M.A. Bakshi, V.P. - (1.) WE find it convenient to dispose of these two appeals of the assessee for assessment years 1990 -91 and 1991 -92 by this consolidated order. Rival contentions have been heard and record perused.
(2.) ONE of the common issues involved in these appeals is relating to the computation of deduction under section 80HHC. The assessee had derived income from exports, interest on loans, hiring charges for surplus space and LIC commission. Deduction under section 80HHC was claimed on the entire income except LIC commission. Under section 80HHC(3) the profits derived from exports is to be worked out in proportion to the export turnover vis -a -vis total turnover. The assessee has taken the export turnover and the total turnover as same. In other words whereas income from sources other than exports is included in the profits, these items have not been taken into account for working out the total turnover. As a result of this, deduction has been claimed in respect of the entire profits including income from commission, interest on loans, rent of surplus space, etc.
(3.) THE assessing officer held that the assessee was engaged in the business of export of readymade garments. The interest income had been earned by the assessee on the loans advanced to the relatives and family concerns and that advancing money to the relatives and sister -concerns was not the business of the assessee and, therefore, the interest income did not have the character of business income. Similarly, in regard to commission and rent from godown, it was held that the income was assessable as income from other sources. The deduction under section 80HHC was accordingly worked out by excluding such income from profits of business. The assessee appealed to the Commissioner (Appeals) and the latter agreed with the view of the assessing officer. Before the Commissioner (Appeals), as an alternative contention, the assessee had pleaded that atleast the interest received should be set off against the interest paid. This contention was also rejected on the ground that earning of interest income was assessable under the head 'Income from other sources' and the payment of interest was adjustable against the business income.;