S.S. Gas Lab Asia P. Ltd., Delhi V. ITO, New Delhi

ITA 252/DEL/2014

• Counselvise Citation: 25220114 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 14-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEVI SHARAN SINGH
• Assessee Lawyers: ANIL KUMAR
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH SMC SMC SMC SMC : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA, VICE , VICE , VICE , VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT ITA NO ITA NO ITA NO ITA NO . .. . 252/DEL/2014 252/DEL/2014 252/DEL/2014 252/DEL/2014 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009 - -- - 10 1010 10 M/S S.S. GAS LAB ASIA P.LTD., M/S S.S. GAS LAB ASIA P.LTD., M/S S.S. GAS LAB ASIA P.LTD., M/S S.S. GAS LAB ASIA P.LTD., A AA A- -- -6/3, JHILMIL INDUSTRIAL AREA, 6/3, JHILMIL INDUSTRIAL AREA, 6/3, JHILMIL INDUSTRIAL AREA, 6/3, JHILMIL INDUSTRIAL AREA, SHAHDARA, SHAHDARA, SHAHDARA, SHAHDARA, DELHI DELHI DELHI DELHI 110 092. 110 092. 110 092. 110 092. PAN : A PAN : A PAN : A PAN : AAKCS1928C. AKCS1928C. AKCS1928C. AKCS1928C. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -7(1), 7(1), 7(1), 7(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL KUMAR, CA. RESPONDENT BY : SHRI DEVI SHARAN SINGH, SR.DR. DATE OF HEARING : 14.07.2015 14.07.2015 14.07.2015 14.07.2015 DATE OF PRONOUNCEMENT : 11.08.2015 11.08.2015 11.08.2015 11.08.2015 ORDER ORDER ORDER ORDER THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-1 0 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-X, NEW DELHI DATED 29 TH OCTOBER, 2013. 2. THE GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE TREATMENT OF THE INTEREST INCOME ON FDRS AMOUNTING TO `2,74,124/- AS INCOME FRO M OTHER SOURCES INSTEAD OF INCOME FROM BUSINESS & PROFESSION. THE ACTION OF AUTHORITIES BELOW IS WRONG, ILLEGAL, MISCONCEIVED, UNJUSTIFIED AND BAD AT LAW TH EREFORE IT SHOULD BE QUASHED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ACTION OF THE AUTHORITY OF DISALLOWAN CE OF EXEMPTION UNDER SECTION 10B IN RESPECT OF SUCH INTERE ST ITA-252/DEL/2014 2 INCOME IS WRONG, ILLEGAL, MISCONCEIVED, UNJUSTIFIED AN D BAD AT LAW THEREFORE IT SHOULD BE QUASHED. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND THE LD. ASSESSING OFFICER HAS ERRED COMPLETELY IN INTERPRETING THE NATURE OF INCOME WHICH IS TO BE EXE MPT U/S 10B OF THE INCOME TAX ACT, 1961. 4. THE ACTION OF LD. AUTHORITY IS NOT JUSTIFIED IN TH E EYES OF LAW OF APPLYING THE CASE LAW OF M/S SHRI RAM HONDA POWER EQUIPMENT LTD. AS THE FACTS AND CIRCUMSTANCES OF THE SAID CASE ARE IRRELEVANT. 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IN TEREST INCOME ON FDRS AMOUNTING TO `2.74 LAKHS WAS CLAIMED BY THE ASSESSEE AS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS AND PROFE SSION. HE SUBMITTED THAT THE LEARNED CIT(A) HAS WRONGLY CONF IRMED THE ORDER OF THE ASSESSING OFFICER IN TREATING THE INTEREST INCOME FROM FDRS AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM BUSINE SS AND PROFESSION. HE SUBMITTED THAT THE ACTION OF THE REVEN UE AUTHORITIES IN DISALLOWING THE EXEMPTION UNDER SECTION 10B IN RESPEC T OF SUCH INTEREST INCOME WAS WRONG. HE SUBMITTED THAT THE DE CISION OF M/S SHRI RAM HONDA DOES NOT APPLY TO THE FACTS OF THE CASE OF T HE ASSESSEE AND IS DISTINGUISHABLE. HE SUBMITTED THAT THESE FDRS WERE M ADE AS SECURITY TO THE BANKS FOR OBTAINING OVERDRAFT FACILIT IES AND, THEREFORE, RELATED TO THE BUSINESS ACTIVITIES OF THE ASSESSEE. HE RE FERRED TO THE SANCTION LETTER OF THE UCO BANK, COPY FILED IN THE C OMPILATION BEFORE THE TRIBUNAL WHICH CERTIFIES THAT THE ASSESSEE IS OPERA TING A CASH CREDIT ACCOUNT AND AVAILING A LIMIT OF `52.65 LAKHS SECURED AGAINST FIXED DEPOSITS OF THE ASSESSEE COMPANY. HE RELIED ON THE DECI SION OF HONBLE KARNATAKA HIGH COURT DATED 11 TH DECEMBER, 2013 IN THE CASE OF CIT VS. MOTOROLA INDIA ELECTRONICS (P) LTD. IN IN COME TAX APPEAL NO.428 OF 2007 AND 447 OF 2007, OF HONBLE RAJASTHAN HIGH COURT AT JODHPUR DATED 20 TH AUGUST, 2008 IN THE CASE OF CIT VS. HYCON INDIA LTD., UDAIPUR AND ANOTHER IN INCOME TAX APPEAL NO.45 OF 2 006 AND 111 OF ITA-252/DEL/2014 3 2007 AND OF ITAT, MUMBAI BENCH DATED 19 TH JULY, 2013 IN THE CASE OF DCIT VS. HIKAL LTD. IN ITA NO.45/MUM/2011. 4. LEARNED DR HAS RELIED ON THE ORDER OF THE LEARNED CIT(A). 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERU SED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). I FIND THAT THE BASIC FACTS OF THE CASE ARE NOT IN DISPUTE IN THIS CASE. THE ASSESSEE IS OPERATING A CASH CREDIT ACCOUNT WITH UCO BANK AND A VAILING A LIMIT OF `52.65 LAKHS SECURED AGAINST FIXED DEPOSITS OF THE ASSESSEE COMPANY AND THIS FACT HAS BEEN CERTIFIED BY UCO BANK IN THEIR CERTIFICATE DATED 8 TH FEBRUARY, 2010, A COPY FILED IN THE COMPILATION BE FORE THE TRIBUNAL. THE REVENUE COULD NOT CONTROVERT THE SUBMISSION OF TH E ASSESSEE THAT THE FDRS WERE MADE AS SECURITY TO THE BANKS FOR OBTAINI NG OVERDRAFT FACILITIES AND WERE RELATED TO THE BUSINESS ACTIVITIES O F THE ASSESSEE COMPANY. IN THE PECULIAR FACTS AND CIRCUMSTANCES OF T HE CASE, I FIND THAT THE ASSESSEE WAS ABLE TO ESTABLISH THE NEXUS BETWEEN T HE FDRS ON WHICH INTEREST HAS BEEN EARNED TO THE BUSINESS ACTIVITIE S OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, I FIND THAT NO CA SE OF DISALLOWANCE OF INTEREST AND EXEMPTION UNDER SECTION 10B COULD BE MADE OUT BY THE DEPARTMENT AND, ACCORDINGLY, THE GROUNDS OF APPEAL O F THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 11 TH AUGUST, 2015. SD/- (G. (G. (G. (G. C. GUPTA C. GUPTA C. GUPTA C. GUPTA ) )) ) VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. ITA-252/DEL/2014 4 COPY FORWARDED TO: - 1. APPELLANT : M/S S.S. GAS LAB ASIA P.LTD., M/S S.S. GAS LAB ASIA P.LTD., M/S S.S. GAS LAB ASIA P.LTD., M/S S.S. GAS LAB ASIA P.LTD., A AA A- -- -6/3, JHILMIL INDUSTRIAL AREA, SHAHDARA, 6/3, JHILMIL INDUSTRIAL AREA, SHAHDARA, 6/3, JHILMIL INDUSTRIAL AREA, SHAHDARA, 6/3, JHILMIL INDUSTRIAL AREA, SHAHDARA, DELHI DELHI DELHI DELHI 110 092. 110 092. 110 092. 110 092. 2. RESPONDENT : INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD- -- -7(1), NEW DELHI. 7(1), NEW DELHI. 7(1), NEW DELHI. 7(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR