Ambattur Clothing Limited, CHENNAI V. DCIT Company Circle 1(1), CHENNAI

ITA 2062/CHNY/2003

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8175 (ITAT-CHENNAI)
• Duration Of Justice: 15 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 12-11-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Business income
• Section: 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , . , ! BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI S.JAYARAMAN, ACCOUNTANT MEMBER / I.T.A. NOS.2062 & 2063/CHNY/2003 /ASSESSMENT YEARS : 2000-01 & 2001-02 M/S. AMBATTUR CLOTHING FACTORY NO.86 E/2, INDUSTRIAL ESTATE, AMBATTUR, CHENNAI-600 058. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-1(1), CHENNAI-600 034 PAN: AAACA4127D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. R.VIJAYARAGHAVAN, ADVOCATE /RESPONDENT BY : MR. S.BHARATH, CIT /DATE OF HEARING : 27.03.2019 /DATE OF PRONOUNCEMENT : 10.04.2019 / O R D E R PER S.JAYARAMAN, AM: THESE TWO APPEALS ARE REMITTED BACK TO THIS TRIBUN AL BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE ITS JUD GEMENT DATED 13.2.2019 IN T.C.A. NOS . 923 & 924 OF 2008 TO RECONSIDER THE APPEALS AFRESH AS THE TRIBUNAL HAS OMITTED TO CONSIDER THE GROUND OF NETTING OF INTEREST INCOME FOR THE ASSESSMENT YEARS 2000-01 & 2001-02. THE RELEVANT PORTION OF THE ORDER OF HONBLE HIGH COURT IS AS U NDER:- ASSESSEE HAS FILED THESE APPEALS AGGRIEVED BY THE ORDER PASSED BY THE LEARNED INCOME TAX APPELLATE TRIBUNAL, IN SHORT, T HE TRIBUNAL CHENNAI A BENCH, IN I.T.A.NOS.2062/MDS/2003 AND 2063/MDS/2003 , DATED 06.10.2006, FOR THE ASSESSMENT YEARS 2000-2001 AND 2001-2002 RESPECTIVELY, DISMISSING THE APPEALS OF THE ASSESSE E. 2. THE LEARNED TRIBUNAL IN THE SAID ORDER, RECORDED THE CONCESSION GIVEN BY THE LEARNED COUNSEL FOR THE ASSESSEE IN TERMS OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF IPCA LABORATOR IES V. DEPUTY COMMISSIONER OF INCOME TAX, 266 ITR 521, ON THE ISS UE WHETHER THE WORD 2 ITA NO.2062 & 2063/CHNY/2003 PROFIT OCCURRING IN SECTION 8OHHC OF THE INCOME T AX ACT,1961, (3) MEANS THE NET OF THE PROFIT FROM THE EXPORT OF THE SELF-MANUFACTURED GOODS AND ALSO THE EXPORT OF THE TRADED GOODS. 3. MR.V.K.VIJAYARAGHAVAN, LEARNED COUNSEL FOR THE A PPELLANT/ ASSESSEE, HOWEVER, SUBMITS THAT THE REAL AND ANOTHER ISSUE, W HICH WAS RAISED BEFORE THE LEARNED TRIBUNAL IN THE GROUNDS OF APPEAL, WAS NOT ABOUT THE APPLICABILITY OF THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF IPCA LABORATORIES, SUPRA, BUT THE ASSESSES HAD ALSO CLAI MED THAT ONLY NET INTEREST INCOME COULD BE INCLUDED, NAMELY, GRASS IN TEREST MINUS EXPENDITURE INCURRED ON THE BORROWAL OF THE AMOUNT FOR INVESTMENT FOR EARNING THAT 4.,INTEREST AND SUCH NET INTEREST ALON E COULD BE CONSIDERED FOR THE PURPOSE OF SECTION 8OHHC AND, IF THAT NET FIGUR E IS SO TAKEN, THERE IS NO QUESTION OF DISALLOWANCE TO THE EXTENT OF 90% OF THE NEGATIVE FIGURE OF NET INTEREST. ACCORDING TO THE LEARNED COUNSEL, THE SAID ASPECT HAS NOT BEEN CONSIDERED BY THE LEARNED TRIBUNAL IN THE ORDE R IMPUGNED, THOUGH A SPECIFIC GROUND WAS RAISED BEFORE IT IN THE APPEAL. 4.. HAVING HEARD THE LEARNED COUNSEL FOR THE PARTIE S AND ALSO ON PERUSAL OF THE IMPUGNED ORDER OF THE LEARNED TRIBUNAL, DATED 0 6. 10.2006, WE ARE OF THE OPINION THAT THIS MATTER DESERVES TO BE SENT BA CK TO THE TRIBUNAL FOR CONSIDERING THE AFORESAID GROUND OF THE ASSESSEE AB OUT THE NETTING OF THE INTEREST INCOME, AS THE SAME APPARENTLY DOES NOT SE EM TO HAVE BEEN CONSIDERED BY THE TRIBUNAL AT ALL. 5. THEREFORE, WE ALLOW THESE TAX CASE APPEALS OF TH E ASSESSEE AND DIRECT THE LEARNED TRIBUNAL TO RECONSIDER THE APPEALS AFRE SH ON THE AFORESAID GROUND OF APPEAL IN ACCORDANCE WITH LAW. NO COSTS. 2. AT THE TIME OF HEARING, THE LD. AR INVITED OUR ATTENTION TO THE ASSESSEES GROUND NO.2 IN THE APPEALS BEFORE THI S TRIBUNAL, WHICH IS EXACTED AS UNDER, AND SUBMITTED THAT THE IMPUGN ED INTEREST HAVE DIRECT LINK WITH BUSINESS AND THE ASSESSEE H AS PAID MORE INTEREST THAN THE INTEREST INCOME ADMITTED BY IT IN THE RE SPECTIVE ASSESSMENT YEARS, THEREFORE THERE IS NO NEED TO DISALLOW 90% OF INTEREST RECEIPTS. 3 ITA NO.2062 & 2063/CHNY/2003 ITA NO.2062/CHNY/2003: 2. NETTING OF INTEREST RECEIPTS AGAINST INTEREST PA YMENTS: 2.1 THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT INTEREST OF RS.26,47,054/- RELATES TO FIXED DEPOSITS WHICH DID NOT HAVE ANY DIRECT LINK OR PROXIMITY WITH THE APPELLANTS BUSINESS. 2.2 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGH T TO HAVE APPRECIATED THAT INTEREST OF RS.26,11,531/- OUT OF A BALANCE OF RS.2 6,47,054/- HAS A DIRECT LINK OR PROXIMITY WITH THE APPELLANTS BUSINESS AS THEY REL ATE TO FOLLOWING ITEMS. STAFF LOAN 184366 COLORPLUS FASHIONS (LOCAL BUYER) 2427165 2611531 INTEREST ON INCOME TAX REFUND 35522 INTEREST RECEIPTS CONSIDERED BY CIT (A) AS HAVING NO LINK WITH BUSINESS 2647054 2.3 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE HAS DURING THE YEAR PAID RS.4,46,16,72 9/- AS INTEREST WHICH IS FAR MORE THAN THE INTEREST EARNED, HENCE IN REALITY THE RE IS NO INCOME BY WAY OF INTEREST BUT ONLY EXPENDITURE OF INTEREST PAID TO T HE BANK. HENCE FOR PURPOSES OF COMPUTATION OF SEC.80HHC RELI EF THERE IS NO NEED TO DISALLOW 90% OF INTEREST RECEIPTS AS WAS HELD IN FO LLOWING DECISIONS: A) MAC INDUSTRIES VS. ACIT MADRAS 1TA NO. 1595 /MDS / 1996 B) SHAFEEQ SHAMED & CO, MADRAS ITA NO. 24271MDS/ 19 94 C) PINK STAR VS. CIT 72 LTD 137 (MUMBAI) D) HONDA SIEL POWER PRODUCT LTD. 77 LTD 123 (DELHI) E) NSC SHOES PVT. LTD. 258 1TR 749 (MADRAS) ITA NO.2063/CHNY/2003: NETTING OF INTEREST RECEIPTS AGAINST INTEREST PAYME NTS 2.1 THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT INTEREST OF RS.20,36,852/- RELATES TO FIXED DEPOSITS WHICH DID NOT HAVE ANY DIRECT LINK OR PROXIMITY WITH THE APPELLANTS BUSINESS. 2.2 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT INTEREST OF RS. 18,15,886/- OUT OF A BALANCE OF RS. 20,36,852/- HAS A DIRECT LINK OR PROXIMITY WITH THE APPELLANTS BUSINESS AS THEY REL ATE TO FOLLOWING ITEMS. STAFF LOAN 383036 EDDIE BAUER (FOREIGN BUYER) 372598 COLORPLUS FASHIONS (LOCAL BUYER) 378888 4 ITA NO.2062 & 2063/CHNY/2003 ACL WLL (FOREIGN SUBSIDIARY) 681364 1815886 INTEREST ON INCOME TAX REFUND 220966 INTEREST RECEIPTS CONSIDERED BY CIT (A) AS HAVING NO LINK WITH BUSINESS 2036852 2.3 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE HAS DURING THE YEAR PAID RS.5,46,62,90 4/- AS INTEREST WHICH IS FAR MORE THAN THE INTEREST EARNED, HENCE IN REALITY THE RE IS NO INCOME BY WAY OF INTEREST BUT ONLY EXPENDITURE OF INTEREST PAID TO T HE BANK. HENCE FOR PURPOSES OF COMPUTATION OF SEC.8OHHC RELI EF THERE IS NO NEED TO DISALLOW 90% OF INTEREST RECEIPTS AS WAS HELD IN FO LLOWING DECISIONS: A) MAC INDUSTRIES VS. ACIT MADRAS ITA NO. 1595 /MDS / 1996 B) SHAFEEQ SHAMEEL & CO., MADRAS ITA NO. 2427/MDS/ 1994 C) PINK STAR VS. CIT 72 LTD 137 (MUMBAI) D) HONDA SIEL POWER PRODUCT LTD. 77 LTD 123 (DELHI) E) NSC SHOES PVT. LTD. 258 1TR 749 (MADRAS). 3. PER CONTRA, LD. D R SUBMITTED THAT SINCE T HE CORRESPONDING PARTICULARS WERE NOT AVAILABLE IN THE RECORD, TH E ASSESSEE WAS REQUIRED TO SUBSTANTIATE ITS CLAIM. THE ASSESSE E FILED A PAPER BOOK WHEREIN, IT HAS FURNISHED THE FOLLOWING PARTICULA RS:- LOAN OUTSTANDING AS ON 31/03/2000: PARTICULARS AMOUNT 0/S TERM LOAN WITH SBI OVERSEAS BR 57,743,798 IDBI DEBENTURE 63,100,000 PACKING CREDIT LOAN WITH SBI OVERSEAS BR 76 ,311,448 OTHERS (HP) 1,839,783 TOTAL 198,995,029 AMBATTUR CLOTHING LIMITED INTEREST BREAKUP FOR THE YEAR 1999-00 PARTICULAR EXPENSES INCOME INTEREST ON TERM LOAN 12,463,294 INTEREST ON WORKING CAPITAL LOAN 15,727,062 INTEREST ON BILL DISCOUNTING & OTHERS 16,426,373 INTEREST FROM FDR 3,030,043 INTEREST ON INCOME TAX REFUND 35,522 INTEREST ON STAFF LOAN 184,366 INTEREST FROM COLOR PLUS FASHIONS 2,42 7,165 5 ITA NO.2062 & 2063/CHNY/2003 44,616,729 5,677,096 AS PER P & L (NET) 38,939,633 LOAN OUTSTANDING AS ON 31/03/2001: PARTICULAR AMOUNT 0/S TERM LOAN WITH SBI OVERSEAS BR 17,232,000 TERM LOAN WITH 1DBI BANK LTD 49,500,000 IDBI DEBENTURE 20,000,000 PACKING CREDIT LOAN WITH SBI OVERSEAS BR 147,7 06,649 OTHERS (HP WITH BANK OF AMERICA 30,444 TOTAL 234,469,093 AMBATTUR CLOTHING LIMITED INTEREST BREAKUP FOR THE YEAR 2000-01 PARTICULAR EXPENSES INCOME INTEREST ON TERM LOAN 8,960,799 INTEREST ON DEBENTURES IDBI 1,109,928 INTEREST ON WORKING CAPITAL LOAN 24,382,332 INTEREST ON BILL DISCOUNTING 20,209,846 INTEREST FROM FDR 1,814,230 INTEREST ON IDBI DEPOSITS 23,852 INTEREST ON INCOME TAX REFUND 220, 966 INTEREST ON STAFF LOAN 383,036 INTEREST FROM EDDIE BAUER 3 72,598 INTEREST FROM COLOR PLUS FASHIONS 378,88 8 INTEREST FROM ACL WLL BAHRAIN 681,364 54,662,905 3,874,934 AS PER P & L (NET) 50,787,971 3.1 THE LD. A R PLEADED THAT THE ASSESSEES C LAIM IS ALLOWABLE IN ACCORDANCE WITH THE DECISION OF THE HONBLE SUPRE ME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES P.LTD VS. CIT IN C IVIL APPEAL NO.1914 OF 2012 DATED 08.02.2012. 6 ITA NO.2062 & 2063/CHNY/2003 4. PER CONTRA, THE LD. D R SUBMITTED THAT T HE INTEREST INCOME FROM FDR AND IDBI DEPOSITS ARE TO BE ASSESSED UNDER THE HEAD OTHER SOURCES. INVITING OUR ATTENTION TO THE ASSESSMENT ORDER, THE LD DR SUBMITTED THAT THOUGH, THE A O HAS ARRIVED A C ORRECT DECISION IN THIS REGARD, HOWEVER, HE ERRED IN MAKING THE COMPUTATION BY ALLOWING 90% OF SUCH INTEREST. HOWEVER, THE LD CIT(A) HAS R ECTIFIED SUCH ERRORS IN HIS ORDERS HOLDING THAT INTEREST OF RS. 26,47,054 /- & RS.2O,60,707/- FOR ASSESSMENT YEARS 2000-01& 2001-02, DO NOT HAVE ANY DIRECT LINK OR PROXIMITY WITH THE BUSINESS , THEREFORE SUCH INT ERESTS CAN NOT BE TREATED AS INCOME FROM BUSINESS. THEREFORE, HE PL EADED TO UPHOLD SUCH DECISION. ON THE INTEREST ADMITTED ON INCOME TAX REFUND, IT IS SUBMITTED THAT IT WONT INVOLVE ANY EXPENDITURE. HOWEVER, THE ASSESSEE HAS NOT FURNISHED THE SPECIFIC P ARTICULARS OF INTEREST IT HAD INCURRED ON THE INTEREST ADMITTED FROM ; STAF F LOAN, EDDIE BAUER, COLOUR PLUS FASHIONS SO AS TO ARRIVE TAKE A VIEW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THR OUGH RELEVANT MATERIAL. IT IS THE ASSESSEES SUBMISSION THAT THE IMPUGNED INTEREST RECEIPTS HAVE DIRECT LINK WITH BUSINESS. THE HAS ADMITTED NET INTEREST IN ITS BOOKS OF ACCOUNT. IF THE INTERESTS PAID BY IT FOR EARNING THE CORRESPONDING INTERESTS ARE TAKEN INTO ACCOUNT, THE 7 ITA NO.2062 & 2063/CHNY/2003 ASSESSEE PAID MORE INTEREST THAN THE INTEREST I NCOME ADMITTED BY IT IN THE RESPECTIVE ASSESSMENT YEARS, THEREFORE, WH ILE COMPUTING THE DEDUCTION UNDER SECTION 80 HHC, THERE IS NO NEED TO DISALLOW 90% OF SUCH INTEREST RECEIPTS. PER CONTRA, THE REVENUE SUBMITTED THAT THE INTEREST INCOME FROM FDR AND IDBI DEPOSITS HAVE C OME TO THE ASSESSEE MAINLY OUT OF THE DEPOSITS OF SURPLUS FU NDS MADE BY IT. THEREFORE, THERE IS NO QUESTION OF ANY INTER EST PAYMENT FOR EARNING THEM. THEY ARE FROM SEPARATE AND INDEPENDEN T SOURCES AND ARE TO BE ASSESSED UNDER THE HEAD OTHER SOURCES. FOR OTHER INTEREST RECEIPTS, THE ASSESSEE HAS NOT FURNISHED THE CORRESPONDING INTEREST INCURRED, IF ANY, AND HENCE THE ASSESSEES CLA IM SHOULD NOT BE CONSIDERED. IN THE DECISION RELIED ON BY THE LD AR, THE APEX COURT HELD THAT PROFITS OF THE BUSINESS OF AN ASSESSEE WILL HAVE TO BE FIRST COMPUTED UNDER THE HEAD 'PROFITS AND GAINS OF BUSI NESS OR PROFESSION' IN ACCORDANCE WITH PROVISIONS OF SECTION 28 TO 44D OF THE ACT. IN THE COMPUTATION OF SUCH PROFITS OF BUSINESS, ALL RECEIP TS OF INCOME WHICH ARE CHARGEABLE AS PROFITS AND GAINS OF BUSINESS UNDER SECTION 28 OF THE ACT WILL HAVE TO BE INCLUDED. SIMILARLY, IN COMPUTATION OF SUCH PROFITS OF BUSINESS, DIFFERENT EXPENSES WHICH ARE ALLOWABLE UN DER SECTIONS 30 TO 44D HAVE TO BE ALLOWED AS EXPENSES. AFTER INCLUDING SUCH RECEIPTS OF INCOME AND AFTER DEDUCTING SUCH EXPENSES, THE TOTAL OF THE NET RECEIPTS 8 ITA NO.2062 & 2063/CHNY/2003 ARE PROFITS OF THE BUSINESS OF THE ASSESSEE C OMPUTED UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' FROM WHICH DEDUCTIONS ARE TO MADE UNDER CLAUSES (1) AND (2) OF EXPLANATIO N (BAA). THEREFORE, THE NATURE OF EVERY RECEIPT NEEDS TO BE ASCERTAINE D IN ORDER TO FIND OUT WHETHER THE SAID RECEIPT FORMS PART OF INCOME W HICH ARE CHARGEABLE AS PROFITS AND GAINS OF BUSINESS UNDER SECTION 28 . WE HAVE GONE THROUGH THE PAPER BOOK FILED BEFORE US. SCHED ULE 2, 3 & 9 FORMING PART OF ACCOUNTS OF BALANCE SHEET OF THE ASSE SSEE AS ON 31 ST MARCH, 2001 IS EXTRACTED AS UNDER:- SCHEDULE 2 AS AT AS AT 31 ST MARCH, 2001 31 ST MARCH, 2000 RESERVES & SURPLUS RS. IN LAKHS RS. I N LAKHS SHARE PREMIUM 400.00 400.00 GENERAL RESERVE 5,656.68 5,228.03 ADD: EXCESS OF ASSETS OVER LIABILITIES OF AMALGAMATING 9.50 - COMPANY GENERAL RESERVE OF AMALGAMATING COMPANY 0.71 TRANSFER FROM PROFIT & LOSS A/C 290.00 5,956.89 228.65 5,656,68 PROFIT & LOSS ACCOUNT 4,688.09 2,078.95 _________ _________ 11,044.98 8,135.63 SCHEDULE 3 SECURED LOANS DEBENTURES 200.00 -- FROM BANK RUPEES TERM LOAN 172.32 577.44 EXPORT PACKING CREDIT 1,477.07 763.11 FROM FINANCIAL INSTITUTION 9 ITA NO.2062 & 2063/CHNY/2003 RUPEES TERM LOAN 495.00 631.00 OTHER LOANS 0.30 18.40 ________ ________ 2,344,69 _ 1,989.95 SCHEDULE 9: AS AT AS AT 31 ST MARCH, 2001 31 ST MARCH, 2000 RS. IN LAKHS RS. IN LAKHS CASH & BANK BALANCES CASH ON HAND 1.72 2.38 BALANCES WITH SCHEDULES BANKS ON CURRENT ACCOUNT 786.38 147.41 ON DEPOSIT ACCOUNT 358.19 283.47 ON MARGIN MONEY DEPOSIT 0.41 1,144.98 10.46 441.34 ----------- --- --------- 1,146.70 443.72 5.1 FROM THE ABOVE , IT IS CLEAR THAT THE ASSESSEE HAD HUGE RESERVES AND SURPLUS AND PART OF IT STOOD INVESTED IN THE DEPOSIT ACCOUNTS. THEREFORE, THE REVENUES PLEA T HAT THE INTEREST INCOME FROM FDR AND IDBI DEPOSITS HAVE COME TO THE ASSESSEE MAINLY OUT OF THE DEPOSITS OF SURPL US FUNDS MADE BY IT, THERE IS NO INTEREST PAYMENTS FOR EARNING THEM, THEY ARE FROM SEPARATE AND INDEPENDENT SOURCES AND ARE TO BE ASSESSED UNDER THE HEAD OTHER SOURCES AS THEY DO NOT HAVE A DIRECT LINK OR PROXIMITY WITH THE LINE OF BUSINESS FIND MERIT A ND HENCE WE UPHOLD VIEW TAKEN BY THE LD CIT(A). THOUGH, THE ASSESSEE HAS NOT FURNISHED THE SPECIFIC PARTICULARS OF TH E CORRESPONDING 10 ITA NO.2062 & 2063/CHNY/2003 INTEREST PAYMENTS ON THE RECEIPTS OF OTHER INTE RESTS, THE NATURE OF THE OTHER RECEIPTS , AS EXTRACTED IN PARA 3 S UPRA, REQUIRE EXAMINATION. ITEM 7 ON NOTES ON ACCOUNTS UNDER SC HEDULE 23 IS EXTRACTED AS UNDER : 7. INTEREST OF RS.507.89 LAKHS (PREVIOUS YEAR RS .389.40 LAKHS) AS PER SCHEDULE 22 IS NET OFF INTEREST EARNED ON : A) FIXED DEPOSITS WITH BANKS OF RS. 19.30 LAKHS ( PREVIOUS YEAR RS.30.61 LAKHS) (TAX DEDUCTED AT SOURCE RS.6.94 LAKHS; PREVIOUS YEAR RS.3.64 LAKHS) B) TRADE DUES OF RS.14.33 LAKHS (PREVIOUS YEAR RS .24.27 LAKHS ) (TAX DEDUCTED AT SOURCE RS.0.86 LAKHS PREVIOUS YE AR RS.5.34 LAKHS) C) OTHER DUES OF RS.5.12 LAKHS (PREVIOUS YEAR RS1. 89 LAKHS) 5.2 FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSSEE HAS TREATED THE RECEIPTS OF RS. 14.33 LAKHS AS TR ADE DUES. SINCE THESES RECEIPTS ARE PROXIMATELY CONNECTED WITH TRA DE RECEIPTS, THEY FORM PART OF PROFITS OF THE BUSINESS AND HENCE TH EY ARE TO BE CHARGED U/S 28 ONLY. THE OTHER DUES COMPRISES INTERES T OF STAFF LOAN AND INTEREST ON IT REFUND. SINCE THE INTEREST EARN ED OR INCURRED ON STAFF LOAN IS INCIDENTAL TO THE ASSESSEES BUSINESS, SUCH RECEIPT BEING INTIMATELY CONNECTED WITH THE BUSINESS, THIS RE CEIPT ALSO FORMS PART OF PROFITS OF THE BUSINESS. WE ARE OF THE VIEW THAT THE INCOME TAX PAYMENT BEING PERSONAL IN NATURE, THE INTEREST ON INCOME TAX REFUND SHOULD BE TREATED AS AN INCOME FROM OTHER SOURC E AND TAXED WITHOUT ALLOWING ANY INTEREST DEDUCTION ON IT. THUS, THE AO WOULD RE-COMPUTE THE INCOME ACCORDINGLY. 11 ITA NO.2062 & 2063/CHNY/2003 5.3 THE NEXT ISSUE IS THAT WHEN THE ABOVE INTEREST RECEIPTS WHICH ARE HELD AS BUSINESS INCOME, THEN THE DEDUCTION THAT SHOULD BE PERMISSIBLE IN TERMS OF THE EXPLANATION (BAA) IS 90% OF THE NET INTEREST. HOWEVER, THE NEXUS BETWEEN OBTAINING THE LOAN AND PAYING INTEREST THEREON (LAYING OUT THE EXPENDITUR E BY WAY OF INTEREST) FOR THE PURPOSE OF EARNING THE IMPUGNED INTERESTS HAS TO BE FURNISHED AND PROVED BY THE ASSESSEE. I.E., FOR APPLICATION OF THE NETTING PRINCIPLE, THE ONUS LIES ON THE ASSESSEE. THOUGH THE ASSESSEE HAS NOT FURNISHED THE REQUIRED DETAILS, IN THE INTER ESTS OF JUSTICE, WE REMIT THIS ISSUE BACK TO THE AO FOR A FRESH EXAMINATION. THE ASSESSEE SHALL PLACE ALL RELEVANT MATERIALS BEFORE THE AO AND COM PLY TO THE REQUIREMENTS OF AO IN ACCORDANCE WITH LAW. THE AO SHALL AFTER AFFORDING EFFECTIVE OPPORTUNITY TO THE ASSESSEE SHALL DECIDE THIS ISSUE IN ACCORDANCE WITH LAW FOR BOTH THE ASSESSMENT YEARS. 6. IN THE RESULT, THE ASSESSEES ABOVE APPE ALS ARE TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED ON 10 TH APRIL , 2019 SD/- SD/- ( . . . ) (. ) ( N.R.S.GANESAN) (S.JAYARAMAN) ( / JUDICIAL MEMBER) ( /ACCOUNTANT MEMBER) /CHENNAI, /DATED 10 TH APRIL, 2019 SOMU 12 ITA NO.2062 & 2063/CHNY/2003 #$% &% /COPY TO: APPELLANT 2. RESPONDENT 3. ( () /CIT(A) 4. ( /CIT 5. % ##- /DR 6. 0 /GF