Court held that the amendments made to section\u00a080HHC\u00a0of the\u00a0Income-tax Act, 1961\u00a0by the Finance (No. 2) Act, 1991, substituting sub-section\u00a0(3)\u00a0of section\u00a080HHC\u00a0and prescribing a different formula, are applicable with effect from April 1, 1992. The amendments do not have retrospective effect, that the judgment of the High Court applying the substituted and amended provisions of section\u00a080HHC(3)\u00a0was unsustainable.<\/p>\n
Court also held that\u00a0 for the AY. 1989-90 on the head under which income from sale of shares was taxable, which finding had attained finality, the income from sale of shares should be treated as \u201cincome from business\u201d for computation of deduction under clause\u00a0(b)\u00a0of section\u00a080HHC(3)\u00a0of the Act. Once the income from sale of shares was included under the head \u201cincome from business\u201d, the amount was also to be included in the total turnover of the business. Held that interest income should be taxed as \u201cincome from other sources\u201d. The finding of the Commissioner (Appeals) that the surplus funds were \u201ctransitory surplus funds\u201d and utilisation thereof for earning interest income could not take away its character as \u201cbusiness income\u201d, was fallacious and wrong. The surplus funds, when deposited in a bank or otherwise to earn interest, were not taxable under the head \u201cincome from business\u201d, but under the head \u201cincome from other sources\u201d. This income did not have direct nexus nor was it earned by way of business activity. Accordingly, the interest income was not to be treated as \u201cincome from business\u201d for computation of the deduction in terms of clause\u00a0(b)\u00a0of section\u00a080HHC(3)\u00a0of the Act. Followed\u00a0 Prabhakar P. R\u00a0 v. CIT\u00a0 (2006)284 ITR 548 (SC) \u00a0(AY. 1989-90 to 1991-92)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 80HHC : Export business–Amendment in 1991 with Effect from 1-4-1992 is prospective-Sale of shares-Business income-to be included in total turnover-Interest earned from deposit of surplus funds in banks–Income from other sources\u201d-to be excluded in computation of deduction. [S. 56, 80HHC(3)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","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":""},"categories":[21],"tags":[],"class_list":["post-38876","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-a72","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/38876","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=38876"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/38876\/revisions"}],"predecessor-version":[{"id":38877,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/38876\/revisions\/38877"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=38876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=38876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=38876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}