Law:

Section:

I. Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertakings - Assessment year 1997-98 - Whether interest received by assessee on overdue payments from customers is eligible for deduction under section 80-IA - Held, yes II. Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertakings - Assessment year 1997-98 - Whether an assessee is entitled to deduction under section 80-IA on interest received from trade debtors - Held, yes - Whether an assessee is entitled to deduction under section 80-IA on interest earned on FDRs - Held, no - Whether an assessee is entitled to deduction under section 80-IA on amount of duty drawback and on amount received by it on sale of DEPB and QBAL licenses - Held, no - Whether deduction under section 80-IA can be allowed to an assessee on amount of notional credit of customs duty on goods imported for self consumption - Held, no III. Section 80HHC of the Income-tax Act, 1961 - Deductions - Exporters - Whether assessee was entitled to reduce interest paid by it against interest received by it while calculating deduction under section 80HHC, read with Explanation (baa) to that section - Held, no FACTS-I The assessee was an industrial undertaking. During the relevant assessment year, it received interest on late payments by customers to whom it had supplied goods. The assessee had taken that amount into consideration while computing deductions under section 80-IA. The Assessing Officer reduced that amount from the profits of the business for the purposes of computing deduction under section 80-IA, treating the said income as 'Income from other sources' and not as business income. The Assessing Officer was of the view that the interest receipts had not been earned by the assessee out of its manufacturing activities and these had no direct or immediate nexus with the industrial undertaking of the assessee. The order of the Assessing Officer was confirmed by the Commissioner (Appeals). However, on second appeal, the Tribunal directed the Assessing Officer to compute the deduction under section 80-IA by treating the aforesaid income as business…

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