M/s. Shreeji Frozen Fruit &Vegetable, Anand V. The Income tax Office,Ward-2, Anand

ITA 1098/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1147 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANTONY PARIATH
• Keywords: Business income
• Section: 143(3); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ././ ./ ITA NO. 1098/AHD/2013 / // / ASSESSMENT YEAR : 2009-10 M/S. SHREEJI FORZEN FRUIT & VEGETABLE, AT. LAMBHVEL, TAL: ANAND PAN : ABKFS 0145 B VS INCOME TAX OFFICER, WARD-2, ANAND / // / (APPELLANT) / // / (RESPONDENT) ASSESSEE BY : SMT. ARTI N. SHAH, AR REVENUE BY : SHRI ANTONY PARIATH, SR DR / // / DATE OF HEARING : 08/07/2016 / // / DATE OF PRONOUNCEMENT: 11/07/2016 / // / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, BARODA DAT ED 15.02.2013 FOR ASSESSMENT YEAR 2009-10. 2. THE SOLITARY GROUND RAISED BY THE ASSESSEE READ S AS UNDER:- THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-IV , BARODA HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIRMING THE AMOU NT OF RS.74,052/- BEING INTEREST ON ELECTRICITY DEPOSIT TO THE TAXABLE U/S 56 AS HELD BY THE ASSESSING OFFICER, THOUGH THE SAME PART OF BUSINESS INCOME IS EXEMPT U/S 80IB(11A) OF THE ACT. 3. BRIEFLY STATED FACTS ARE THE ASSESSEE IS A PAR TNERSHIP FIRM, IT FILED RETURN OF INCOME ON 12.07.2010 DECLARING TOTAL INCO ME AT RS.NIL, AFTER CLAIMING DEDUCTION OF RS.35,48,919/- U/S 80IB(11A) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS PICKED U P FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE ACT WAS FRAMED VIDE ORDER DATED 03.09.2012. WHILE FRAMING THE ASSESSMENT, TH E ASSESSING OFFICER MADE ADDITION OF RS.74,052/- U/S 56 OF THE ACT TOWA RDS INTEREST INCOME FROM MADHYA GUJARAT VIJ COMPANY LTD (IN SHORT MGVC L) AS, ACCORDING TO HIM, SUCH INTEREST EARNED ON ITS LOANS AND ADVAN CES CANNOT FALL WITHIN THE SMC-ITA NO. 1098/AHD/2013 M/S. SHREEJI FROZEN FRUIT & VEGETABLE VS. ITO AY : 2009-10 2 CATEGORY OF INCOME FROM OTHER SOURCES. ON APPEAL, THE LD. CIT(A) CONFIRMED THIS DISALLOWANCE MADE BY THE ASSESSING O FFICER ON THE GROUND THAT SUCH INTEREST INCOME WAS NOT DERIVED FROM ANY BUSINESS ACTIVITIES OF THE ASSESSEE. 3.1 AGGRIEVED BY THE AFORESAID ORDER OF THE LD. CIT (A), THE ASSESSEE IS FURTHER IN APPEAL BEFORE ME. 3.2 LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE IN QUESTIO N AS THERE IS A DIRECT NEXUS BETWEEN THE INTEREST INCOME EARNED FROM MGVCL AND T HE EXPENDITURE OF THE BUSINESS OF THE ASSESSEE. 3.3 ON THE CONTRARY, LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT LD. CIT(A) WAS JUSTIFIED IN CONF IRMING THE DISALLOWANCE AS THE SAME COMES UNDER INCOME FROM OTHER SOURCES WHICH IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(11A) OF THE ACT. 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL PLACED BEFORE ME AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORI TIES. I FIND THAT THE ASSESSING OFFICER MADE THE ADDITION IN QUESTION U/S 56 OF THE ACT TOWARDS INTEREST INCOME EARNED FROM MGVCL AND THE LD. CIT(A ) CONFIRMED THE SAME BY FOLLOWING OBSERVATIONS:- 5.3 SECTION 80IB(11A) OF THE ACT STATES THAT AMOUNT OF DEDUCTION IN A CASE OF AN UNDERTAKING DERIVING PROFIT FROM THE BUS INESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS AND VEGETABLE. THE WORD DERIVE AS USED IN THE SECTION 80IB(11A) HAS NARROW MEANING AND THE ONLY PROFIT WHICH IS DIRECTLY DERIVED FROM THE BUSINESS OF PROC ESSING, PRESERVATION AND PACKAGING OF FRUITS AND VEGETABLE CAN BE ELIGIBLE F OR DEDUCTION UNDER SUCH SECTION. THE INTEREST RECEIVED FROM MGVCL ON SECUR ITY DEPOSIT GIVEN TO IT AT THE MOST CAN BE SAID TO BE ATTRIBUTABLE TO THE B USINESS ACTIVITIES OF THE APPELLANT, BUT IT CANNOT BE SAID TO BE INCOME DERI VED FROM SUCH BUSINESS ACTIVITIES. CONSIDERING THE FACT, I AM OF THE VIEW THAT THE INTEREST INCOME OF RS.76,403/- IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB( 11A) OF THE IT ACT AS SUCH INTEREST INCOME IS NOT DERIVED FROM ABOVE BUSINESS ACTIVITIES OF THE APPELLANT. SMC-ITA NO. 1098/AHD/2013 M/S. SHREEJI FROZEN FRUIT & VEGETABLE VS. ITO AY : 2009-10 3 IN VIEW OF THIS THE DISALLOWANCE OF RS.76,403/- AS MADE BY THE AO BY TREATING THE SAME AS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(11A) OF THE ACT IS HEREBY CONFIRMED. I FIND THAT THE ASSESSEE WAS CARRYING ON THE BUSINE SS OF PROCESSING, PRESERVATION AND PACKING OF VEGETABLE FRUITS. IT I S UNDISPUTED FACT THAT, FOR CARRYING OUT SUCH BUSINESS, ELECTRICITY CONNECTION WAS OBTAINED FROM MGVCL AND THE REQUIRED CHARGES WARE PAID TO THE MGC VL FOR NECESSARY CONNECTION WHICH INCLUDES SECURITY DEPOSIT, SERVICE CONNECTION CHARGES AND LINE CHARGER. IN MY CONSIDERED VIEW, SUCH CHARGES PAID TO THE COMPANY AGAINST SUPPLY OF ELECTRICITY FOR CARRYING ON BUSIN ESS IS THE EXPENDITURE TOWARDS THE ASSESSEES BUSINESS AND THE CONSEQUENTI AL INTEREST THEREOF RECEIVED FROM THE ELECTRICITY COMPANY TOWARDS SECUR ITY DEPOSIT HAS A DIRECT NEXUS WITH COMPANYS BUSINESS. THUS, THE ASSESSEE I S ELIGIBLE FOR DEDUCTION U/S 80IB(11A) OF THE ACT ON THIS INTEREST INCOME AL SO. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 11 TH JULY, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 11/07/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, TRUE COPY / // / ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD