ACIT, New Delhi V. Shri Ankit Jain, New Delhi

ITA 2939/DEL/2012

• Counselvise Citation: 293920114 RSA 2012
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-08-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 12-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Assessee Lawyers: AMAR MITTALARS
• Keywords: Business income; Business expenditure; Capital receipt
• Section: 143(3); 80HHC; 37; 56; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI A BENC H BEFORE SHRI A.D. JAIN, JM & SHRI A.N. PAHUJA, AM ITA NO.2939/DEL/2012 ASSESSMENT YEAR:2001-02 ASSISTANT CIT,CIRCLE-22(1), NEW DELHI V/S . ANKIT JAIN,C-599, NEW FRIENDS COLONY,PHASE-1, NEW DELHI [PAN : AASPJ 5472 J] (APPELLANT) (RESPONDENT) ASSESSEE BY S/SHRI V.P.GUPTA & AMAR MITTAL,ARS REVENUE BY MRS. ANUSHA KHURANA, DR DATE OF HEARING 21-08-2012 DATE OF PRONOUNCEMENT 14-09-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 12.06.2012 BY THE REVENUE AGAI NST AN ORDER DATED 14.03.2012 OF THE LEARNED CIT(A)-XI, NEW DELH I, RAISES THE FOLLOWING GROUND:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN HOLDING THE INTEREST I NCOME AS BUSINESS INCOME AND ONLY THE NETTED INTEREST IS TO BE TAXED AS PER PROVISIONS OF SECTION 80HHC AND FURTHE R 90% OF THE NETTED INTEREST WILL BE REDUCED FROM THE PROFIT OF BUSINESS AS PER EXPLANATION BAA BELOW SUB-SECTIO N 4B OF SECTION 80HHC OF THE ACT. 2. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY O F THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F HEARING OF THE APPEAL. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T RETURN DECLARING INCOME OF ` ` 89,13,264/- FILED ON 31.10.2001 BY THE ASSESSEE, EX PORTING READYMADE GARMENTS, WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S ITA N O.2939 /DEL./2012 2 143(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT), ISSUED ON 20 TH SEPTEMBER, 2002. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION OF ` `1,85,55,055/- U/S 80HHC OF THE ACT. INTER ALIA, ON PERUSAL OF PROFIT AND LOSS ACCOUNT, THE AO NOTICED THAT THE ASSESSEE CREDITED AN AMOUNT OF ` ` 47,49,445/- ON ACCOUNT OF NET INTEREST . TO A QUERY BY THE AO, THE ASSESSEE REPLIED THAT IN ORDER TO AVAIL PACKING CREDIT AND LC LIMITS,, HE PU RCHASED FIXED DEPOSITS FROM THE BANK FROM WHICH INTEREST WAS EARNED WHILE INTEREST WAS PAID ON THE ACTUAL USE OF THE LIMIT. ACCORDINGLY, IN THE BOOKS ONLY ONE INTER EST ACCOUNT WAS MAINTAINED. TO A FURTHER QUERY BY THE AO, SEEKING DETAILS OF GROSS INTEREST, THE ASSESSEE FURNISHED THE FOLLOWING DETAILS:- [IN ` ] AMOUNT OF ACCRUED INTEREST FROM I0B 54,2 8,269/- AMOUNT OF INTEREST RECOVERABLE FROM MR. ANAND GUPTA 7,92,740/- AMOUNT OF INTEREST REFUNDED PAID AT THE TIME OF EXPORT BILLS NEGOTIATION 1,14,171/- GROSS INTEREST RECEIVED 63,35,180/- LESS: AMOUNT OF INTEREST PAID TO I0B DURING THE YEAR AS PER COPY OF STATEMENT FILED. 15,85,735/- NET AMOUNT OF INTEREST 47,49,445/- 2.1 AFTER EXAMINING THE AFORESAID DETAILS, THE AO ASKED THE ASSESSEE AS TO WHY INTEREST BE NOT TAXED AS INCOME UNDER THE HEAD OTHER SOURCES. HOWEVER, THE ASSESSEE DID NOT FURNISH ANY EXPLANATI ON AND REITERATED THEIR SUBMISSIONS ALREADY FURNISHED VIDE LETTER DATED 6 TH AUGUST, 2003. ACCORDINGLY, THE AO WHILE REJECTING THE SUBMISSIONS OF THE ASSES SEE CONCLUDED THAT INTEREST INCOME WAS NOT DERIVED FROM THE ACTIVITY OF EXPORT OF GOODS OR MERCHANDISE. SINCE INTEREST INCOME WAS NOT DIRECTLY RELATED TO EXPORT ACTIVITIES, THE AO WHILE RELYING UPON DECISION IN CAMBAY ELECTRIC SUPPLY IND USTRIAL CO. LTD. VS. CIT (1978) 113 ITR 84 (SC) AND CIT VS. STERLING FOODS ( 1999) 237 ITR 579 (SC); HINDUSTAN LEVER LTD. VS. CIT (1999) 239 ITR 297 (SC ); CIT VS. SHIRKE CONSTRUCTIONS EQUIPMENTS LTD.,246 ITR 430(BOM.);CIT VS. K.K DOSHI & CO.,245 ITA N O.2939 /DEL./2012 3 ITR 849(BOM.)AND K. RAVINDRANATHAN NAIR VS. DY. CIT ,262 ITR 669(KERALA),FOLLOWING DECISIONS IN 243 ITR 192;253 ITR 553;&253 ITR 319, BROUGHT TO TAX THE GROSS AMOUNT OF INTEREST OF ` ` 63,35,180/- UNDER THE HEAD INCOME FROM OTHER SOURCES WHILE CONCLUDING THAT T HE INTEREST WAS NOT DERIVED FROM THE EXPORT ACTIVITIES. ACCORDINGLY DEDUCTION U/S 80 HHC WAS REDUCED TO ` `1,69,06,511/-. 3. ON APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE, HOLDING AS UNDER:- 11. I HAVE CONSIDERED THE SUBMISSIONS MADE. THE ISSUE IN THIS CASE IS AS TO WHETHER THE INTEREST INCOME W AS FROM BUSINESS ACTIVITY OF THE APPELLANT OR FROM OTHER SOURCES. A LSO WHETHER THE INTEREST INCOME IS INEXTRICABLY CONNECTED WITH THE BUSINESS OF THE APPELLANT. IN THIS CONTEXT, THE APPELLANT HAS RELI ED A COPY OF APPELLATE ORDER OF THE LEARNED CIT(A)-XXVI. NEW DEL HI FOR THE ASSESSMENT YEAR 2001-02 IN THE CASE OF SHRI AJAY KU MAR JAIN, A RELATION OF THE APPELLANT TO IMPRESS UPON THE POINT THAT IN THE SIMILAR CIRCUMSTANCES, THE INTEREST INCOME WAS HELD TO BE B USINESS INCOME AND DEDUCTION U/S 80HHC WAS ALLOWED ACCORDINGLY. 12. FOLLOWING THE DECISION OF LEARNED CIT(A)-XXVI, NEW DELHI IN APPEAL NO.272/02-03 OF 25.02.2004 IN THE C ASE OF SHRI AJAY KUMAR JAIN FOR THE ASSESSMENT YEAR 2001-02 AND SO A LSO THE DECISION OF HONBLE SPL. BENCH ITAT, DELHI IN I.T.A . NO.2990/D/99, AND AS PER FACTS I DIRECT THE LEARNED AO TO RECOMPU TE THE DEDUCTION U/S 80HHC BY WAY OF TAKING INTO ACCOUNT NET INTERES T AS BUSINESS RECEIPT. 4. ON FURTHER APPEAL, THE ITAT UPHELD THE FINDINGS OF THE LD. CIT(A) IN THE FOLLOWING TERMS. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREF ULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AN D ALSO DELIBERATED UPON THE VARIOUS CASE LAWS RELIED ON BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS C ITED BY THE LEARNED AR AND DR IN THE COURSE OF HEARING BEFORE US. FROM THE RECORD, WE FOUND THAT THE ASSESSEE FIRM IS DOING THE EXPORT BUSINESS OF FASHION GARMENTS. FOR THE EXPORT BUSINESS, THE ASSE SSEE HAS BEEN ITA N O.2939 /DEL./2012 4 SANCTIONED PACKING CREDIT LIMIT AND IN ORDER TO SEC URE THIS LIMIT THE ASSESSEE HAS BEEN KEEPING A DEPOSIT FROM YEAR TO YE AR WITH THE BANK. THESE DEPOSITS ARE KEPT BY ASSESSEE IN FIXED DEPOSITS BUT ASSESSEE IS ALSO CHARGED INTEREST ON THE ACTUAL USE OF THE LIMITS. HOWEVER, IN THE BOOKS OF ACCOUNT ONLY ONE INTEREST ACCOUNT IS MAINTAINED WHERE BOTH THE DEBIT AND CREDIT ENTRIES OF THE INTEREST ARE RECORDED. THE NET BALANCE IS SHOWN IN THE FINAL P & L ACCOUNT. ACCORDING TO THE REQUIREMENT OF THE BANK FOR GIVING FACILITY TO THE ASSESSEE, THE ASSESSEE HAS BEEN REQUIRED TO MAINTAI N RECURRING DEPOSIT RECEIPTS WITH THE BANK TO COVER THE FACILIT IES BEING PROVIDED BY THE BANK TO THE ASSESSEE SUCH AS PACKING CREDIT, CASH CREDIT, BILL DISCOUNTING AND BANK GUARANTEE LIMITS. THE ASSESSEE HAS MADE THESE RECURRING DEPOSITS BY DEBITING THE OVERDRAFT AMOUNT OR CASH CREDIT AMOUNT AND NOT OUT OF ANY SURPLUS NON-INTERE ST BEARING FUNDS I.E. THE ASSESSEE HAS INCREASED ITS BORROWING WITH THE BANK TO CREATE THESE DEPOSITS. THE DIRECT NEXUS HAS EXISTED WHEN THIS WAS DONE AS THE BANK HAS A LIEN OVER THESE DEPOSITS. WE ALSO FOUND THAT WHENEVER ANY RECURRING DEPOSIT RECEIPT IS MATU RED, THE BANK HAS IMMEDIATELY DEPOSITED IT AGAINST ITS LOAN ACCOU NT OUTSTANDING ON THAT DATE. THERE HAS NOT BEEN A SINGLE INSTANCE WHERE THE RECURRING DEPOSIT RECEIPTS HAVE BEEN EN-CASHED AND MONEY HAS BEEN GIVEN TO THE ASSESSEE. THAT WHENEVER THE INTER EST HAS BEEN CREDITED AGAINST THESE RECEIPTS, THE SAME HAS BEEN DONE SIMULTANEOUSLY WITH DEBIT OF INTEREST ON THE OVERDR AFT FACILITIES. THERE IS DIRECT NEXUS BETWEEN THE INTEREST PAID TO THE BANK AND THE INTEREST RECEIVED FROM BANK AND THE PRINCIPLE OF MU TUALITY IS CLEARLY ESTABLISHED. THERE IS NO DISPUTE TO THE FACT THAT D EPOSIT WAS PLACED WITH THE BANK AS A MATTER OF BUSINESS COMPULSION IN THE COURSE OF ASSESSEE'S BUSINESS OF EXPORT WHERE LC IS REQUIRED TO BE OPENED AND OTHER CREDIT FACILITIES ARE NEEDED IN THE COURS E OF EXPORT BUSINESS. THE AMOUNT DEPOSITED IN THE BANK WAS NOT OUT OF SURPLUS FUND AVAILABLE WITH THE ASSESSEE AND WHICH HAS BEE N PUT TO THE BANK FOR EARNING INTEREST INCOME, BUT THE