COMMISSIONER OF INCOME TAX-III vs RAJ RATNA METAL INDUSTRIES

Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal Bench "B" (hereinafter referred to as "the learned tribunal") dated 20/10/2009 in ITA No.215/Ahd/2002 for the Assessment Year 1998-99, revenue has preferred the present Tax Appeal to consider the following question of law;

"Whether the Appellate Tribunal is right in law and on facts in confirming the order of CIT(A) in computing the business profit without reducing 90% of interest receipt?"

Heard Shri Nitin Mehta, learned Counsel appearing on behalf of the revenue.

Though served, nobody appears on behalf of the assessee.

Having heard Shri Nitin Mehta, learned Counsel appearing on behalf of the revenue and considering the question of law framed in the present Tax Appeal, we are of the opinion that the aforesaid question is now not res integra in light of the decision of the Hon''ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. Vs. Commissioner of Income Tax reported in (2012) 343 ITR 89 (SC). In the case of ACG Associated Capsules Pvt. Ltd. (Supra) it is held by the Hon''ble Supreme Court that 90% of not the gross interest but only the net interest, which has been included in the profits of the business of the assessee as computed under the heads "profits and gains of business or

profession", is to be deducted under Clause (1) of Explanation (baa) to Section 80HHC of the Income Tax Act for determining the profits of business.

Applying the law laid down by the Hon''ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. (Supra), the question of law raised in the present Tax Appeal is held against the revenue and in favour of the assessee. Assessing Officer to make necessary computation as per the decision of the Hon''ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. (Supra).

With this, the present Tax Appeal stands disposed of accordingly.