COMMISSIONER OF INCOME TAX Vs. PUNIT COMMERCIAL LIMITED

JUDGEMENT

(1.) SINCE all the above three appeals deal with common question of fact and law they are jointly disposed of by this judgment.

(2.) ASSESSEE is 100 per cent exporter. The assessee is wholly engaged in export business. The entire business income is from exports. The assessee credited in the P&L a/c for the asst. year 1989 - 90, interest income while working out the deduction under S. 80HHC by considering these amounts as part of business profit. The AO held that interest income cannot be treated as profit relating to business exports and accordingly, while working out the business profits for the purposes of s. 80HHC, the AO reduced the interest income from the business profit. The AO held that the deduction under S. 80HHC was meant for the assessee who earned profits from exports and any business profits other than from export activity was not eligible for deduction under S. 80HHC. Being aggrieved, the assessee filed an appeal to the CIT(A). Both the first appellate authority and the Tribunal found, on facts, that the assessee was 100 per cent exporter. That, S. 80HHC(3)(a) was applicable to the facts of the case and, therefore, the AO erred in reducing the interest income from the business profits of the assessee. Being aggrieved by the decision of the Tribunal, the Department has come in appeal under S. 260A.

(3.) WE do not find any merit in the above contentions. At the outset, it may be mentioned that the grounds of appeal are vague. None of the above contentions find place in the memo of appeal. The statement of facts in the memo of appeal are also not borne out by the facts of the case. In the statement of facts vide para 4(a), it is mentioned that the AO has treated the interest income as income from other sources whereas the impugned judgment and the order of AO proceed on the footing that the interest income was the business income, but it was not an income from exports . Hence we refuse to go into larger questions of law canvassed by the learned counsel for the Department. Suffice it to say that in this matter, the assessee is 100 per cent exporter. In this case, S. 80HHC(3)(a) is applicable as the assessee is a 100 per cent exporter. Hence, the entire business income is deemed to be profit derived from export of goods. Therefore, the interest income could only fall under "business income". Sec. 80HHC(3)(a) deals with 100 per cent exporter whereas S. 80HHC(3)(b) deals with composite business. In the latter case, local sales are included. Hence, the entire profits are entitled to deduction. This would include interest income also. In the circumstances, the above appeals stand dismissed with costs.