1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. INCOME TAX APPEAL (LODG.) NO.1242 OF 2008 The Commissioner of Income Tax-VI ..Appellant. Vs. M/s. Cebon Apparels Pvt. Ltd. ..Respondent. .... Mr. Suresh Kumar for the Appellant. Mr. Nishant Thakkar with Mr. Atul K. Jasani for the Respondent. ..... CORAM : DR. D.Y.CHANDRACHUD & J.P. DEVADHAR, JJ. 22 April, 2010. P.C.: 1. The office objections are waived and the registry is directed to register the appeal. 2. Admit. 3. The following questions of law are raised by the Revenue in this appeal under Section 260-A of the Income Tax Act : “(a) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in setting aside the issue as to whether interest income of Rs.16,65,127/- is business income or income from other sources without giving further direction that in case it is held to be business income, 90% of the same should be excluded from the 2 profits of business for the purpose of calculation of deduction u/s. 80HHC in view of explanation (baa) to section 80HHC of the Income Tax Act; (b) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in directing not to exclude 90% of sale of Quota Licence amounting to Rs. 2,46,082/- and exchange difference amounting to Rs. 28,57,765/- from the profits of business for the purpose of deduction u/s. 80HHC even though 90% of these two amounts were rightly excluded by the Assessing Officer in view of Explanation (baa) to section 80HHC of the Income Tax Act; (c) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in directing the Assessing Officer not to exclude job work charges amounting to Rs.1,82,81,388/- from profits of business for the purpose of computation of deduction u/s. 80HHC even though 90% of the same are to be excluded in view of Explanation of (baa) to section 80HHC of the Income Tax Act in view of recent decision of Hon’ble Supreme Court in the case of CIT v. K. Ravindranathan Nair (295 ITR 228); (d) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the order of CIT(A) directing the Assessing Officer not to exclude refund of excess premium amounting to Rs. 1,14,349/-. delivery charges from customers amounting to Rs.2,92,612/-, excess provision of earlier years written back amounting to Rs.55,40,114/- from profits of business for the purpose of deduction u/s. 80HHC even though 90% of these receipts is to be excluded in view of Explanation (baa) to section 80HHC of the Income Tax Act;” 3 4. Insofar as question (a) is concerned, the Tribunal has restored the issue to the Assessing Officer. We only clarify that in determining the issue upon remand, the Assessing Officer shall determine the issue in accordance with law and after taking due cognizance of the relevant judgments holding the field, particularly the judgments of this Court in Commissioner of Income Tax v. Asian Star Company Ltd. (ITA 200 of 2009 decided on 18/19 March 2010) and Commissioner of Income Tax v. Swani Spice Mills Pvt. Ltd. (ITA 1019 of 2007 decided on 19 April 2010). 5. Insofar as question (b) is concerned, the issue pertaining to quota licence is covered in favour of the Revenue and against the assessee by the judgment of the Supreme Court in Commissioner of Income tax v. K. Ravindranathan Nair1. The issue of exchange difference is covered in favour of the Revenue and against the assessee by the judgment delivered today in Commissioner of Income Tax v. Shah Originals (ITA 431 of 2008). In view of the 1 (2007) 295 ITR 228 (SC). 4 statement made by counsel appearing on behalf of the assessee and counsel appearing on behalf of the Revenue as aforesaid, the question of law is answered in favour of the Revenue and against the assessee. 6. Insofar as question (c) is concerned, both the learned counsel are agreed in stating before the Court that the issue is covered in favour of the Revenue and against the assessee by the judgment of this Court in Commissioner of Income Tax v. Dresser Rand India Pvt. Ltd. (ITA 2186 of 2009 decided on 8 April 2010). 7. Insofar as question (d) is concerned, the submission which has been urged on behalf of the assessee is that an excess provision written back from the profits of business does not constitute a receipt for the purposes of explanation (baa) to Section 80HHC. On a perusal of the record, it is common ground between the learned counsel that this issue has not been enquired into by the authorities below. In the circumstances, it would be appropriate for this Court to remand the proceedings back to the Tribunal for a fresh 5 determination of the question. For the reasons indicated earlier, the judgment of the Tribunal on this issue is set aside and the Tribunal is directed to decide the issue afresh. 8. For the reasons indicated, the appeal shall accordingly stand disposed of in the aforesaid terms and the questions of law are answered accordingly. There shall be no order as to costs. (Dr. D.Y.Chandrachud, J.) (J.P. Devadhar, J.)