Law:

Section:

Section 80HHC of the Income-tax Act, 1961 - Deductions - Exporters - Assessment year 1995-96 - Whether expression 'derived from' as used in section 80HHC must be understood as profit directly arising from export of goods and not incidental to export - Held, yes - Whether interest income derived by assessee from deposit made with bank for opening letter of credit and other formalities to enable him to export goods to various countries is business income eligible for relief under section 80HHC - Held, no Words and phrases - 'derived from' as occurring in section 80HHC of the Income-tax Act, 1961 FACTS The assessee was engaged in export business. For the relevant assessment year while computing the relief under section 80HHC, the Assessing Officer treated the interest received by the assessee on short-term deposits with the bank as 'Income from other sources'. The assessee contended that he had to make the short-term deposits only because of the insistence of the bank for making such deposits as a condition precedent for the opening of the letter of credit and for the grant of other facilities which were necessary requirements to enable the assessee to export goods and, therefore, the interest income received from the short-term deposits was an eligible income from business as contemplated under section 80HHC. The Assessing Officer rejected that contention and assessed the interest income under the head 'Income from other sources'. The Commissioner (Appeals) confirmed the order of the Assessing Officer. The appeal before the Tribunal was also unsuccessful. On reference : HELD The expression 'derived from' as used in section 80HHC must be understood as profit directly arising from the export of the goods and not incidental to the export. The interest from short-term deposits received by the appellant was not the direct result of any export of any goods or merchandise. The fixed deposit was made only for the purpose of opening letter of credit and for getting other benefits which were necessary requirements to enable the assessee to make the export. From the above, it was clear that the interest income received on the short-term deposits, though it could be…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492