Dusk Valley Technologies Ltd., New Delhi V. DCIT, New Delhi

ITA 4517/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74424 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 23-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: MANU K GIRI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI) BEFORE SHRI G. D. AGARWAL, HONBLE VICE PRESIDENT AND SHRI U. B. S. BEDI, JUDICIAL MEMBER I.T.A. NO. 4517/DEL/2012 (ASSESSMENT YEAR 2009-10) M/S. DUSK VELLEY TECHNOLOGIES LTD., VS. DCIT, CIRC LE 10(1), 303, DLF COURT YARD, NEW DELHI SAKET, NEW DELHI 110 017. PAN/GIR NO.: AABCD5471A (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI MANU K GIRI, ADVOCATE DEPARTMENT BY: SMT. NIDHI SRIVASTAVA, SR. DR ORDER PER U B S BEDI, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY LD. CIT(A) XIII, NEW DELHI DATED 18.06.2012 RELEVANT TO ASSESSMENT YEAR 2009- 10 WHEREBY FOLLOWING SINGLE EFFECTIVE GROUND HAS BE EN RAISED: THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS IN T REATING THE SUM OF RS.59,77,209/- BEING THE AMOUNT OF INTEREST INCOME EARNED BY THE ASSESSEE COMPANY DURING THE COURSE OF ITS BUSINESS ACTIVITIES AS INCOME FROM OTHER SOURCES. 2. THE FACTS INDICATE THAT DURING THE YEAR UNDER CO NSIDERATION, THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF SOF TWARE DEVELOPMENT AND SYSTEM INTEGRATION. THE ASSESSEE HAS CLAIMED INTER EST INCOME OF RS.59,77,209/- FROM FDRS AND INTER CORPORATE LOANS. THE SAME WAS TREATED I.T.A. NO.4517/DEL/2012 2 AS BUSINESS INCOME BY THE ASSESSEE. HOWEVER, IN TH E ASSESSMENT ORDER PASSED BY THE A.O., SUCH INCOME WAS TREATED AS INCO ME FROM OTHER SOURCES. 3. THE ASSESSEE CHALLENGED SUCH ACTION OF THE A.O. AND PLEADED THAT THE COMPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVE LOPMENT AND PROVIDED SERVICES TO IS CLIENTS IN USA. DURING THE YEAR UND ER CONSIDERATION, DUE TO ECONOMIC SLOW DOWN, THE COMPANY DID NOT FIND SUITAB LE BUSINESS OPPORTUNITIES. THEREFORE, IN ORDER TO TIDE OVER TH E DIFFICULTIES, IT UTILIZED ITS FUNDS BY WAY OF INVESTMENT IN FDRS AND AS INTER-COR PORATE DEPOSITS / LOANS. THEREFORE, THE FUNDS AVAILABLE WITH THE COMPANY WHI CH HAD BEEN UTILIZED FOR EARNING THE INTEREST INCOME, HAD NEXUS WITH THE BUS INESS AND HAS RIGHTLY BEEN SHOWN IN THE RETURN OF INCOME FROM BUSINESS. IT WAS FURTHER SUBMITTED THAT INCOME FROM OTHER SOURCES IS RESIDUARY HEAD OF INCO ME AND THAT THE SECTION DOES NOT SPECIFICALLY PROVIDE THAT THE INCOME ON DE POSITS WITH BANK AND OTHER COMPANIES BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. RELIANCE WAS PLACED ON CIT VS TAMIL NADU DAIRY DEVE LOPMENT CORPORATION LTD. (1995) 216 ITR 535, CIT VS GOVIND CHOUDHARY & SON (1993) 203 ITSR 881 (S.C.) AND FURTHER SUBMITTED TH AT THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKA LIES CHEMICALS AND FERTILIZERS LTD. VS CIT 227 ITR 172 (S.C.) DEALS WI TH INTEREST ON DEPOSITS PRIOR TO COMMENCEMENT OF BUSINESS, SO THE SAME CANN OT B E APPLIED HERE TO TREAT THE INCOME OF THE ASSESSEE FROM INTEREST AS I NCOME FROM OTHER SOURCES. LD. CIT(A) CONSIDERED SUCH SUBMISSION OF THE ASSESS EE AND WHILE RELYING UPON VARIOUS DECISIONS NOTED IN THE APPEAL ORDER IN CLUDING TOTGARS COOPERATIVE SALE SOCIETY LTD. VS ITO 188 TAXMAN 282 , CIT VS GOPINATHAN I.T.A. NO.4517/DEL/2012 3 248 ITR 579 TUTICORIN ALKALIES CHEMICALS AND FERTIL IZERS LTD. VS CIT 227 ITR 172 (S.C.), PANDIAN CHEMICALS VS CIT 262 ITR 27 8, SHRI RAM HONDA POWER EQUIPMENT 289 ITDR 475 (DEL.), DELHI BRASS AN D METAL WORKS 31`3 ITR 352 (DEL.), DCIT VS ALLIED CONSTRUCTION 105 ITD 01 (ITAT-DEL. SB). LD. CIT(A) HAS CONCLUDED TO UPHOLD THE ACTION OF TH E A.O. AS PER LAST LIMB OF PARA 6.4 AND 6.5 AS UNDER: IT IS SEEN THAT IN ASSESSMENT YEAR 2008-09, MY PRE DECESSOR VIDE ORDER DATED 26.09.2011 IN APPEAL NO.62/10-11 IN THE CASE OF THE ASSESSEE HAS HELD THAT AMOUNT FROM SURPLUS FUNDS IN BANK AND OTHER DEPOSITS IS LIABLE TO BE ASSESSED UNDER HT HEAD IN COME FROM OTHER SOURCES. RESPECTFULLY FOLLOWING THE DECISIONS AS REFERRED TO IN PARA 6 TO 6.3 SUPRA IT IS HELD THAT THE A.O. HAS CORRECT LY TREATED THE INTEREST OF RS.59,77,209/- ON FDRS, INTEROPERATE LOANS ETC. AS INCOME FROM OTHER SOURCES. ACCORDINGLY, THE GROUND RAISED BY T HE ASSESSEE FAILS. 4. STILL AGGRIEVED, THE ASSESSEE HAS COME UP IN FUR THER APPEAL AND WHILE REITERATING THE SUBMISSIONS MADE BEFORE LOWER AUTHO RITIES, IT WAS PLEADED FOR SETTING ASIDE THE ORDER OF AUTHORITIES BELOW AND TO ACCEPT THE CLAIM OF THE ASSESSEE AS FILED IN ITS RETURN TO TREAT THE INCOME FROM INTEREST AS INCOME FROM BUSINESS. WHEREAS, LD. D.R. HAS RELIED UPON T HE ORDERS OF AUTHORITIES BELOW AND PLEADED FOR CONFIRMATION OF THE SAME AS T HE ISSUE IS SQUARELY COVERED BY VARIOUS DECISIONS AND DURING THE EARLIER YEAR I.E. 2008-09, SIMILAR TREATMENT WAS GIVEN TO SUCH INCOME BY THE A.O. WHI CH WAS UPHELD BY LD. CIT(A) AND THE ASSESSEE HAS NOT CHALLENGED SUCH ACT ION. THEREFORE, IT WAS PLEADED FOR CONFIRMATION OF THE IMPUGNED ORDER. 5. WE HAVE HEAD BOTH THE SIDES, CONSIDERED THE MATE RIAL ON RECORD AS WELL AS CASE LAW CITED AND FIND THAT LD. CIT(A) HAS PASSED VERY WELL I.T.A. NO.4517/DEL/2012 4 REASONED AND ELABORATE ORDER CONSIDERING EACH AND E VERY ASPECT OF THE MATTER IN DETAIL WHILE FOLLOWINGS VARIOUS DECISIONS AS DIS CUSSED IN HIS ORDER. NO INFIRMITY OF LAW HAS BEEN POINTED OUT OR NOTICED. THEREFORE, WHILE CONCURRING WITH THE FINDINGS OF LD. CIT(A), WE UPHO LD HIS ORDER AND DISMISS THE APPEAL OF THE ASSESSEE BEING DEVOID OF ANY MERI T. 6. AS A RESULT, APPEAL OF THE ASSESSEE GETS DISMISS ED. 7. ORDER PRONOUNCED IN THE OPEN COURT SOON AFTER CO NCLUSION OF THE HEARING ON 31 ST MARCH, 2014. SD./- SD./- (G. D. AGARWAL) (U.B.S.BEDI) VICE PRESIDENT JUDICIAL MEMBER DATE: 31 ST MARCH, 2014. SP. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV, NEW DELHI AR, ITAT, 5. CIT(ITAT), NEW DELHI NEW DELHI