R P TARWAY CO Vs. ITO

JUDGEMENT

(1.) This appeal by the assessee is directed against order dated 2-7-1994, of the learned Commissioner (Appeals), Jamshedpur, for the assessment year 1996-97.

(2.) In the grounds of appeal the assessee has set forth as many as 3 grounds but in effect they are against the disallowance of deduction under section 80HHC of the Income Tax Act by prima facie adjustment as made by the assessing officer under section 143(1)(a) of the Income Tax Act.

(3.) The assessee is a partnership firm and engaged in the export business of mica and its bye-products. The assessee filed its return of income on 31-1-1997, showing therein nil income which was processed under section 143(1)(a) of the Income Tax Act determining total income at Rs. 1,52,596. While processing the return of income the assessing officer by way of prima facie, adjustment excluded the interest income for determination of allowable deduction under section 80HHC. Being aggrieved by that order the assessee carried the matter in appeal before the learned Commissioner (Appeals) and it was contended that the interest on the fixed deposits in the bank were, in fact, had nexus with the export business. It was said that from the disclosed turnover and business profit the assessee-firm made fixed deposits in the banks. The interest income was part and parcel of the export business and, as such, deduction under section 80HHC should be considered along with interest income. It was also said that even otherwise also since the matter was a disputed point, no disallowance should have been made by way of adjustment while processing the return of income under section 143(1)(a) of the Income Tax Act. Before the learned Commissioner (Appeals) reliance was also placed on the following decisions :