(1.) THE following question has been referred by the Income Tax Appellate Tribunal, Ahmedabad Bench 'b' u/s. 256 (1) of the Income Tax Act, 1961 (the Act) at the instance of the revenue. "whether, on the facts and in the circumstances of the case, the Hon'ble Tribunal was legally justified in holding that the interest on FDRS treated as income from other sources should be reduced by the interest paid in relation to the borrowings for business of exports in order to allow the higher relief u/s. 80hhc of the I. T. Act".
(2.) THE Assessment Year is 1992-93. The assessee company claimed deduction u/s. 80hhc. In relation to the same the Assessing Officer observed as under: "5. Deduction u/s. 80hhc is worked out separately and taken accordingly. (Annexure enclosed ). " thereafter, in the Annexure showing working of deduction u/s. 80hhc of the Act the Assessing Officer has deducted (1) under the head :"income from other sources" three items totalling to Rs. 25,26,984/-; (2) under the Head : "other income", 90% of Rs. 40,84,762/-; and (3) under the head:"other income debited" 90% of Rs. 51,91,479/-, which also includes one item "interest received Rs. 12,94,672/-".
(3.) THE assessee challenged the said part of the computation along with other grounds before Commissioner (Appeals) who has after reproducing Explanation (baa) appearing in Section 80hhc of the Act recorded "it is evident that interest is to be reduced for computing deduction u/s. 80hhc of the Act, and hence the working of assessing officer is upheld".