FUND WAS TRANSFERRED TO THE DEPOSIT ACCOUNT OUT OF THE OVERDRAFT FACILITIES ALREADY AVAILED BY THE ASSESSEE ON WHICH ASSESSEE WAS PAYING INTEREST TO THE BANK. THUS, BY MAKING THE DEPOSIT AND TRANSFERRING THE FU ND, LIABILITY FOR INTEREST BEARING FUNDS HAVE BEEN INCREASED. WITH TH E INCREASE IN SUCH LIABILITY FOR INTEREST BEARING FUNDS, THE ASSE SSEE HAS CORRESPONDINGLY EARNED, INTEREST INCOME OUT OF SUCH DEPOSIT WITH THE BANK. THE ASSESSEE HAS MAINTAINED ONLY ONE INTE REST ACCOUNT AND WHAT HAS GONE TO THE P & L ACCOUNT OF THE ASSES SEE WAS NET INTEREST INCOME WHICH HE WAS LIABLE TO PAY ON ITS B ORROWINGS. FURTHERMORE, WHENEVER SUCH DEPOSIT WAS MATURED, THE BANK HAS DIRECTLY ADJUSTED THE SAME OUT OF THE LOAN ACCOUNT OF THE ASSESSEE AND NO FUND WAS HANDED OVER TO THE ASSESSEE TO REPR ESENT ITS SURPLUS FUND. THAT THE PRINCIPLE OF LAW INVOLVED IS WELL EXPLAINED BY ITA N O.2939 /DEL./2012 5 THE SUPREME COURT IN TWO OF ITS JUDGMENTS BASED ON SIMILAR POINT OF LAW THAT RECEIPTS INEXTRICABLY LINKED HAVE TO BE NE TTED OFF AND ONLY THE NET INCOME COULD BE TREATED AS THE INCOME OF BU SINESS OR A CAPITAL RECEIPT AS THE CASE MAY, IN CIT VS BOKARO S TEEL LTD., (1999) 236 ITR 315 AND CIT VS. KARNAL SUGAR MILLS LTD., (2 000) 161 CTR (SC) 241. APPLYING THIS PRINCIPLE IN THE CASE OF TH E ASSESSEE AND THE FACTS AS NARRATED ABOVE, THE INTEREST INCOME EM ANATING FROM BANK DEPOSITS OPENED ONLY FOR THE PURPOSES OF BUSIN ESS OF MAINTAINING CREDIT LIMITS WITH THE BANK, LETTER OF CREDITS AND OTHER FACILITIES, THE INCOME WOULD NEED TO BE NETTED I.E. FROM THE RECEIPT OF INTEREST THE INTEREST PAID WOULD NEED TO BE NETTED AND ONLY THE NET INCOME WOULD ENTER THE COMPUTATION OF PROFITS AND G AINS OF BUSINESS. ONCE THE NET INCOME ENTERS THE PROFITS AN D GAINS OF BUSINESS IN ACCORDANCE WITH LAW, THEN AS PER EXPLAN ATION BAA, THE NET INCOME WOULD NEED TO BE ADJUSTED FOR PURPOSES O F CALCULATING DEDUCTION UNDER SEC. 80- HHC. ITAT, DELHI SPECIAL B ENCH IN THE CASE OF LALSONS ENTRPRISES (SUPRA) HAS HELD THAT WH EN THERE IS A DIRECT NEXUS BETWEEN INTEREST RECEIVED AND PAID, NE TTING OF INTEREST HAS TO BE ALLOWED. THE JURISDICTIONAL HIGH COURT. I N THE CASE OF COSHIKA TELECOM LTD. 203 CTR 99 HAD OBSERVED THAT I NTEREST ON DEPOSIT WITH THE BANK ON SECURING BANK GUARANTEE OF DOT FOR OBTAINING LICENSE IS BUSINESS INCOME AND NOT INCOME FROM OTHER SOURCES. 8. IN THE CASE OF K. RANINDRANATHAN NAIR 262 ITR 6 69, AS REFERRED TO BY THE REVENUE IN ITS GROUND OF APPEAL, WE FOUND THAT INTEREST INCOME RECEIVED ON SHORT TERM DEPOSIT WAS HELD TO BE INCOME FROM OTHER SOURCES NOT ELIGIBLE FOR DEDUCTIO N UNDER SECTION 80-HHC OF THE ACT. HOWEVER, IN THE INSTANT CASE BEF ORE US, WE ARE CONCERNED WITH THE' PRINCIPLE OF NETTING OF ANY EXP ENDITURE/INCOME WHICH GOES TO FORM PART OF INCOME OF THE ASSESSEE. AS THE ACT HAS CLEARLY PROVIDED FOR EXCLUSION OF 90% OF THE INTERE ST INCOME FOR COMPUTING DEDUCTION UNDER SEC. 80-HHC AS PER EXPLAN ATION BAA OF SUB- SECTION 4B, BY FOLLOWING THE DECISION OF LALSO NS ENTERPRISES (SUPRA), WE ARE INCLINED TO HOLD THAT NETTING OF SU CH INTEREST INCOME IN THE INSTANT CASE WAS JUSTIFIED IN SO FAR THE DEP OSIT IN THE BANK WAS MADE OUT OF THE OVERDRAFT ACCOUNT BEING AVAILED BY THE ASSESSEE ON WHICH INTEREST WAS PAYABLE TO THE BANK. WHAT THE ASSESSEE HAS DONE IS THE DEBITING THE NET INTEREST EXPENDITURE, AFTER REDUCING THE INTEREST INCOME RECEIVABLE FROM THE BANK FROM THE INTEREST EXPENDITURE PAYABLE TO THE BANK. 9. IN VIEW OF THE ABOVE, WE ARE INCLINED TO AGREE WITH THE LEARNED AR SHRI AMAR MITTAR THAT IN VIEW OF THE FAC TS AND CIRCUMSTANCES OF THE CASE WHERE DEPOSIT IN THE BANK ACCOUNT WAS ITA N O.2939 /DEL./2012 6 INEXTRICABLY RELATED TO THE EXPORT BUSINESS AND UND ER BUSINESS COMPULSION, MADE OUT OF OVERDRAFT LIMIT AVAILED BY THE ASSESSEE, CIT(A) WAS JUSTIFIED IN NETTING OF INTEREST EXPENDI TURE PAYABLE TO THE BANK OUT OF INTEREST INCOME RECEIVABLE ON THE DEPOS IT MADE OUT OF FUNDS AVAILED FROM THE OVERDRAFT LIMIT. 5. ON AN APPEAL FILED BY THE REVENUE, HONBLE HIGH COURT VIDE THEIR ORDER DATED 14.1.2009 IN ITA NO.1133/2007 RESTORED THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTIONS THAT ASSESSMENT BE FRAMED ST RICTLY IN COMPLIANCE WITH DIRECTIONS CONTAINED IN CIT VS. SHRIRAM HONDA POWER EQUIPMENT LTD. ,289 ITR 475/158 TAXMAN 474 (DELHI). 6. IN TERMS OF THE AFORESAID DIRECTIONS OF THE HON BLE HIGH COURT, THE AO COMPLETED THE ASSESSMENT, REITERATING THAT INTER EST INCOME HAS TO BE ASSESSED UNDER THE INCOME FROM OTHER SOURCES AS W AS THE CASE IN THE ORIGINAL ASSESSMENT ORDER DATED 29 TH DECEMBER, 2003. THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER DATED 30.11.2009 READ AS UNDER:- THE SUBMISSION OF THE ASSESSEE HAS BEEN CONSIDERED BUT FOUND UNTENABLE. THERE IS NO DISPUTE ON THE ISSUE THAT TH E INTEREST EARNED ON FDRS IS THE INCOME TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AS HAS BEEN HELD BY THE THEN AO IN ORIGINAL ASSESSMENT ORDER DT. 29.12.2003. THIS IS ALSO IN ACCORDANCE WI TH THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE O F SHRI RAM HONDA POWER EQUIPMENT LTD., 289 ITR 475. THE ONLY ISSUE TO BE DECIDED NOW AS PER THE DIRECTI ONS OF THE HON'BLE HIGH COURT IS WHETHER THE INTEREST EXPENDIT URE IS TO BE DEDUCTED U/S 57 OF THE I.T. ACT FROM THE INTEREST I NCOME OF RS.63,35,180/- ON THESE FDRS AND ACCORDINGLY TO BE EXCLUDED FROM THE BUSINESS PROFITS FOR CALCULATING DEDUCTION U/S 80HHC. THE ASSESSEE HAD BORROWED THE FUNDS FOR OBTAINING B ANK GUARANTEE AND CREDIT LIMITS {OR THE PURPOSE OF ITS EXPORTS BUSINESS AND AS PER THE REQUIREMENT OF THE BANKS. ACCEPTANCE OF THE MAKING OF FDRS WITH THE BANKS AS A PRECONDITION LED TO THE AVAILABILITY OF CREDIT FACILITIES ON WHICH THE INTEREST EXPENDITURE WAS INCURRED AND RIOT THAT THE FUNDS BORROWED AGAINST THE CREDIT FAC ILITIES WERE BORROWED FOR THE PURPOSE OF MAKING THE FDRS AND EAR N THE INTEREST INCOME. THE PURPOSE OF OBTAINING THE LOAN FROM THE BANK OR THE ITA N O.2939 /DEL./2012 7 FINANCIAL INSTITUTIONS WAS NOT TO PURCHASE THE FDRS AND TO EARN INTEREST THEREON BUT IT WAS TAKEN ON THE REQUIREMEN T OF OBTAINING CREDITS FOR THE EXPORT BUSINESS. THEREFORE, THE INT EREST PAID BY THE ASSESSEE TO THE CREDITORS/FINANCIAL INSTITUTION WAS TO PROMOTE HIS BUSINESS INCOME. WHEN THE NATURE OF ASSESSEE'S BUSINESS ACTIVITY IS EXAMINED IT IS VERY CLEAR THAT BORROWING OF FUNDS WAS NEVER DONE TO EARN 'INTEREST ON FDRS. IN FACT BORROWING WAS DONE PRIMA RILY TO ENJOY CREDIT FOR CERTAIN PERIOD. AS SUCH BORROWINGS WERE DONE AND FDRS WERE MADE FOR THE PURPOSE OF ENJOYING CREDIT FOR LO NGER PERIOD. THEREFORE, THESE INTEREST OUTGOINGS ARE PART OF PUR CHASE CONSIDERATION OR COST OF INPUT TO THE ASSESSEE IN H IS BUSINESS OF EXPORT OF GARMENTS. HENCE, IT IS HELD THAT INTEREST PAID ON OVERDRAFT FACILITIES IS A BUSINESS EXPENSES AND HAS BEEN RIGH TLY CLAIMED SO IN THE P&L A/C. THE FDR INTEREST RECEIPTS ON THE OTHER HAND ARE INC OME ARISING OUT OF INVESTMENTS. EVEN IF THE ASSESSEE WO ULD NOT HAVE EARNED ANY INTEREST ON FDR STILL TO ENJOY CREDIT FA CILITY IT WOULD HAVE INCURRED BORROWING AND PAID INTEREST. IT IS THEREFO RE VERY CLEAR THAT IRRESPECTIVE OF ASSESSEE HAVING EARNED INTEREST OR NOT, THE EXPENDITURE WOULD HAVE BEEN NECESSARILY MADE BY THE ASSESSEE. THEREFORE, THERE IS NO NEXUS BETWEEN EARNING OF THI S INTEREST AND INTEREST EXPENDITURE. THE EXPENDITURE WAS NEVER INCURRED WITH OBJECTIVE OF EARNING INTEREST INCOME. THE FACT THAT EVEN IF THE ASSESSEE PAID INTEREST IT IS ONLY AS COMPONENT OF C OST OF GOODS PURCHASED DEDUCTIBLE U/S 36/37 OR THE I.T. ACT AND NOT U/S 57. THE NEXUS OF INTEREST EXPENDITURE IS WITH CREDIT AND PU RCHASE POLICY OF THE ASSESSEE AND IS COST ATTRIBUTABLE DIRECTLY TO A SSESSEE'S PURCHASES. THE EARNING OF INTEREST IS INDEPENDENT O F THIS COST AND THEREFORE, THE NEXUS CLAIMED BY THE ASSESSEE DOES N OT EXIST. THE INTEREST EXPENDITURE NOT BEING LAID OUT 'WHOLLY AND EXCLUSIVELY' FOR PURPOSE OF EARNING INTEREST INCOME AS REQUIRED FOR DEDUCTION U/S 57, IN VIEW OF THE ABOVE THE ASSESSEE'S CLAIM THAT NETTING OFF BE DONE IS NOT ACCEPTABLE. THIS IS ALSO IN ACCORDANCE WITH THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF SHRI RAM HONDA P OWER EQUIPMENT LTD. (289 ITR 475) WHEREIN THE COURT HAS HELD 'WHERE, AS A RESULT OF THE COMPUTATION OF PROFITS A ND GAINS OF BUSINESS AND PROFESSION THE ASSESSING OFFICER TREAT S THE INTEREST ITA N O.2939 /DEL./2012 8 RECEIPT AS BUSINESS INCOME, THEN DEDUCTION SHOULD B E PERMISSIBLE, IN TERMS OF EXPLANATION (BAA) OF THE NET INTEREST, I.E., THE GROSS INTEREST LESS THE EXPENDITURE INCURRED FOR THE PURP OSES OF EARNING SUCH INTEREST. THE NEXUS BETWEEN OBTAINING THE LOAN AND PAYING INTEREST THEREON (LAYING OUT THE EXPENDITURE BY WAY OF INTEREST) FOR THE PURPOSE OF EARNING THE INTEREST ON THE FIXED DE POSIT, TO DRAW AN ANALOGY FROM SECTION 37, WILL REQUIRE TO BE SHOW N BY THE ASSESSEE FOR APPLICATION OF THE NETTING PRINCIPLE'. IN PARAGRAPHS 35 AND 36 OF THE SAME DECISION, THE JURISDICTIONAL HIGH COURT HAS CONSIDERED TWO CATEGO RIES OF FIXED DEPOSITS TAKEN BY THE ASSESSEE. THE FIRST CATEGORY IS FIXED DEPOSITS TAKEN BY THE ASSESSEE FOR THE PURPOSES OF PARKING O F ITS SURPLUS FUNDS. THE SECOND CATEGORY IS FIXED DEPOSITS THAT H AVE BEEN TAKEN BY' THE ASSESSEE FOR MANDATORILY KEEPING THE MONIES WITH THE BANK FOR THE PURPOSES OF AVAILING OF CREDIT FACILITATES, ETC., FOR ITS EXPORT BUSINESS. THE COURT HELD ON A CONSIDERATION OF THE DECISIONS OF THE KERALA HIGH COURT IN NANJI TOPANBHAI AND CO. V. ASS TT. CLT [2001] 243 ITR 192, K RAVINDRANATHAN NAIR V. DEPUTY CIT (A SSESSMENT) [2003] 262 ITR 669 AND URBAN STANISLAUS CO. V. CLT [2003] 263 ITR 10, THAT IN BOTH THE SITUATIONS, THE INTEREST E ARNED BY THE ASSESSEE ON THE FIXED DEPOSITS WOULD HAVE TO BE TRE ATED AS INCOME FROM OTHER SOURCES AND NOT BUSINESS INCOME. THE ABOVE MENTIONED OBSERVATION WERE AGAIN AFFIRMED BY HON'BLE DELHI HIGH COURT ON 25.1.2008 IN THE CASE OF COMMIS SIONER OF INCOME-TAX V. PAWAN KUMAR JAIN [2008] 298 ITR 443 ( DEL). IN THIS CASE, THE ASSESSEE HAD TAKEN SOME FIXED DEPOSITS FO R THE PURPOSE OF AVAILING OF CREDIT FACILITIES FROM BANK OF RAJAS THAN. IT HAD CLAIMED A DEDUCTION ON THE GROUND THAT THE INTEREST EARNED ON THE FIXED DEPOSITS SO OBTAINED IS BUSINESS INCOME. THIS WAS A CCEPTED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER AS APPARE NT FROM THE ACCEPTANCE OF THE COMPUTATION OF INCOME GIVEN BY TH E ASSESSEE. AS A RESULT HON'BLE HIGH COURT ALLOWED THE NETTING OF INTEREST INCOME AS THE INTEREST INCOME WAS HELD AS BUSINESS INCOME BY THE AUTHORITIES BELOW. FOLLOWING FACTS EMERGES FROM THE ABOVE DISCUSSION (A) NETTING OF INTEREST WILL BE ALLOWED IF A.O HAS GIVEN A SPECIFIC FINDING THAT INTEREST INCOME IS BUSINESS INCOME AND SUCH FINDING IS NOT CHALLENGED BY THE REVENUE. ITA N O.2939 /DEL./2012 9 (B) NETTING OF INTEREST WILL NOT BE ALLOWED IF INT EREST EARNED BY THE ASSESSEE IS TREATED AS INCOME FROM OTHER SOURCES AN D INTEREST EXPENDITURE IS HELD AS BUSINESS EXPENDITUR E. (C) ONCE THE INTEREST INCOME IS TREATED AS INCOME F ROM OTHER SOURCES, THE DEDUCTION OF INTEREST PAID, I.E. NETTI NG WILL BE ALLOWABLE U/S 57 OF THE LT. ACT ONLY IF THE DIRECT NEXUS BETW EEN EARNING OF INTEREST AND INTEREST EXPENSES EXISTS. IN THE CASE OF THE ASSESSEE THERE IS NO DOUBT THAT INTEREST INCOME IS 'INCOME FROM OTHER SOURCES AS HELD BY TH E AO IN THE ORIGINAL ASSESSMENT ORDER U/S 143(3) DATED: 29.12.2 003. THUS, THE CASE OF THE ASSESSEE IS COVERED UNDER CLAUSE (B) & (C) ABOVE. THE DEDUCTION OF AN EXPENDITURE INCURRED UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION' CANNOT BE ALLOWED AGAINST AN INCOME TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. ACCORDINGLY FOR CALCULATING DEDUCTION U/S 80HHC OF THE I.T. ACT, 1961 THE GROSS INTEREST EARNED OF RS.63,35,180/- IS DISALLOWED WITHOUT DEDUCTING ANY INTEREST EXPENDITURE U/S 57 A S CLAIMED BY THE ASSESSEE AND FULL AMOUNT IS ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AS HAS BEEN RIGHTLY DONE IN THE ORIGI NAL ASSESSMENT ORDER DATED: 7. ON APPEAL, THE LD. CIT(A) WITHOUT EVEN ADVERTIN G TO THE DIRECTIONS OF THE HONBLE HIGH COURT THAT ASSESSMENT BE FRAMED ST RICTLY IN COMPLIANCE WITH DIRECTIONS CONTAINED IN CIT VS. SHRIRAM HONDA POWER EQUIPMENT LTD.(SUPRA), ALLOWED THE CLAIM OF THE ASSESSEE, AS UNDER:- GROUND NO.1, 2, 3 & 4 : THE ASSESSMENT ORDER AND T HE SUBMISSIONS OF THE APPELLANT HAVE BEEN DULY PERUSED. THE FACTS OF THE CASE ARE FOUND IDENTICAL TO THE CASE OF AJAY KUMAR JAIN WHER EIN THE CIT(A) AND THE HONBLE ITAT HAVE HELD IN FAVOUR OF THE APP ELLANT. FOLLOWING THE SAID DECISIONS AND THE FACTS OF THIS CASE, IT IS HELD THAT THE APPELLANT IS ONLY CARRYING ON EXPORT BUSINESS A ND NO OTHER BUSINESS AND INTEREST INCOME HAS BEEN BOTH PAID AND RECEIVED FOR THIS EXPORT BUSINESS AND HAS A DIRECT NEXUS WITH TH E BUSINESS. THE INTEREST INCOME THEREFORE IS TO BE TREATED AS BUSIN ESS INCOME. HENCE, ONLY THE NETTED INTEREST IS TO BE TAXED AS P ER PROVISIONS OF SECTION 80HHC OF THE ACT, AND 90% OF THE NETTED INT EREST INCOME WILL BE REDUCED FROM THE PROFIT OF BUSINESS AS PER EXPLANATION BAA BELOW SECTION 4B OF SECTION 80HHC OF THE ACT. THE ASSESSING ITA N O.2939 /DEL./2012 10 OFFICER MAY THEREFORE RE-COMPUTE THE DEDUCTION U/S 80HHC ACCORDINGLY. 8. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. DR SUPPORTED THE ORDER OF THE AO WHILE CONTENDING THAT THE ASSESSEE DID NOT ESTABLISH NEXU S BETWEEN EXPENDITURE INCURRED ON INTEREST AND THE INTEREST EARNED BY THE ASSESSEE FROM FIXED DEPOSITS KEPT WITH THE BANK FOR OBTAINING PACKING CREDIT LIM IT AND LC LIMIT NOR SUCH INTEREST INCOME WAS DERIVED FROM THE EXPORT ACTIVITIES.. ON THE OTHER HAND, THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF TH E LD. CIT(A) WHILE RELYING UPON DECISIONS IN CIT VS. SHAHI EXPORT HOUSE,195 TAXMAN 163 (DELHI); CIT VS. PAWAN KUMAR JAIN (2008), 298 ITR 443 (DEL); CIT VS. BHARAT RASAYAN LTD. (2008), 172 TAXMAN 338 (DELHI); M/S ACG ASSOCIATED CAPSULES PVT. LTD. VS. CIT (2012) 18 TAXMANN.COM 137 (SUPREME COURT) AND CIT V S. HIGH POLYMER LABS LTD. ,2012(4)TMI 435(DELHI). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS RELIED UPON BY THE LD. AR ON BEHALF OF THE ASSESSEE. AS IS APPARENT FROM THE AFORESAID FACTS, HONBLE HIGH COURT VIDE THEIR ORDER DATED 14.1.2009 IN ITA NO.1133/2007 RESTORED THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTIONS THAT ASSESSMENT BE FRAMED ST RICTLY IN COMPLIANCE WITH DIRECTIONS CONTAINED IN SHRIRAM HONDA POWER EQUIPME NT LTD.(SUPRA). HONBLE HIGH COURT IN THEIR DECISION IN SHRIRAM HONDA POWER EQUIPMENT LTD.(SUPRA) WHILE ADJUDICATING AN IDENTICAL ISSUE SUMMARIZED THEIR CO NCLUSIONS AS UNDER : (I) IN COMPUTING WHAT THE PROFITS DERIVED FROM EXPO RTS FOR THE PURPOSES OF SECTION 80HHC(1) READ WITH SECTION 80HHC(3) ARE, THE NEXUS TEST HAS TO BE APPLIED TO EXCLUDE THAT WHICH DOES NOT PARTAKE OF PROFITS THAT CAN BE SAID TO HAVE BEEN DERIVED FROM THE BUSINESS OF EXPORTS. (II) IN THE SPECIFIC CONTEXT OF CLAUSE (BAA) OF THE EXPLANATION TO SECTION 80HHC, WHILE DETERMINING THE 'PROFITS OF THE BUSINESS', TH E ASSESSING OFFICER HAS TO UNDERTAKE A TWO-STEP EXERCISE IN THE FOLLOWING SEQU ENCE. HE HAS TO FIRST 'COMPUTE' THE PROFITS OF THE BUSINESS UNDER THE HEA D 'PROFITS AND GAINS OF ITA N O.2939 /DEL./2012 11 BUSINESS OR PROFESSION.' IN OTHER WORDS, HE WILL HA VE TO COMPUTE BUSINESS PROFITS, IN TERMS OF THE ACT, BY APPLYING THE PROVISIONS OF SECTIONS 28 TO 44 THEREOF. (III) IN ARRIVING AT PROFITS OF THE BUSINESS BY THE ABOVE METHOD, THE ASSESSING OFFICER WILL EXCLUDE ALL SUCH INCOMES WHICH PARTAKE OF THE CHARACTER OF 'INCOME FROM OTHER SOURCES' WHICH IN ANY EVENT ARE TREATED UNDER SECTIONS 56 AND 57 OF THE ACT AND ARE THEREFORE NOT TO BE RECKONED FOR TH E PURPOSES OF SECTION 80HHC. THE ASSESSING OFFICER WILL APPLY THE LAW AS EXPLAIN ED IN THE JUDGMENTS OF THE KERALA HIGH COURT REFERRED TO ABOVE WHICH HAVE BEEN AFFIRMED BY THE HON'BLE SUPREME COURT. (IV) WHERE SURPLUS FUNDS ARE PARKED WITH THE BANK