S.80HHC:Export business-Computation-Profits of the business-Interest from money lending is not excludible
for purpose of applying formula for computing export profits for earlier year- law is amended with effect from
Assessment year 1992-93. (S.80AB)
The assesseeis an individual engaged in export business. For the assessment year 1991-92, he claimed deduction of Rs. 33,63,149 under section 80HHC of the Income-tax Act, 1961. The income-tax authorities objected that the interest income, even if it was assessed as business income on the footing that the assessee was carrying on moneylending business, represented domestic profits and not export profits and, therefore, a mechanism should be devised by which the domestic profits were excluded from the profits of the business for the purpose of applying the formula prescribed by section 80HHC. The Tribunal held that the domestic business need not have any nexus with the export business for the purpose of deduction under section 80HHC and hence interest income could not be excluded from the profits of the business. On appeal the Court held that the amendment made to clause (baa) of the Explanation below section 80HHC defined "profits of the business" in such a manner as to exclude receipts like interest, commission, etc., which did not have an element of turnover, was introduced prospectively by the Finance (No. 2) Act, 1991, with effect from the assessment year 1992-93 and the amendment did not operate retrospectively. Therefore, for the assessment years prior to the assessment year 1992-93, it would not be permissible to exclude interest receipts even if the business from which interest arose did not have an element of turnover. Appeal ofrevenue was dismissed. (A.Y.1991-92)
No comments:
Post a Comment