Commissioner Of Income Tax, Ludhiana-Ii v. M/S Eveline International, Ludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.156 of 2008Date of decision: 16.10.2008 Commissioner of Income Tax, Ludhiana-II. Vs. M/s Eveline International, Ludhiana. -----Appellant. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON'BLE MR JUSTICE L.N. MITTAL Present:-Mr. Rajesh Sethi, Sr. Standing Counselfor the appellant. ----- ORDER: The revenue has preferred this appeal under Section 260Aof the Income Tax Act, 1961 (for short, “the Act”) against the order ofthe Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarhpassed in I.T.A. No.179/Chandi/2006 dated 24.01.2007 for theassessment year 2003-04. The assessee claimed for deduction under Section 80 HHCof the Act by including premium earned by sale of export incentive.Further claim was for interest income as business income afterreducing the same by 90% under explanation (baa) to Section 80 HHCof the Act. The said claim having not been allowed, the assesseepreferred an appeal. The CIT (Appeal) allowed the claim of the assessee, which was upheld by the tribunal by following its order in thecase of the assessee for the assessment year 2002-03, which wasupheld by the Income Tax Appellate Tribunal vide order dated2.9.2005. On further appeal by the revenue, the Tribunal affirmed thesaid view with the following observations with regard to the issue ofinterest, which reasoning also applies for income from sale of exportincentive:- “5.2 As regard to the contention of Ld. Sr. D.R. for therevenue that a finding should be given that the interestincome earned by the assessee was income from othersources and not as business income, we are of the viewthat this issue is not arising out of the impugned order.Moreover, while deciding the departmental appeal for theimmediately proceeding year assessee’s own case, theTribunal has observed at page No.5 of the order dated02.09.2005 in ITA No.898/Chandi/204 (supra) that even ifthe interest income is taken as business income of theassessee, 90% of the same has to be excluded from thecomputation of business profit u/s 80 HHC in view of clause(Baa) to subsection (4c) of section 80 HHC. We, therefore,are of the opinion that it was not an issue before the Ld. CIT(A) that the income earned by the assessee was businessincome or the income from other sources even theAssessing Officer in the assessment order dated01.10.2004 in para 2.2 has added 10% of the interestincome while computing the deduction u/s 80 HHC of ITAct. Therefore, the contention of the Ld. Sr. D.R. for therevenue is not tenable.” It could not be disputed that the above view flows from barereading of the statutory provision in explanation (baa) to Section 80 HHC of the Act. No substantial question of law arises forconsideration. The appeal is dismissed. ( ADARSH KUMAR GOEL )JUDGE October 16, 2008ashwani ( L. N. MITTAL ) JUDGE