A ND INTEREST IS EARNED THEREON IT CAN ONLY BE CATEGORISED AS INCOME FROM OTHER SOU RCES. THIS RECEIPT MERITS SEPARATE TREATMENT UNDER SECTION 56 OF THE ACT WHIC H IS OUTSIDE THE RING OF PROFITS AND GAINS FROM BUSINESS AND PROFESSION. IT GOES ENT IRELY OUT OF THE RECKONING FOR THE PURPOSES OF SECTION 80HHC. (V) INTEREST EARNED ON FIXED DEPOSITS FOR THE PURPO SES OF AVAILING OF CREDIT FACILITIES FROM THE BANK, DOES NOT HAVE AN IMMEDIATE NEXUS WIT H THE EXPORT BUSINESS AND THEREFORE HAS TO NECESSARILY BE TREATED AS INCOME F ROM OTHER SOURCES AND NOT BUSINESS INCOME. (VI) ONCE BUSINESS INCOME HAS BEEN DETERMINED BY AP PLYING ACCOUNTING STANDARDS AS WELL AS THE PROVISIONS CONTAINED IN TH E ACT, THE ASSESSEE WOULD BE PERMITTED TO, IN TERMS OF SECTION 37 OF THE ACT, CL AIM AS DEDUCTION, EXPENDITURE LAID OUT FOR THE PURPOSES OF EARNING SUCH BUSINESS INCOME. (VII) IN THE SECOND STAGE, THE ASSESSING OFFICER WI LL DEDUCT FROM THE PROFITS OF THE BUSINESS COMPUTED UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' THE FOLLOWING SUMS IN ORDER TO ARRIVE AT THE 'PROFI TS OF THE BUSINESS' FOR THE PURPOSES OF SECTION 80HHC(3): (A) 90 PER CENT. OF ANY SUM REFERRED TO IN CLAUSES (IIIA), (IIIB) AND (IIIC) OF SECTION 28 I.E., EXPORT INCENTIVES; (B) 90 PER CENT. OF ANY RECEIPTS BY WAY OF BROKERAG E, COMMISSION, INTEREST, RENT, CHARGES OR ANY OTHER RECEIPT OF A SIMILAR NATURE IN CLUDED IN SUCH PROFITS; AND (C) PROFITS OF ANY BRANCH, OFFICE, WAREHOUSE OR ANY OTHER ESTABLISHMENT OF THE ASSESSEE SITUATE OUTSIDE INDIA. (VIII) THE WORD 'INTEREST' IN CLAUSE (BAA) OF THE E XPLANATION CONNOTES 'NET INTEREST' AND NOT 'GROSS INTEREST'. THEREFORE, IN DEDUCTING S UCH INTEREST, THE ASSESSING OFFICER WILL TAKE INTO ACCOUNT THE NET INTEREST I.E ., GROSS INTEREST AS REDUCED BY EXPENDITURE INCURRED FOR EARNING SUCH INTEREST. THE DECISION OF THE SPECIAL BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL IN LALSONS [20 04] 8 ITR 25 (DELHI) TO THIS ITA N O.2939 /DEL./2012 12 EFFECT IS AFFIRMED. IN HOLDING AS ABOVE, WE DIFFER FROM THE JUDGMENTS OF THE PUNJAB AND HARYANA HIGH COURT IN RANI PALIWAL [2004] 268 ITR 220 AND THE MADRAS HIGH COURT IN CHINNAPANDI [2006] 282 ITR 389 AND AFFIRM THE RULING OF THE SPECIAL BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL IN LALSONS [2004] 8 ITR 25 (DELHI). (IX) WHERE, AS A RESULT OF THE COMPUTATION OF PROFI TS AND GAINS OF BUSINESS AND PROFESSION, THE ASSESSING OFFICER TREATS THE INTERE ST RECEIPT AS BUSINESS INCOME, THEN DEDUCTION SHOULD BE PERMISSIBLE, IN TERMS OF E XPLANATION (BAA) OF THE NET INTEREST, I.E., THE GROSS INTEREST LESS THE EXPENDI TURE INCURRED FOR THE PURPOSES OF EARNING SUCH INTEREST. THE NEXUS BETWEEN OBTAINING THE LOAN AND PAYING INTEREST THEREON (LAYING OUT THE EXPENDITURE BY WAY OF INTER EST) FOR THE PURPOSE OF EARNING THE INTEREST ON THE FIXED DEPOSIT, TO DRAW AN ANALO GY FROM SECTION 37, WILL REQUIRE TO BE SHOWN BY THE ASSESSEE FOR APPLICATION OF THE NETTING PRINCIPLE. 9.1 IN TERMS OF THE AFORESAID CONCLUSIONS, THE AO ASSESSED THE INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. AS REGA RDS INTEREST ON FDRS WITH THE BANKS, HON'BLE SUPREME COURT IN TUTICORIN ALKAL I CHEMICALS AND FERTILIZERS LTD. [1997] 227 ITR 172 HELD THAT INTEREST EARNED ON DEPOSITS PLACED FOR T HE PURPOSES OF OBTAINING LOANS FOR BUSINESS CANNOT BE TREATED AS BUSINESS INCOME BUT ONLY AS INCOME FROM OTHER SOURCES.. THE DECISIO N IN TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. [1997] 227 ITR 172 , WHICH WAS RENDERED IN THE CONTEXT OF SECTIONS 56 AND 57, HAS BEEN FOLLOWED IN CIT V. AUTOKAST LTD. [2001] 248 ITR 110 (SC). LIKEWISE, IN CIT V. DR. V. P. GOPINATHAN [20 01] 248 ITR 449 (SC) INTEREST ON FIXED DEPOSITS WAS HELD NOT TO QUA LIFY FOR SETTING OFF AGAINST INTEREST ON LOANS BORROWED. THE OTHER DECISIONS ON THE SAME LINES, IN THE CONTEXT OF SECTION 80HHC ARE CIT V. STERLING FOODS [1999] 237 ITR 579 (SC) AND PANDIAN CHEMICALS LTD. V. CIT [2003] 262 ITR 278 (SC). IN THESE