M/s Rishab Udyog, New Delhi V. ACIT, New Delhi

ITA 4676/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3731 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 03-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 10-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL SR
• Assessee Lawyers: ATCHAL PURI
• Keywords: Business income
• Section: 80IC

Judgement Text

I.T.A. NO. 4676 /DEL/2009 1/4 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH F BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 4676/DEL/2009 (ASSESSMENT YEAR 2006-07) M/S. RISHABH UDYOG, VS. ACIT, CIRCLE 27(1), A-7, FF MAYAPURI INDL AREA, NEW DELHI PHASE II, NEW DELHI. (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAHFR2812A APPELLANT BY: SHRI ATCHAL PURI, CA RESPONDENT BY: SHRI H K LAL, SR. AR ORDER PER A. K. GARODIA, AM: 1. THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(A) XXIV, NEW DELHI DATED 16.11.2009 FOR THE ASSESSMENT YEAR 2006-07. THE GROUNDS OF APPEAL RAI SED BY THE ASSESSEE ARE AS UNDER: 1) THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE A.O., 2) THAT THE LD. CIT(A) HAS MISUNDERSTOOD AND MISINTERPRETED THE FACTS OF THE CASE; 3) THAT THE LD. CIT(A) HAS FURTHER ERRED IN TREATING B USINESS INCOME AS INCOME FROM OTHER SOURCES; 4) THAT THE LD. CIT(A) HAS FURTHER ERRED IN NOT ALLOWI NG THE DEDUCTION OF BUSINESS INCOME U/S 80UC OF THE I. T. ACT, 1961; 5) THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORING T HE PRINCIPLES OF CONSISTENCY. 2. ALTHOUGH VARIOUS GROUNDS ARE RAISED BY THE ASSESSEE BUT THE ISSUE INVOLVED IN THESE GROUNDS IS ONLY ONE, AS TO WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IC WITH RE GARD TO THE I.T.A. NO. 4676 /DEL/2009 2/4 INTEREST INCOME EARNED BY THE ASSESSEE ON ACCOUNT O F DELAYED PAYMENT OF SALE PROCEEDS FROM THE CUSTOMERS. THE B RIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE AS SESSMENT ORDER THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IC OF THE I. T. ACT. IT IS FURTHER NOTED BY THE A.O. THAT THE ASSES SEE HAD RECEIVED INTEREST AMOUNT OF RS.5,86,271/-. IT WAS SUBMITTED BY THE ASSESSEE THAT SUCH INTEREST WAS RECEIVED FROM C USTOMERS ON DELAYED PAYMENT OF SALE PROCEEDS. THE A.O. ASKED T HE ASSESSEE AS TO WHY INTEREST INCOME RECEIVED FORM BAJAJ ELECT RICALS LTD. SHOULD NOT BE EXCLUDED FORM COMPUTATION OF DEDUCTIO N U/S 80IC SINCE IT IS NOT THE INCOME DERIVED FROM THE INDUSTR IAL UNDERTAKING. THE ASSESSEE SUBMITTED ITS REPLY AND AFTER CONSIDERING THE SAME, THE A.O. HAS EXCLUDED SUCH IN TEREST INCOME FROM BUSINESS PROFITS FOR THE PURPOSE OF COM PUTATION OF DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80IC. BEIN G AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD . CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. IT IS SUBMITTED BY THE LD. A.R. THAT THIS ISSUE IS NOW SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS ADV ANCE DETERGENTS LTD. REPORTED IN 228 CTR 356 IN WHICH HO N'BLE HIGH COURT OF DELHI HAS FOLLOWED THE JUDGEMENT OF H ONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF NIRMA IN DUSTRIES LTD. VS DCIT AS REPORTED IN 283 ITR 402 (GUJ.) AND ALSO THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CAS E OF CIT VS GOVINDA CHAUDHARY & SONS REPORTED IN 203 ITR 881 (S.C.). IT IS ALSO SUBMITTED THAT IN ADDITION TO THESE TWO JUDGMENTS, THE HON'BLE HIGH COURT HAS ALSO FOLLOWED FOUR OTHER JUD GMENTS OF VARIOUS OTHER HIGH COURTS. IT IS ALSO SUBMITTED TH AT IN THAT CASE, I.T.A. NO. 4676 /DEL/2009 3/4 THE HON'BLE HIGH COURT OF DELHI HAS ALSO CONSIDERED THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CAS E OF LIBERTY INDIA VS CIT 371 ITR 218 (S.C.) AND EVEN AF TER THIS, THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE AN D IT WAS HELD THAT INTEREST INCOME RECEIVED BY THE ASSESSEE ON OV ERDUE PAYMENT FROM CUSTOMERS IS TO BE CONSIDERED AS PART OF SALE PROCEEDS AND HENCE SHOULD BE ASSESSED AS PROFIT & G AINS WHICH ARE DERIVED FROM THE INDUSTRIAL UNDERTAKING. AS AG AINST THIS, LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL ON RECORD AND HAVE ONE THROUGH THE ORDERS OF AUTHOR ITIES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. OF THE ASS ESSEE. WE FIND THAT THE FACTS ARE NOT IN DISPUTE BECAUSE IT I S NOTED BY THE A.O. ALSO THAT INTEREST INCOME IN QUESTION WAS RECE IVED BY THE ASSESSEE ON ACCOUNT OF DELAYED PAYMENT FROM CUSTOME RS. IN THE CASE OF ADVANCE DETERGENTS (SUPRA), ALSO THE FACTS ARE IDENTICAL. IN THAT CASE ALSO, INTEREST OF RS.12.60 LACS WAS RE CEIVED BY THE ASSESSEE FROM CUSTOMERS ON ACCOUNT OF DELAYED PAYME NT AND IN THAT CASE, THE ASSESSEE WAS CLAIMING DEDUCTION U/S 80IA. THE QUESTION WAS, AS TO WHETHER SUCH INTEREST INCOME SH OULD BE EXCLUDED FROM BUSINESS PROFIT FOR THE PURPOSE OF CO MPUTATION OF DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80IA. HON' BLE HIGH COURT OF DELHI IN THAT CASE ALSO, NOTED THE JUDGEME NT OF HONBLE APEX COURT RENDERED IN THE CASE OF LIBERTY INDIA (S UPRA) AND EVEN AFTER THAT THIS ISSUE WAS DECIDED BY THE HON'B LE HIGH COURT OF DELHI IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE JUDGEMENT OF HON'BLE HIGH COURT OF GUJARAT RENDERED IN THE CASE OF NIRMA INDUSTRIES AND ALSO THE JUDGMENT OF HON'BLE APEX CO URT RENDERED IN THE CASE OF CIT VS. GOVINDA CHAUDHARY ( SUPRA). IT IS OBSERVED BY HON'BLE HIGH COURT OF DELHI IN THAT CASE THAT IN I.T.A. NO. 4676 /DEL/2009 4/4 FOUR OTHER JUDGEMENTS, VARIOUS OTHER HIGH COURTS BE ING HONBLE PUNJAB & HARYANA, CALCUTTA, ORISSA AND MADRAS HIGH COURTS HAVE ALSO TAKEN THE SIMILAR VIEW. THE CITATIONS O F THESE FOUR VARIOUS HIGH COURTS JUDGEMENTS ARE NOTED BY THE HON 'BLE HIGH COURT OF DELHI IN THAT JUDGEMENT AND THEREAFTER IT IS HELD THAT THERE IS NO REASON TO DEPART FROM THIS VIEW TAKEN C ONSISTENTLY BY VARIOUS HIGH COURTS, WHICH IS IN TUNE WITH THE PRIN CIPLES LAID DOWN BY HON'BLE APEX COURT IN LIBERTY INDIA (SUPRA) . HENCE, WE ARE IN AGREEMENT WITH THE LD. A.R. FOR THE ASSES SEE THAT THE PRESENT DISPUTE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY THIS JUDGMENT OF HON'BLE HIGH COURT OF DELHI AND HE NCE BY RESPECTFULLY FOLLOWING THIS JUDGEMENT OF HON'BLE HI GH COURT OF DELHI, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESS EE AND HOLD THAT THE INTEREST INCOME IN DISPUTE HAS TO BE ASSES SED AS PART OF SALE PROCEEDS AND THEREFORE, IT COULD NOT BE EXCLUD ED FORM THE BUSINESS PROFIT FOR THE PURPOSE OF COMPUTATION OF D EDUCTION ALLOWABLE TO THE ASSESSEE U/S 80IC. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. 6. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 8 TH JUNE, 2010. SD./- SD/- (RAJPAL YADAV) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:18 TH JUNE, 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI