HANJER BIOTECH ENERGIES PVT. LTD., MUMBAI V. DCIT - 5(1), MUMBAI

ITA 2190/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0568 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: NEELAM C JADHAV
• Keywords: Business income
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI G BENCH BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 2190/MUM/2016 (ASSESSMENT YEAR- 2011-12) M/S HANJER BIOTECH ENERGIES PVT. LTD., 335, SHALIMAR HOUSE, GRANT ROAD, MUMBAI-400007. PAN: AABCH3870H VS. DY.CIT 5(1), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : MISS. NEELAM C. JADHAV (AR) REVENUE BY : SHRI V. VIDHYADHAR (DR) DATE OF HEARING : 26.12.2017 DATE OF PRONOUNCEMENT : 07.02.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME TAX ACT IS DIRECTED AGAINST THE ORDER OF COMMISSIONER APPEALS-10, MUMBA I DATED 10 TH DECEMBER 2015 FOR ASSESSMENT YEAR 2011-12, WHICH IN TURN ARISES FROM THE ORDER PASSED BY ASSESSING OFFICER UNDER SECTION 143(3) DATED 21 ST MARCH 2014. THE ASSESSEE HAS RAISED FOLLOWING GROUN DS OF APPEAL: REDUCTION OF CLAIM OF RS.41,79,481/- UNDER SECTION 80IA. (1) THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRM ING THE ORDER OF ASSESSING OFFICER ASSESSING INTEREST INCOME FROM MA RGIN MONEY AND FIXED DEPOSITS AS INCOME FROM OTHER SOURCES INSTEAD OF BU SINESS INCOME AND THEREBY REDUCING CLAIM UNDER SECTION 80 IA AMOUNTIN G TO RS.41,79,481/-. (2) WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT USED BORROWED MONEY TO KEEP MARGIN MONEY AND FIXED DEPOSITS AS SECURITY DEPOSIT S IN RELATION TO THE MSW RECYCLING BUSINESS FOR OBTAINING THE CONTRACTS FROM VARIOUS MUNICIPAL ITA NO.2190/M/16 HANJER BIOTECH ENERGIES P. LTD. 2 AUTHORITIES, THEREFORE, THE INTEREST PAID ON BORROW ED MONEY MAY BE SET OFF AGAINST INTEREST ASSESSED AS INCOME FROM OTHER SOUR CES. (3) THE APPELLANT CRAVES LEAVE TO ADD, AND, SUBSTITUTE AND/AFTER ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-C OMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPING, OPERATING AND MANUFACTURING OF SOLID WASTE MANAGEMENT SYSTEM WITH VARIOUS MUNICIPAL CORPORATIO NS, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 ON 29 TH SEPTEMBER 2011 DECLARING TOTAL INCOME AT RS. NIL UNDER NORMAL PROV ISIONS AND ON THE BOOK PROFIT AT RS. 30,47,68,763/- AS PER THE PROVIS IONS OF SECTION 115JB OF THE ACT. THE ASSESSING OFFICER COMPLETED THE ASSESS MENT UNDER SECTION 143(3) ON 21 ST MARCH 2014. DURING THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER NOTED THAT ASSESSEE CLAIMED DEDUC TION UNDER SECTION 80IA(4) OF RS. 67,22,73,075/- CLAIMING ITSELF IN TH E BUSINESS OF DEVELOPING, OPERATING AND MAINTENANCE OF SOLID WAST E MANAGEMENT SYSTEM. THE ASSESSEE NOT EXCLUDED THE INTEREST INCO ME OF RS. 41,79,481/- FROM THE PROFIT OF THE UNDERTAKING FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SECTION 8OIA. THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE INTEREST INCOM E SHOULD NOT BE EXCLUDED FROM THE DEDUCTION UNDER SECTION 80IA. THE ASSESSEE VIDE ITS REPLY DATED 14.02.2014 CONTENDED THAT THE INTEREST ON BANK FD AND SECURITY DEPOSIT ARE IN CO-RELATION TO MANAGEMENT S OLID WASTE RECYCLING BUSINESS ACTIVITY OF THE ASSESSEE. ALL FDS AND SECU RITY DEPOSIT ARE KEPT IN ITA NO.2190/M/16 HANJER BIOTECH ENERGIES P. LTD. 3 RELATION TO BUSINESS OF ASSESSEE AND BE TREATED AS BUSINESS INCOME AND BE ADJUSTED AGAINST THE DEDUCTION UNDER SECTION 80IA. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO HOLDING THAT TH E INTEREST IS NOT DERIVED DIRECTLY FROM THE BUSINESS UNDERTAKING OF T HE ASSESSEE. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF AO WAS CONFIRM ED. THUS, FURTHER AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE HAS FILE D THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AR OF THE ASSESSEE AND LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. GROUND NO .1 OF THE APPEAL RELATES TO EXCLUSION OF INTEREST INCOME FROM DEDUCT ION UNDER SECTION 80IA. THE LD. AR OF THE ASSESSEE ARGUED THAT THE AS SESSEE DEPOSITED THE MARGIN MONEY IN THE BANK AND EARNED INTEREST. THE I NTEREST EARNED BY THE ASSESSEE IS FROM ITS BUSINESS ACTIVITY AND SHOULD B E TREATED AS INCOME DERIVED FROM THE ELIGIBLE UNDERTAKING. THE AO TREAT ED THE INTEREST INCOME AS INCOME FROM OTHER SOURCES THOUGH IT WAS A PART OF BUSINESS INCOME. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE ARGUE D THAT THE INTEREST INCOME EARNED BY ASSESSEE IS NOT DERIVED FROM ELIGI BLE UNDERTAKING FOR DEDUCTION UNDER SECTION 80IA. THE INTEREST INCOME C ANNOT BE SAID TO BE FLOWING DIRECTLY FROM BUSINESS OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THERE IS N O DISPUTE THAT ASSESSEE ITA NO.2190/M/16 HANJER BIOTECH ENERGIES P. LTD. 4 EARNED INTEREST INCOME OF RS. 41,79,481/- ON FD AND SECURITY DEPOSIT. THE ASSESSEE CLAIMED TO HAVE EARNED THE INTEREST IN COME ON BANK DEPOSITS OF MARGIN MONEY RECEIVED FROM VARIOUS MUNICIPAL AUT HORITIES. IN OUR VIEW, THE INTEREST INCOME FROM FD AND SECURITY DEPO SIT IS INDEPENDENT OF BUSINESS ACTIVITY OF THE ASSESSEE. THE HONBLE SUPR EME COURT IN CASE OF PANDIAN CHEMICALS LTD. VS. CIT (2003) 129 TAXMAN 53 9 (SC) HELD THAT DERIVING OF INTEREST OR PROFIT ON DEPOSIT WITH ELEC TRICITY BOARD CANNOT BE SAID TO BE FLOWING DIRECTLY FROM INDUSTRIAL UNDERTA KING AND, THEREFORE, DEDUCTION UNDER SECTION 80HH COULD NOT BE ALLOWED I N RESPECT THEREOF. CONSIDERING THE DECISION OF HONBLE SUPREME COURT T HAT THE INTEREST OR PROFIT ON DEPOSIT CANNOT BE SAID TO BE FLOWING FROM THE ELIGIBLE INDUSTRIAL UNDERTAKING. THUS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY LD. CIT(A). IN THE RESULT, GROUND NO.1 OF THE APPEAL IS DISMISSED. 5. GROUND NO.2 RELATES TO SET-OFF OF INTEREST AGAINST THE BORROWED MONEY. WE HAVE NOTED THAT THE LD. AR OF THE ASSESSEE HAS N OT ARGUED ANYTHING IN SUPPORT OF THIS GROUND OF APPEAL. HENCE, THE LD. DR HAS NO OPPORTUNITY TO CONTROVERT THE SUBMISSION OF LD. AR OF THE ASSESSEE . CONSIDERING THE FACT THAT THE ASSESSEE HAS RAISED THIS GROUND OF APPEAL IN ALTERNATIVE. WE HAVE FURTHER NOTED THAT NO SUCH GROUND OF APPEAL WAS RAI SED BEFORE LD. CIT(A). CONSIDERING THE FACT THAT THE ASSESSEE HAS RAISED T HIS GROUND OF APPEAL FOR THE FIRST TIME BEFORE THE TRIBUNAL, WE ADMIT THIS G ROUND OF APPEAL AND ITA NO.2190/M/16 HANJER BIOTECH ENERGIES P. LTD. 5 RESTORED THIS GROUND OF APPEAL TO THE FILE OF AO TO DECIDE THE SAME IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT AO SHALL GRANT SUFFICIENT OPPORTUNITY BEFORE PASSING THE ORDER. HENCE, THIS G ROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF FEBRUARY, 2018. 8. - S SD/- SD/- (R.C. SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 07/02/2018 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/