Appeal details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 7570 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 year(s) 9 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-09-2017
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
13-07-2017
Assessment Year
2007-2008
Appeal Filed On
25-11-2011
Judgement Text
IT(TP)A.1162/BANG/2011 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIT KUMAR, JUDICIAL MEMBER I.T(TP).A NO.1162/BANG/2011 (ASSESSMENT YEAR : 2007-08) QUINTILES RESEARCH (INDIA) P. LTD, 2B, NITESH BROADWAY, 9/3, M. G. ROAD, BENGALURU 560 001 .. APPELLANT PAN : AAACQ0935H V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -12(2), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. KETAN VED, CA REVENUE BY : SMT. NEERA MALHOTRA, CIT -DR HEARD ON : 13.09.2017 PRONOUNCED ON : 22.09.2017 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THE PRESENT APPEAL IS INSTITUTED BY THE ASSESSEE, CHALLENGING THE DIRECTIONS ISSUED BY THE DRP VIDE ORDER DT.15.09.20 11, FOR THE ASSESSMENT YEAR 2007-08. IT(TP)A.1162/BANG/2011 PAGE - 2 02. THE LD. AR FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUES IN GROUND NOS.1, 2, 3, 5 AND 6 HAVE BEEN RESOLVED BILA TERALLY THROUGH THE PROCESS OF MAP BETWEEN INDIA AND USA AND THE AO HAD ISSUED A LETTER DT.18.08.2017 GIVING EFFECT TO THE RESOLUTIO N AND THEREFORE THE ASSESSEE SEEKS TO WITHDRAW THE GROUND NOS.1, 2, 3, 5 AND 6. 03. THE LD. DR HAS NO OBJECTION FOR ALLOWING THE AS SESSEE TO WITHDRAW THE ABOVE GROUNDS. 04. GROUND NO.4 OF THE ASSESSEE READS AS UNDER : LD. AO ERRED IN LAW AND ON FACTS IN MAKING ADDITION OF INTEREST EARNED OF RS.1,16,38,296/- BEING NOT ELIGI BLE FOR DEDUCTION U/S.80IB(8A) OF THE ACT. LD. AO OUGHT TO HAVE APPRECIATED THE VIEW TAKEN BY VARIOUS JUDICIAL AUTH ORITIES THAT CLAIM OF DEDUCTION U/S.80IB ON THE INTEREST IN COME EARNED AS PART OF REGULAR BUSINESS OF THE APPELLANT BE ALLOWED. 05. IN SUPPORT OF THE ABOVE GROUND, IT WAS SUBMITTE D BY THE LD. AR FOR THE ASSESSEE THAT THE INTEREST INCOME EARNED BY THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80IB(8A) OF THE ACT AND FOR THAT PURPOSE, THE LD. AR RELIED UPON THE JUDGMENT OF THE BOMBAY H IGH COURT IN THE CASE OF CIT V. V. S. DEMPO & CO., [(2015) 53 TAXMAN N.COM 41], WHEREIN THE HONBLE BOMBAY HIGH COURT HELD AS UNDER : 14. THUS, AFTER TAKING INTO CONSIDERATION THE SETTLED LEGAL POSITION AS ENUMERATED FROM THE AFORESAID CITATIONS AND AS STAT ED EARLIER, IN THE PRESENT CASE ALSO AS PER THE OWN FINDINGS OF THE AS SESSING OFFICER, THE ASSESSEE IS UTILIZING DEPOSITS FOR GIVING SECURITY TO THE BANKS AND OPENING IT(TP)A.1162/BANG/2011 PAGE - 3 LETTERS OF CREDIT ETC. AS PER THE RECORDS, INVESTIN G SURPLUS FUNDS IN THE CALL MONEY MARKET OR SHORT TERM DEPOSIT IN FAVOUR OF THE BANKS FOR PROVIDING SECURITY FOR OBTAINING SHORT TERM LOANS OR AS A DEP OSIT TOWARDS LC OPENING IS ONE OF THE BUSINESS ACTIVITIES OF THE ASSESSEE A ND THIS HAD COME FOR THE SCRUTINY OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 1 967-68 TO 1972-1973 AND IT WAS HELD IN FAVOUR OF THE ASSESSEE THAT THE INTEREST INCOME ACCRUED THEREFROM IS A BUSINESS INCOME. THE RECORD IS VERY CLEAR THAT THERE IS NO MATERIAL TO DEMONSTRATE THE SUBSTANTIAL CHANGE IN T HE SAID VIEW FOR YEARS WHICH WERE FOLLOWED THEREAFTER. IT WAS AFTER SUBSTA NTIAL CONSISTENT FOLLOWING OF THE SAID VIEW, IT APPEARS THAT THE ASS ESSING OFFICER TOOK A DISTINCT AND SEPARATE VIEW THEREBY TREATING THE INT EREST INCOME AS INCOME FROM OTHER SOURCES IN THE YEAR 1991-92 AND THEREAFT ER. THE DEPARTMENT HAS NOT ESTABLISHED IN ANY CASE THAT THE SAID INTEREST HAS BEEN SPENT FOR ANY OTHER PURPOSE EXCEPT THE BUSINESS PURPOSE. THE IMPO RTANT ASPECT WHICH IS TO BE CONSIDERED HERE IS THAT THE RESPONDENT/ASSESS EE IS EARNING THIS INTEREST INCOME FOR LAST MANY YEARS AND IT WAS ALWA YS TREATED AS BUSINESS INCOME. IN VIEW OF THE RATIO LAID DOWN BY THE SUPRE ME COURT IN THE CASE OF RADHASOAMI SATSANG (SUPRA) AND BY APPLYING THE S AID RULE OF CONSISTENCY, WE HOLD THAT, IN THE ABSENCE OF ANY MA TERIAL CHANGE JUSTIFYING THE DEPARTMENT/ASSESSING OFFICER TO TAKE A DIFFEREN T VIEW FROM THAT TAKEN IN EARLIER PROCEEDINGS, THE QUESTION OF THE EXEMPTION OF RESPONDENT/ASSESSEE SHOULD NOT HAVE BEEN REOPENED. 06. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80IB(8A) FOR THE ABOV E, ON ACCOUNT OF FIXED DEPOSIT MADE BY THE ASSESSEE AND OUR ATTENTIO N WAS DRAWN TO SECTION 80IA(8A), TO THE FOLLOWING EFFECT : - - - - - 07. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE THE ASSESSEE HAD RECEI VED INTEREST INCOME ON FD OF RS.1,16,38,296/-. HOWEVER, THE SAID AMOUN T WAS NOT OFFERED TO TAX. IT WAS SUBMITTED BY THE ASSESSEE THAT THE INTEREST INCOME IS PART OF THE REGULAR BUSINESS OF THE ASSESSEE AND THEREFO RE ELIGIBLE FOR IT(TP)A.1162/BANG/2011 PAGE - 4 DEDUCTION U/S.80IB(8A) OF THE ACT. WE FIND THAT TH E ASSESSEE HAS KEPT THE FD OF RS.27,20,00,000/- AS TERM-DEPOSIT WITH TH E BANK AND HAS EARNED INTEREST INCOME OF RS.1,16,38,296/-. THE AS SESSEE HAS NOT SHOWN ANY BUSINESS PURPOSE FOR KEEPING THE TERM-DEP OSIT , AS THE MANDATORY CONDITION FOR DOING ANY BUSINESS AND THE ASSESSEE HAS ALSO FAILED TO DEMONSTRATE AS TO HOW THE TERM DEPOSIT OF RS.27,20,00,000/- WAS ESSENTIAL OR INTEGRAL PART OF THE BUSINESS ACTI VITIES UNDERTAKEN BY THE ASSESSEE AND HOW THE SAID AMOUNT WAS DIRECTLY R ELATED TO THE BUSINESS OF THE ASSESSEE. 08. IN OUR VIEW, FOR THE PURPOSE OF QUALIFYING FOR DEDUCTION U/S.80IB(8A), IT IS THE GROSS TOTAL INCOME OF THE A SSESSEE THAT IS TO BE INCLUDED IN THE PROFIT AND GAINS DERIVED FROM ANY B USINESS OF THE ASSESSEE. _____ IN THE PRESENT CASE, THE INTEREST INCOME HAS NOT BEEN DERIVED FROM THE BUSINESS OF THE ASSESSEE AS THE DE POSIT OF THE AMOUNT IN TERM-DEPOSIT HAS NO CORRELATION WITH THAT OF THE BUSINESS OF THE ASSESSEE. FURTHER THE HONBLE SUPREME COURT IN THE MATTER OF LIBERTY INDIA _____ [183 TAXMANN.COM 34] HAS EXPLAINED THE MEANING OF DERIVED FROM, AND HELD AS UNDER : PARA 14 TO 16 - - - - - 09. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON BLE SUPREME COURT RENDERED IN THE MATTER OF LIBERTY INDIA _____ (SUPRA), WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE ASSESSEE. ACCORDINGLY GROUND NO.4 IS DISMISSED. IT(TP)A.1162/BANG/2011 PAGE - 5 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF SEPTEMBER, 2017. SD/- SD/- (A. K. GARODIA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL M EMBER BENGALURU DATED : 22.09.2017 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY
