Bombay High Court
Commissioner Of Income-Tax vs S.G. Jhaveri Consultancy Ltd. on 8 August, 2000
Equivalent citations: [2000]245ITR854(BOM)
Author: S.H. Kapadia
Bench: S.H. Kapadia, R.M.S. Khandeparkar
JUDGMENT S.H. Kapadia, J.
1. This appeal has been filed by the Department. It concerns the assessment year 1980-90. The assessee is a manufacturer, trader and exporter of diamonds. While calculating the deduction under Section 80HHC(3), the assessee included labour charges, assistance and service charges as also interest in the business profits while applying the formula: Business profits X Export turnover/Total turnover. The Assessing Officer rejected the calculations submitted by the assessee. However, the Tribunal has accepted the claim of the assessee for inclusion of the above items in the business profits in the above formula. Hence, the Department has come in appeal. In the case of CIT v. K.K. Doshi and Co. [2000] 245 ITR 849 (Bom), in Income-tax Appeal No. 77 of 2000, this court has taken the view that receipts like interest, commission, etc., cannot be included in the business profits as the said items do not have any linkage with the export activities. This court has held that a combined reading of Clauses (b) and (ba) of the Explanation to Section 80HHC shows that the business profits in the above formula did not include receipts by way of brokerage, commission, interest, rent or any other receipt of a similar nature as they do not have any nexus with the sale proceeds from export activities. In view of the said judgment, tins appeal is allowed with no order as to costs.
2. C. C. expedited.