DECISIONS, THE HON'BLE SUPREME COURT REITERATED THE NEXUS THEORY A ND DECLINED TO TREAT SUCH INTEREST EARNED AS BUSINESS INCOME. IN G.T.N. TEXTI LES LTD. V. DY. CIT [2005] 279 ITR 72 , THE HONBLE KERALA HIGH COURT HELD THAT INTEREST ON BANK DEPOSITS WAS NOT PROFIT DERIVED FROM EXPORT OF GOODS. THE KERALA HIGH COURT HAVE FURTHER HELD THAT THE INTEREST EARNED BY THE ASSESSEE ON FIXED D EPOSITS, ETC., WERE NOT BUSINESS INCOME AND CONSEQUENTLY THE ASSESSEE WAS N OT ENTITLED TO COMPUTATION OF ELIGIBLE DEDUCTION UNDER SECTION 80HHC OF THE AC T BY INCLUDING THOSE RECEIPTS UNDER THE HEAD BUSINESS INCOME . GIVEN THE REPEATED AFFIRMATION BY THE HON'BLE ITA N O.2939 /DEL./2012 13 SUPREME COURT IN THE VARIOUS CASES, INTEREST EARNED FROM THE BANK, WHICH DOES NOT HAVE AN IMMEDIATE NEXUS WITH THE BUSINESS OF T HE INDUSTRIAL UNDERTAKING, CANNOT BE SAID TO BE DERIVED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING . 9.2 AS ALREADY OBSERVED, IN THE INSTANT CASE, THE A O IN THE ORIGINAL ASSESSMENT ORDER AND EVEN IN THE SUBSEQUENT ASSESSM ENT ORDER DATED 30.11.2009 IN PURSUANCE TO DIRECTIONS OF THE HONBL E JURISDICTIONAL HIGH COURT IN SHRIRAM HONDA POWER EQUIPMENT LTD.(SUPRA), CONCLUDE D THAT INTEREST ON FIXED DEPOSIT KEPT FOR OBTAINING PACKING CREDIT LIMIT AND L.C. LIMIT HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. HOWEVER , THE LD. CIT(A) INSTEAD OF ANALYZING THE FACTS IN TERMS OF THE AFORESAID CONC LUSIONS DRAWN IN THE CASE OF SHRIRAM HONDA POWER EQUIPMENT LTD.(SUPRA) ,RELIED O N A DECISION OF THE ITAT IN AJAY JAIN AND CONCLUDED THAT INTEREST INCOME HAS TO BE TREATED AS BUSINESS INCOME. A COPY OF THE DECISION IN THE CASE OF AJAY JAIN HAS NOT BEEN PLACED BEFORE US NOR THE LD. CIT(A) NARRATED THE FACTS IN THE SAID DECISION. EVEN OTHERWISE, THE LD. CIT(A) DID NOT EXAMINE AS TO WHE THER OR NOT THERE WAS ANY NEXUS OF BORROWED FUNDS HAVING BEEN UTILISED IN PU RCHASING FDRS NOR AS TO WHETHER OR NOT INTEREST INCOME HAD BEEN DERIVED FRO M EXPORT ACTIVITIES OF THE ASSESSEE AND NOR EVEN ANALYSED THE FACTS OF THE INS TANT CASE IN THE LIGHT OF AFORESAID STEPS LAID DOWN BY THE HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF SHRIRAM HONDA POWER EQUIPMENT LTD.(SUPRA). IN VIEW OF THE FOREGOING, ESPECIALLY WHEN THE LD. CIT(A) HAVE NOT RECORDED HI S SPECIFIC FINDINGS AS TO WHETHER OR NOT THE ASSESSMENT ORDER HAS BEEN PASSED IN STRICT COMPLIANCE OF THE AFORESAID DECISION IN S HRIRAM HONDA POWER EQUIPMENT LTD.(SUPRA) NOR HAVE FOLLOWED THE VARIOU S STEPS LAID DOWN BY THE HON. HONBLE HIGH COURT IN THE SAID DECISION AND N OR EVEN APPLIED THE NEXUS TEST IN THE LIGHT OF VARIOUS DECISIONS OF THE HONBLE APEX COURT REFERRED TO ABOVE, WE CONSIDER IT FAIR AND AP PROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE M ATTER TO HIS FILE FOR DECIDING THE AFORESAID ISSUE, AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF THE AFORESAID DECISION IN SHRIRAM HONDA PO WER EQUIPMENT ITA N O.2939 /DEL./2012 14 LTD.(SUPRA) AS DIRECTED BY THE HONBLE HIGH COURT I N THEIR ORDER DATED 14.1.2009 IN ITA NO.1133/2007, AFTER ALLOWING SUFFICIENT OPPO RTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, THE LD. CIT(A) SHALL PASS A SPEAKING ORDER, KEEPING IN MIND , INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6) OF THE ACT AND BRINGING OUT CLEARLY AS TO WHETHER OR NOT THE ASSESSMENT ORDER H AS BEEN PASSED IN STRICT COMPLIANCE OF THE AFORESAID DECISION IN S HRIRAM HONDA POWER EQUIPMENT LTD.(SUPRA) . WITH THESE OBSERVATIONS, G ROUND NO. 1 IN THE APPEAL IS DISPOSED OF. 10. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.2 IN THE APPEAL; ACCORDINGLY, T HIS GROUND IS DISMISSED. 11. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 12. IN THE RESULT, APPEAL IS ALLOWED BUT FOR STA TISTICAL PURPOSES. SD/- SD/- (A.D. JAIN) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. ASSISTANT CIT,CIRCLE-22(1),NEW DELHI 3. CIT CONCERNED. 4. CIT(A)-XI, NEW DELHI 5. DR, ITAT,A BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT