Commissioner of Income Tax vs Taj International

The revenue is aggrieved by an order dated 5-9-2006 passed by the Income Tax Appellate Tribunal, Delhi Bench ''A'' in ITA No. 4710/D/2003 relevant for the assessment year 2002-03.

There is no dispute about the fact that the issue raised in this appeal is covered by the decision of this court in CIT v. Shri Ram Honda Power Equip. (2007) 289 ITR 47 .

Learned counsel for the assessee, however, states that the tax effect in this case is below the limit of Rs. 4lakhs, that is Rs. 3,92,000. However, when the interest is calculated on this amount, the total comes to more than Rs. 4 lakhs. Even assuming that the tax effect in this case is Rs. 3,92,000, it is a border line case. A large batch of cases were heard and decided by the judgment of this court in Shri Ram Honda Power Equip''s case (supra).

Under these circumstances, we do not see any reason to take this appeal out of the purview of the decision of this Court.

Accordingly, we frame the following substantial question of law:

Whether the Income Tax Appellate Tribunal was correct in law in holding that 90 per cent of the net interest and not the gross interest is to be excluded from the profits of the business, while calculating deduction u/s 80HHC read with Explanation (baa) of the Income Tax Act?

Filing of paper books is dispensed with.

In view of our decision in Shri Ram Honda Power Equips case (supra), the question is answered in the negative, in favour of the revenue and against the assessee. The appeal is allowed.