and gains of business or profession". While computing such profits under the head "profits and gains of business or profession", if any receipt by way of brokerage, commission, interest, rent charges or any other receipt of a similar nature included in such profits, the same has to be reduced by 90 per cent from the profits computed as aforesaid. The deductions to be made are from the amount of profits so computed and not from the amount computed under any other head of income of that assessee. No reference to net interest is mentioned in clause (baa) of the Explanation to section 80hhc (4b ). Section 80hhc stipulates a deduction in respect of export profits. Instead of enjoining the Assessing Officer to compute such export profits from out of the consolidated amount of income of the assessee, which may involve income by way of interest, rent, commission, etc. , the Legislature has provided a simple procedure under which 90 per cent. of the receipts such as interest, rent, commission, brokerage, etc. , shall be excluded as profits not attributable to exports. The intention is therefore clear that there should be no attempt to deduct any expenditure from the receipts however related such expenditure may be to the receipts. It is in this sense that the expression "receipt by way of" has been used in the section and not "income" of that nature. Ninety per cent. that is deductible for the claim under section 80hhc of the Act is from the gross interest received by the assessee and the amount of interest paid by the assessee should not be deducted therefrom. " (emphasis supplied)