Surya Processed Food Pvt. Ltd., Noida V. ITO, New Delhi

ITA 6065/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98108 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 14-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 07-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR ANJULA JAIN
• Assessee Lawyers: K P GARG
• Keywords: Business income

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - I : NEW DELHI BEFORE SHRI VIJAY PAL R A O , JUDICIAL MEMBER ITA NO. 6065 /DEL/ 2014 (ASSESSMENT YEAR: 2010 - 11 ) SURYA PROCESSED FOOD PVT. LTD, D - 1, SECTOR - 2, NOIDA PAN:AAKCS7174G VS. ITO, WARD - 9(4), NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH. K.P. GARG, CA RESPONDENT BY : DR. ANJULA JAIN, SR. DR DATE OF HEARING 14.12.2015 DATE OF PRONOUNCEMENT 18 . 12 .2015 O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28.08.2014 OF LD. CIT(A) - XII, NEW DELHI FOR THE ASSESSMENT YEAR 2010 - 11 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER, WARD 9(4), NEW DELHI THE FAKE ADDITIONS OF RS.2,95,414/ - ON ACCOUNT OF INTEREST INCOME EARNED BY THE APPELLANT COMPANY ON FIX ED DEPOSIT MADE FOR ISSUE THE SEVERAL LETTER OF CREDITS OPENED FOR IMPORT OF MACHINERIES. 2. THAT THE ORDER OF THE LEARNED CIT(A) NEW DELHI AND THE ASSESSING OFFICER, WARD 9(4), NEW DELHI BEING NOT SUSTAINABLE, THE APPEAL IS ALLOWED. 3. THE AO NOTED THAT DURI NG THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS EARNED INCOME WHICH IS NOT EARNED FROM THE MANUFACTURING ACTIVITY OF THE ASSESSEE COMPANY, THEREFORE THE SAME IS NOT ELIGIBLE FOR DEDUCTION U/S 80IC. ACCORDINGLY, THE AO HAS DISALLOWED THE CLAIM OF DEDU CTION U/S 80IC IN RESPECT TO INTEREST INCOME OF RS.2,95,414/ - . THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) AND SUBMITTED THAT THIS INTEREST INCOME WAS EARNED BY THE ASSESSEE ON THE FIXED DEPOSIT MADE FOR ISSUE OF SEVERAL LETTERS OF CREDITS OPENED FOR IMPORT OF MACHINERIES. THUS THE ASSESSEES CLAIM FOR FIXED DEPOSIT WAS MADE IN THE REGULAR COURSE OF THE BUSINESS OF THE ASSESSEE FOR OBTAINING LETTER OF CREDIT FROM THE BANK AND THEREFORE INTEREST INCOME ON SUCH FIXED DEPOSIT SHALL BE TREATED AS INCOME FROM THE BUSINESS ACTIVITY OF THE ASSESSEE AND CONSEQUENTLY PAGE NO. 2 ELIGIBLE FOR DEDUCTION U/S 80IC. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND BY FOLLOWING T HE ORDER F OR THE ASSESSMENT YEAR 2009 - 10 CONFIRMED THE DISALLOWANCE OF CLAIM. 4. NOW BEFORE THE TRIBUNAL THE AR OF THE ASSESSEE HAS SUBMITTED THAT THOUGH IN ASSESSMENT YEAR 2009 - 10, THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE, HOWEVER FOR THE S AID ASSESSMENT YEAR THE TRIBUNAL HAS GIVEN A FINDING ON THE GROUNDS THAT THE ASSESSEE FAILED TO ESTABLISH THE DIRECT NEXUS OF THE FIXED DEPOSIT AND LETTER OF CREDIT ISSUED WHEREAS FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE ESTABLISH DIRECT NEXUS OF THE FIXED DEPOSIT MADE WITH THE BANK AND BANK GUARANTEE ISSUED BY THE BANK TO THE CUSTOM DEPARTMENT FOR PAYMENT OF DUTY AT CONCESSIONAL LOWER RATE. THUS THE LD AR SUBMITTED THAT THE ASSESSEE HAS BROUGHT THE RELEVANT RECORD TO ESTABLISH THE FACT THAT THE FIXED DEPOSITED WAS MADE FOR THE PURPOSE OF ISSUANCE OF LETTER OF CREDIT AND BANK GUARANTEE FROM THE BANK AND THEREFORE THE INTEREST EARNED FROM THE SAID FIXED DEPOSIT WILL BE IN THE NATURE OF BUSINESS INCOME OF THE ASSESSEE. IN SUPPORT OF HIS CONTENTION THE LD AR RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. JAYPEE DSC VENTURES LTD. (2011) 335 ITR 132 (DEL) AND SUBMITTED THAT THE HONBLE JURISDICTIONAL HIGH COURT AFTER CONSIDERING ALL THE JUDGMENTS ON THIS ISSUE HAS AL LOWED THE INTEREST INCOME AS INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING AND THEREFORE ELIGIBLE FOR DEDUC TION. ON THE OTHER HAND THE LD D R SUBMITTED THAT THE ISSUE IS NOW COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10. 5 . HAVING CONSIDERED THE RIVAL SUBMISSION AND CAREFULLY PERUSED OF THE MATERIAL ON RECORD IT IS NOTED THAT FOR THE ASSESSMENT YEAR 2009 - 10 THE TRIBUNAL HAS HELD IN PARA 6 AS UNDER: - 6. WE HAVE HEARD THE RIVAL SUBMISSION OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE PAPER BOOK. WE FIND FROM THE PAPER BOOK THAT ONLY AN APPLICATION TO THE BANKER FOR OPENING OF LETTER OF CREDIT WAS FILED. COPIES OF BALANCE - SHEET, PROFIT AND LOSS ACCOUNT AND THE LEDGER EXTRACT OF INTEREST ACCO UNT WERE FILED. ACCORDING TO US, THESE MATERIALS DO NOT PROVE CONCLUSIVELY THAT THE FIXED DEPOSITS ON WHICH INTEREST INCOME EARNED WERE MADE ONLY FOR THE PURPOSE OF OPENING OF LETTERS OF CREDIT. THE APPELLANT HAS CHOSEN NOT TO FILE ANY CONCLUSIVE EVIDENCE EVEN BEFORE US. MERE RELIANCE ON LEGAL PROPOSITION WITHOUT PROVING THE FACTS CONCLUSIVELY DOES NOT HELP THE CASE OF THE APPELLANT. ITS NOTHING BUT BALD CLAIM WHICH CANNOT BE ALLOWED. WE, THEREFORE, DISMISS THE APPEAL FILED BY THE APPELLANT. 6 . IT IS CLEA R THAT THE TRIBUNAL GIVEN THE FINDING THAT THE ASSESSEE HAS NOT BROUGHT THE RELEVANT EVIDENCE TO PROVE CONCLUSIVE THAT THE FIXED DEPOSIT ON WHICH INTEREST PAGE NO. 3 EARNED WERE MADE ONLY FOR THE PURPOSE OF OPENING OF THE LETTERS OF CREDIT. THEREFORE THE TRIBUNAL HAS NOT GIVEN ANY FINDING ON THE LEGAL PROPOSITION OF ELIGIBILITY OF DEDUCTION U/S 80I C IN RESPECT OF INTEREST INCOME ON THE FIXED DEPOSIT CLAIMED TO HAVE BEEN MADE FOR OBTAINING LETTER OF CREDITS. THE AUTHORITIES BELOW HAVE SIMPLY FOLLOWED THE DECISION FOR A SSESSMENT YEAR 2009 - 10 WITHOUT GIVING ANY FINDING ON THE FACT THAT WHETHER THE FIXED DEPOSIT ARE MADE BY THE ASSESSEE FOR OBTAINING THE LETTER OF CREDIT AND OTHER BANK GUARANTEES WHICH ARE REQUIRED FOR THE IMPORT AND EXPORT BUSINESS OF THE ASSESSEE. 7 . IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN VIEW OF THE FINDING OF THE TRIBUNAL THIS ISSUE REQUIRES A PROPER VERIFICATION AT THE LEVEL OF THE AO TO GIVEN A FINDING WHETHER THE FIXED DEPOSIT ON WHICH INTEREST IS EARNED ARE MADE FOR TAKING THE LETTER OF CREDIT OR FOR THE PURPOSE OF GUARANTEE OR BANK GUARANTEE FOR THE PURPOSE OF IMPORT AND EXPORT BUSINESS OF THE ASSESSEE THEN DECID E THIS ISSUE AFTER CONSIDERING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. JAYP EE DSC VENTURES LTD (SUPRA). 8 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 . 12 .201 5 . - SD/ - ( VIJAY PAL RAO ) JUDICIAL MEMBER DATED : 18 / 12 / 2015 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI