CANADIAN SPECIALITY VINYLS,NEW DELHI V. ITO WARD-63(4), DELHI, NEW DELHI

ITA 549/DEL/2025

AI Insights

The case involves Canadian Speciality Vinyls, a partnership firm engaged in manufacturing laminated fabric, which appealed against the order of the Addl./JCIT(A)-, Aurangabad. The firm had filed its return of income for the assessment year 2016-17, declaring a nil income after claiming a deduction under section 80IC. The Assessing Officer (AO) assessed the income, including disallowing certain interest and other incomes, which was upheld by the First Appellate Authority. The Tribunal's decision was influenced by a precedent set in the assessee's own case for the preceding assessment year, where it was determined that interest income from specific sources was derived from the eligible business.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314024 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Other Referred Cases: CIT vs Seshasayee Paper & Board Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHYAM MANOHAR SINGH
• Assessee Lawyers: SHANTANU JAIN

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH “SMC’’ : NEW DELHI) BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT ITA No. 549/Del/2025 Asstt. Year : 2016-17 Canadian Speciality Vinyls, vs. ITO, Ward-63(4), C/o B-50, LGF, South Extension-II, Civic Centre, New Delhi – 49 Minto Road, New Delhi (PAN: AAGFC0200J) (Appellant) (Respondent) Appellant by : Shri Shantanu Jain, Adv. Respondent by : Shri Shyam Manohar Singh, Sr. DR. Date of Hearing 06.05.2025 Date of Pronouncement 06.05.2025 ORDER This appeal by the assessee is emanating from the order of the Addl./JCIT(A)-, Aurangabad in Appeal No. ITBA/APL/S/250/2024-25/1072443613(1) dated 23.1.2025. 2. Heard both the parties at length and perused the relevant records. 3. Brief facts of the case are that assesee is a partnership firm having three partners namely Mr. Anil Mahajan, Mr. Shikhar Mahajan, and Mrs. Suman Mahajan. The assessee is engaged in the business of manufacturing of different kinds of laminated fabric like PVC flax and rigid etc. at Industrial Zone in Kashipur, Uttarakhand. The assessee filed its return of income on 30.11.2016 declaring a total income of Rs. NIL after claiming deduction u/s. 80IC amounting to Rs. 2,49,48,967/-. The AO assessed total income at Rs. 29,77,270/- by disallowing the interest income of Rs. 28,18,637/- and other income of Rs. 1,58,631/- during the year under consideration. However, in appeal, Ld. First Appellate Authority sustained the addition of Rs. 29,77,270/-. Against the above, assessee appealed before the Tribunal. 4. At the time of hearing, Ld. AR has submitted that action of the Ld. CIT(A) in upholding the action of AO in making addition of Rs. 29,77,270/- by alleging that the said ‘interest income’ and ‘other income’ are not derived from eligible business of the assesse 2 | P a g e under section 80IC is not tenable. He submitted that assessee has received interest income of Rs. 28,18,637/- and other income of Rs. 1,58,631/- during the year under consideration viz. interest of Rs. 4,89,674.62 received from Uttaranchal Power Corporation Ltd.; Rs. 1,22,940/- received from Punjab National Bank; Rs. 41,793.58 received from Standard Chartered Bank; Rs. 21,64,229.27 received from customers and Rs. 1,58,631/- on account of other income. It was the contention of the Ld. AR that the above interest income, are derived from the eligible business under section 80IC of the Act. It was further submitted that the assessee has claimed the deduction of various interest income under section 80IC of the Act in preceding years as well, which have been allowed. He further submitted that the Coordinate Bench of the ITAT, Delhi in assessee’s own case for the immediate preceding assessment year viz. 2015-16 vide ITA No. 7612/Del/2019 dated 2.6.2023 has partially allowed the appeal of the assessee thereby disallowing the ‘other income’. Thus, the present case is squarely covered by the order of the Division Bench in assessee’s own case (supra), which may kindly be followed and accordingly, appeal of the assessee may be allowed. Ld. DR relied upon the orders of the authorities below. 5. I have heard both the parties and perused the records. I find that the Coordinate Bench of the Tribunal in assessee’s own case for the immediate preceding assessment year viz. 2015-16 vide ITA No. 7612/Del/2019 dated 2.6.2023 has partially allowed the appeal of the assessee thereby disallowing the ‘other income’ by holding as under:- “6. In view of above factual matrix regarding earning of interest income by the assessee when we consider the preposition render by Hon'ble High Court of Madras in the case of CIT vs Seshasayee Paper & Board Ltd.(supra) then we clearly find that their Lordship speaking for High Court held that the interest received on deposit kept with electricity board has to be considered and should not be deducted from gross total income while computing deduction admissible u/s. 801 of the Act. In the present case the Assessing Officer himself at page 2 noted that the interest received by the assessee from four entities was due to FDR's kept with electricity board, environment board, for opening LC therefore, the impugned amount of interest has to be held derived from the eligible business entitle for deduction us. 80IC of the Act. however, amount of Rs. 54,680/- interest received on insurance claim cannot be held as derived from eligible business thus this part is should be reduced for 3 | P a g e the claim u/s. 80IC of the Act. Accordingly, ground no. 2 of assessee is partly allowed.” 6. After perusing findings of the tribunal in assessee’s own case (supra), I am of the considered view that the issue of ‘interest income’ amounting to Rs. 28,18,637/- is squarely covered in favour of the assesssee by the aforesaid decision in assessee’s own case, hence, respectfully following the aforesaid precedent, the said interest income for the year under consideration deserve to be held derived from the eligible business entitle for deduction u/s. 80IC of the Act. However, amount of Rs. 1,58,631/- on account of other income comprises small amounts of round /off adjustments and misc. accounts adjusted in the normal course of business claim cannot be held as derived from eligible business thus this part should be reduced for the claim u/s. 80IC of the Act. I hold and direct accordingly. 7. The instant assesseee’s appeal is party allowed in the aforesaid terms. Order pronounced in the Open Court on 06.05.2025. Sd/- (MAHAVIR SINGH) VICE PRESIDENT SRBhatnagar Copy forwarded to: - 1. Appellant 2. Respondent 3. DIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order, Assistant Registrar, ITAT, Delhi Bench "