{"id":4298,"date":"2012-02-09T15:38:45","date_gmt":"2012-02-09T15:38:45","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=4298"},"modified":"2012-02-09T15:38:45","modified_gmt":"2012-02-09T15:38:45","slug":"acg-associated-capsules-pvt-ltd-vs-cit-supreme-court-for-expl-baa-to-s-80hhc-netting-of-income-from-expenditure-is-allowed","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/acg-associated-capsules-pvt-ltd-vs-cit-supreme-court-for-expl-baa-to-s-80hhc-netting-of-income-from-expenditure-is-allowed\/","title":{"rendered":"ACG Associated Capsules Pvt. Ltd vs. CIT (Supreme Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (associated_capsule_80HHC_netting.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nFor Expl (baa) to s. 80HHC, netting of income from expenditure is<\/em> allowed<\/strong><\/p>\n

The AO & CIT(A) computed s. 80HHC deduction by deducting 90% of the gross<\/em> interest received from the profits of business. However, the Tribunal, relying on Lalsons Enterprises<\/a><\/strong> 89 ITD 25 (Del) (SB) & Shri Ram Honda Power Equip<\/strong> 289 ITR 475 (Del), held that only the net<\/em> interest could be deducted (subject to nexus<\/em> between the expenditure and income being proved). On appeal by the department, the High Court (CIT vs. Asian Star Co Ltd<\/a><\/strong> 326 ITR 56 (Bom)) reversed the Tribunal and held that the gross receipts had to be excluded. On appeal by the assessee, HELD reversing the High Court:<\/p>\n

Under Clause (1) of Explanation (baa) to s. 80HHC, 90% of any receipts by way of brokerage, commission, etc “included in any such profits<\/em>” have to be deducted from the profits & gains of business. The expression \u201cincluded any such profits<\/em>\u201d means such receipts by way of brokerage, commission, etc included in the profits & gains. Therefore, if any quantum of receipts by way of brokerage, commission, etc is allowed as expenses u\/s 30 to 44D and is not included in the profits of business, 90% of such quantum of receipts cannot be reduced under clause (1) of Explanation (baa) to s. 80HHC. In other words, only 90% of the net amount of any receipt of the nature mentioned in clause (1) which is actually included<\/em> in the profits of the assessee is to be deducted from the profits of the assessee for determining \u201cprofits of the business\u201d<\/strong>. The High Court wrongly relied on CIT vs. K. Ravindranathan Nair<\/strong> 295 ITR 228 (SC) & circular dated 19.12.1991 explaining the clauses of the Finance Bill, 1991 (Principle in Distributors (Baroda)<\/strong> 155 ITR 120 (SC) followed; Shri Ram Honda Power Equip<\/strong> 289 ITR 475 (Del) approved)<\/p><\/blockquote>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

For Expl (baa) to s. 80HHC, netting of income from expenditure is allowed The AO & CIT(A) computed s. 80HHC deduction by deducting 90% of the gross interest received from the profits of business. However, the Tribunal, relying on Lalsons …<\/p>\n

ACG Associated Capsules Pvt. Ltd vs. CIT (Supreme Court)<\/span> Read More »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[4,7],"tags":[],"class_list":["post-4298","post","type-post","status-publish","format-standard","hentry","category-all-judgements","category-supreme-court"],"acf":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts\/4298","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/comments?post=4298"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts\/4298\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/media?parent=4298"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/categories?post=4298"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/tags?post=4298"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}