NIKO (NECO) LTD, MUMBAI V. DDIT (IT) 4(2), MUMBAI

ITA 8441/MUM/2010

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2248 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 14-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 03-12-2010
• Court: TRIBUNAL
• Department Lawyers: VIJAY MEHTADR
• Assessee Lawyers: M DAYASHANKAR
• Keywords: Business income; Depreciation; Source of fund

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.5972/MUM/2013 ASSESSMENT YEAR- 2008-09 NIKO (NECO) LTD. 407-411/311, OBEROI CHAMBERS-II, PLOT NO. 645/646, NEW LINK ROAD, ANDHERI (WEST), ANDHERI-400053 / VS. DDIT (INTERNATIONAL TAXATION)-4, MUMBAI ( /ASSESSEE) ( ! / REVENUE) PAN. NO.AACCN4403B ITA NO.6493/MUM/2013 ASSESSMENT YEAR- 2008-09 DDIT (INTERNATIONAL TAXATION)-4, MUMBAI / VS. NIKO (NECO) LTD. 407-411/311, OBEROI CHAMBERS-II, PLOT NO. 645/646, NEW LINK ROAD, ANDHERI (WEST), ANDHERI-400053 ( ! / REVENUE) ( /ASSESSEE) PAN. NO.AACCN4403B NIKO (NECO) LTD. 2 ITA NO.8440 /MUM/2010 ASSESSMENT YEAR- 2007-08 NIKO (NELPIO) LTD. 308-309 DYNASTY BUSINESS PARK, A-WING, ANDHERI- KURLA ROAD, ANDHERI(E), MUMBAI-400069 / VS. DDIT (INTERNATIONAL TAXATION)-4, MUMBAI ( /ASSESSEE) ( ! / REVENUE) PAN. NO.AACCN440 2A ITA NO. 8441/MUM/2010 ASSESSMENT YEAR- 2007-08 NIKO (NECO) LTD. 407-411/311, OBEROI CHAMBERS-II, PLOT NO. 645/646, NEW LINK ROAD, ANDHERI (WEST), ANDHERI-400053 / VS. DDIT (INTERNATIONAL TAXATION)-4, MUMBAI ( /ASSESSEE) ( ! / REVENUE) PAN. NO.AACCN4403B / ASSESSEE BY SHRI M.DAYASHANKAR, ! / REVENUE BY SHRI VIJAY MEHTA-DR ' !# $ % / DATE OF H EARING : 02/11/2015 $ % / DATE OF ORDER: 02/12/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THERE ARE CROSS APPEALS FOR ASSESSMENT YEAR 2008-09 BY THE ASSESSEE AS WELL AS THE REVENUE IN THE CASE OF M/S NIKO (NECO ) LTD. AND APPEAL BY THE ASSESSEE FOR ASSESS MENT YEAR 2007-08 (ITA NO. 8441/MUM/2010) AND DIFFERENT ASSE SSEE I.E. NIKO (NELPIO ) LTD ( ITA NO. 8440/MUM/2010). NIKO (NECO) LTD. 3 CHALLENGING THE IMPUGNED ORDERS DATED 30.08.2013 AN D 16.09.2013 OF THE LD. FIRST APPELLATE AUTHORITY AND LD. DRP, MUMBAI. 2. FIRST WE SHALL TAKE UP APPEAL IN ITA NO. 8440/MUM/2010, (A.Y. 2007-08), WHEREIN, FIRST GROU ND RAISED BY THE ASSESSEE PERTAINS TO TREATING THE INT EREST INCOME OF RS. 5,45,702/- AS INCOME FROM OTHER SOURC ES AND NOT BUSINESS INCOME. THE CRUX OF ARGUMENTS ADVANCE D BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT THERE WAS NO DEPLOYMENT OF SURPLUS INCOME AND IT WAS NOT AN INDE PENDENT TRANSACTION DE HORS BY BUSINESS RATHER JV PARTNER H AD KEPT IT IN THE ACCOUNT. IT WAS CLAIMED THAT THE ASSESSEE HA D ALREADY STARTED BUSINESS FOR WHICH OUR ATTENTION WAS INVITE D TO PAGE 3 OF THE ANNUAL REPORT. THE CRUX OF THE ARGUMENT IS THAT IT WAS NOT AN INDEPENDENT ACTIVITY OF THE ASSESSEE TO PUT THE MONEY IN BANK FOR WHICH OUR ATTENTION WAS INVITED T O PARA 14 OF THE ORDER OF THE LD. DRP (PAGE 8). RELIANCE WAS PLACED UPON THE DECISION IN THE CASES OF CIT VS. INDO SWIS S JEWELS LTD. 284 ITR 289 (BOM), CIT VS. LOK HOLDINGS 308 I TR 356 (BOM.) AND SANAM PROGETTI SPA VS. ADDL. CIT 132 ITR 70 (DELHI). ON THE OTHER HAND, THE LD. DR CONTENDED TH AT NO BUSINESS COMMENCED DURING THE YEAR BY FURTHER INVIT ING OUR ATTENTION TO PARA 7 TO 11 OF THE LD. DRP. THE CRUX OF ARGUMENT IS IN SUPPORT TO THE IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIE F ARE THAT THE NIKO (NECO) LTD. 4 ASSESSEE COMPANY WAS INCORPORATED IN CAYMEN ISLAND, HAVING ITS REGISTERED OFFICE AT CENTURY YARD. THE A SSESSEE DECLARED NIL INCOME IN ITS ELECTRONICALLY FILED RET URN ON 31.10.2007. THE CASE OF THE ASSESSEE WAS SELECTED F OR SCRUTINY, THEREFORE, REQUISITE NOTICES WERE ISSUED TO THE ASSESSEE. THE ASSESSEE WITH 10% PARTICIPATING INTER EST AND IN JOINT VENTURE PARTNERS WITH RELIANCE INDUSTRIES LTD , WITH 90% PARTICIPATING INTEREST, ENTERED INTO A PRODUCTION S HARING CONTRACT WITH GOVT. OF INDIA ON 12 TH APRIL 2000 FOR A PERIOD OF 25 YEARS FOR EXPLORATION AND DEVELOPMENT OF OIL AND GAS FIELD WITH RESPECT TO CONTRACT AREA IDENTIFIED BLOCK NEC- OSN-97/2 (POPULARLY KNOWN AS NEC 25) OR ( NEC-25-PSC). TH E ACCOUNTS OF THE ASSESSEE ARE AUDITED AND THE AUDIT REPORT WAS FILED DURING ASSESSMENT PROCEEDINGS. IN ITS AUD IT REPORT, THE AUDITOR MENTIONED THAT THE COMPANY IS NON-OPER ATOR OF THE FIELD WHILE RIL HAS BEEN DESIGNATED AS OPERATOR . THE COMPANY HAS SET UP A PROJECT OFFICE IN INDIA FROM A PRIL 2006 UNDER INTIMATION TO RBI AND HAS OBTAINED NECESSARY APPROVAL FROM THE ADDITIONAL REGISTRAR OF COMPANIES. THE ONL Y CLAIM MADE BY THE ASSESSEE WAS DEPRECIATION OF A SUM OF R S. 1,43,432/-. IT WAS FOUND BY THE ASSESSING OFFICER, FROM PROFIT & LOSS ACCOUNT, THAT THE ASSESSEE DERIVED INTEREST INCOME OF RS. 5,45,702/- AND FOREIGN EXCHANGE GAIN (NET OF RS . 2833,263/-) TOTALING TO RS. 33,78,965/-. THE ASSESS ING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE INTEREST INCOME AND FOREIGN EXCHANGE GAIN SHOULD NOT BE TREA TED AS INCOME FROM OTHER SOURCES AND NOT AS BUSINESS INCOM E. HOWEVER, THE LD. ASSESSING OFFICER TREATED THE INCO ME OF THE NIKO (NECO) LTD. 5 ASSESSEE AS INCOME FROM OTHER . ON APPEAL BEFORE T HE LD. DRP THE ASSESSEE DID NOT FIND FAVOUR, THEREBY, APPE AL HAS BEEN FILED BEFORE THIS TRIBUNAL. 4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCLUSION DR AWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSER TIONS MADE BY THE LD. RESPECTIVE COUNSELS, IF KEPT IN JUX TAPOSITION AND ANALYZED, WE FIND THAT THE LD. ASSESSING OFFICE R TREATED THE INTEREST INCOME OF RS. 5,45,702/-ON THE FUNDS P LACED IN THE BANKS AS INCOME FROM OTHER SOURCES. IDENTICALLY , FOREIGN EXCHANGE GAIN OF RS. 28,33,263/- WAS ALSO TREATED AS INCOME FROM OTHER SOURCES AND THE CLAIM OF DEPRECIATION OF RS. 1,43,432/- WAS DISALLOWED. BEFORE US, THE LD. DR R ELIED UPON THE DECISION FROM HONBLE APEX COURT PRONOUNCE D IN CIT VS. STERLING FOODS LTD. (237 ITR 579) (SC), PAN DYAN CHEMICALS LTD. VS. CIT 262 ITR 278 AND THE CASE IN ASHOKA LEYLAND LTD. 224 ITR 122 (SC) BY CONTENDING THAT TH E INTEREST INCOME AND FOREIGN EXCHANGE GAIN HAS NOT BEEN DERIV ED FROM/ATTRIBUTABLE TO THE BUSINESS OF THE ASSESSEE, THEREFORE, THESE DECISIONS HAS TO BE FOLLOWED. WE NOTE THAT HO NBLE JURISDICTIONAL HIGH COURT IN CIT VS. LOK HOLDINGS ( 2009) 308 ITR 356 (BOM.) WHILE COMING TO A PARTICULAR DECISIO N DISTINGUISHED THE DECISION FROM HONBLE APEX COURT, PRONOUNCED IN CIT VS. BOKARO STEEL LTD. 237 ITR 315 (SC), TUTICORIN ALKALIE CHEMICALS AND FERTILIZERS LTD. 22 7 ITR 172 AND THEN HELD THAT ACCRUED INTEREST ARISES OUT OF B USINESS ACTIVITY IS ASSESSABLE AS BUSINESS INCOME AND NOT I NCOME NIKO (NECO) LTD. 6 FROM OTHER SOURCES. IDENTICALLY, HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF CIT VS. INDO SWISS JEWELS LTD AND ANOTHER 284 ITR 389 (BOM.) WHEREIN AMOUNT WAS SET A PART FOR IMPORT OF MACHINERY WAS INVESTED IN SHORT TERM INTER- CORPORATE DEPOSITS. SUCH INTEREST INCOME WAS HELD T O BE ASSESSABLE AS BUSINESS INCOME. THERE ARE VARIOUS DE CISIONS IN AN IDENTICAL SITUATION BUT THE FACT OF EACH CASE HAS TO BE KEPT IN JUXTAPOSITION BEFORE TAKING ANY DECISION. (A). SO FAR AS INTEREST OF INCOME OF RS. 545,702/- ON THE FUNDS PLACED WITH BANKS ARE CONCERNED, THERE IS A F ACTUAL FINDING IN PARA 7 OF THE IMPUGNED ORDER THAT THE AS SESSEE HAD NEITHER STARTED COMMERCIAL PRODUCTION NOR EVEN TRIA L PRODUCTION DURING THE YEAR UNDER CONSIDERATION AND THE FUNDS WERE KEPT IN BANKS FROM WHICH INTEREST WAS EA RNED. IN SUCH A SITUATION, IT CAN BE SAID THAT INTEREST INCO ME WAS EARNED PRIOR TO STARTING OF BUSINESS, THEREFORE, IT CANNOT BE SAID TO BE BUSINESS INCOME OF THE ASSESSEE AND HAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES. FUNDS WERE A VAILABLE WITH THE ASSESSEE BEFORE THE SAME ARE INVESTED IN A CTUAL BUSINESS ACTIVITY, THEREFORE, IT CAN BE CONCLUDED T HAT SUCH INTEREST INCOME IS NOT INCIDENTAL TO THE BUSINESS A CTIVITY OF THE ASSESSEE. THERE IS FURTHER FINDING IN THE IMPUG NED ORDER THAT IN THE PRESENT CASE THE SOURCE OF FUNDS ON WHI CH THE INTEREST WAS EARNED WERE NOT THE BUSINESS FUNDS. IT IS NOT THE CASE THAT BUSINESS FUNDS WERE KEPT IN BANK FOR A SH ORT DURATION BEFORE STARTING THE BUSINESS. THE EXPRESSI ON DERIVED FROM IS NARROWER IN SCOPE THAN THE EXPRES SION NIKO (NECO) LTD. 7 ATTRIBUTABLE TO AS WAS HELD BY HONBLE APEX COURT IN CIT VS. STERLING FOODS LTD. 237 IT R 579, PANDYAN CHEMI CALS LTD. VS. CIT 262 ITR 278 AND ASHOKA LEYLAND LTD. 224 ITR 122 (SC). SO FAR AS THE EXPRESSION DERIVED FROM IS CONC ERNED IT MUST BE UNDERSTOOD AS PROFIT DIRECTLY ARISING FROM BUSINESS OF THE ASSESSEE AND NOT INCIDENTAL TO IT. THE RATIO L AID DOWN BY HONBLE APEX COURT IN THE AFOREMENTIONED CASES, IF APPLIED BY KEEPING THEM IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL, IT CAN BE SAID THAT THE INTEREST RECEIVED F ROM FDRS, CAN BE TREATED AS INCOME FROM OTHER SOURCES ONLY. I F SUCH INTEREST IS DERIVED FROM ACTUAL CONDUCT OF THE BUSI NESS OR SUCH INTEREST IS OOZING OUT FROM THE DIRECT SOURCE AND HAVING PROXIMATE COMMERCIAL CONNECTION BETWEEN THE INTERES T EARNED AND BUSINESS OF THE ASSESSEE THEN IT CAN BE SAID TO BE DERIVED FROM THE BUSINESS OF THE ASSESSEE, THEREF ORE, IT WAS RIGHTLY HELD TO BE INCOME FROM OTHER SOURCES, BECAU SE NO DIRECT NEXUS HAS BEEN ESTABLISHED BY THE ASSESSEE B ETWEEN THE INTEREST SO RECEIVED AND BUSINESS OF THE ASSESS EE, THEREFORE, THE INTEREST EARNED ON ACCOUNT OF FDRS, KEPT WITH THE BANKS IS INCOME FROM OTHER SOURCES AS IT HAS N O DIRECT NEXUS WITH THE BUSINESS ACTIVITY OF THE ASSESSEE. OUR VIEW FURTHER FINDS SUPPORT FROM THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF K. RAVINDRA NATHAN NAIR V S. DCIT, NANJI TOPAN BHAI & COMPANY VS. ACIT 243 ITR 192 (KE RALA) CIT VS. JOSH THOMAS 253 ITR 553 (KER.) AND ABAD ENTERPRISES VS. CIT 253 ITR 319 (KER.), WHEREIN, IN TEREST INCOME EARNED ON SHORT TERM DEPOSIT AS HELD TO BE N OT DERIVED FROM THE BUSINESS OF THE ASSESSEE AND SAID DECISION NIKO (NECO) LTD. 8 WAS CONFIRMED BY THE HONBLE APEX COURT. IT IS FUR THER NOTED THAT THE RELIANCE PLACED BY THE ASSESSEE ON THE JUD GMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS LOK HOLDINGS (SUPRA), IS MISPLACED BECAUSE IN THE SAID JUDGMENT ALSO, HONBLE HIGH COURT HAS DISTINGUISHED THE JUDG MENT OF HONBLE SUPREME COURT IN THE CASE OF TUTICORIN 227 ITR 172 ON THE GROUND THAT IN THAT CASE, THE BUSINESS HAD N OT COMMENCED, RELEVANT PARA OF THE JUDGMENT OF HONBLE HIGH COURT IS REPRODUCED BELOW:- IN OUR VIEW, THE FACTS OF THE PRESENT CASE ARE COM PLETELY DIFFERENT THAN THE FACTS IN THE CASE OF TUTICORIN (1997) 227 ITR 1 72 (SC). IN THAT CASE, THE BUSINESS OF THE ASSESSEE-COMPANY HAD NOT COMMEN CED AND, THEREFORE, THE APEX COURT HELD THAT THERE COULD BE NO INCOME FROM BUSINESS. THUS, ASSESSEE WILL NOT BE ABLE TO TAKE BENEFIT OF THIS JUDGMENT. SIMILARLY, THE OTHER CASES RELIED UPON B Y THE ASSESSEE ARE ALSO DISTINGUISHABLE ON FACTS OF THIS CASE, CONSEQUENTLY, ON THIS COUNT, WE AFFIRM THE STAND OF THE LD. DRP. (B). NOW WE SHALL TAKE UP THE PAYMENT OF FOREIGN EX CHANGE GAIN OF RS. 28,33,263/-.WE NOTE THAT THE ASSESSEE INCURRED EXPENDITURE OF RS. 180,799,709 DURING THE RELEVANT YEAR FOR VARIOUS ACTIVITIES CONNECTED WITH EXPLORATION AND DEVELOPMENT OF OIL FIELDS. SUCH EXPENDITURE WAS CLA IMED AS DEDUCTION U/S 42 OF THE ACT IN THE YEAR IN WHICH CO MMERCIAL NIKO (NECO) LTD. 9 PRODUCTION COMMENCED. THE ASSESSEE REDUCED THE FORE IGN EXCHANGE GAIN OF RS. 28,33,263/- FROM THE EXPENDITU RE AND THE NET AMOUNT WAS CLAIMED U/S 42 OF THE ACT IN THE YEAR OF START OF COMMERCIAL PRODUCTION. THE ASSESSEE RELIED UPON THE DECISION IN CIT VS. ENRON OIL & GAS INDIA LTD. 305 ITR 75 AND CIT VS. WOODWARD GOVERNOR INDIA PVT. LTD. 312 ITR 254 (SC) . WE NOTE THAT THE EXPENDITURE HAS NOT BEEN CL AIMED AS DEDUCTION DURING THE YEAR BY THE ASSESSEE. WE FIND THAT IN THE AFOREMENTIONED CASE OF ENRON OIL & GAS INDIA LT D (SUPRA) IT WAS HELD THAT THE LOSS ARISING ON ACCOUNT OF FOR EIGN EXCHANGE TRANSACTION WOULD BE ALLOWED AS BUSINESS L OSS AND THE GAIN HAS TO BE TREATED AS BUSINESS RECEIPT. SEC TION 42 OF THE ACT FOR CLAIMING DEDUCTION IS A SPECIAL PROVIS ION ITSELF. THE SECTION BECOMES OPERATIVE WHEN IT IS READ WITH PRODUCTION SHARING CONTRACT, THEREFORE, THE PROVISI ONS OF PRODUCTION SHARING CONTRACT WILL PREVAIL AS THE PSC IS AN INDEPENDENT ACCOUNTING REGIME AND A COMPLETE CODE B Y ITSELF U/S 42(1)(C) FOR THE PURPOSES OF COMPUTING PROFIT & GAINS OF ANY BUSINESS CONSISTING OF EXTRACTION OR PRODUCTION OF MINERAL OIL ETC. AND ALLOWANCE AS SPECIFIED IN THE AGREEMENT IN RELATION TO :- A) EXPENDITURE BY WAY OF INFRUCTUOUS OR ABORTIVE EXPLORATION EXPENSES IN RESPECT OF ANY AREA SURRENDERED PRIOR TO THE BEGINNING OF COMMERCIAL PRODUCTION BY THE ASSESSEE. B) AFTER THE BEGINNING OF COMMERCIAL PRODUCTION, TO EXPENDITURE INCURRED BY THE ASSESSEE, WHETHER BEFOR E OR AFTER SUCH COMMERCIAL PRODUCTION IN RESPECT OF D RILLING OR EXPLORATION ACTIVITIES OR SERVICES OR IN RESPECT OF PHYSICAL ASSETS USED IN THAT CONNECTION, EXCEPT ASS ET ON NIKO (NECO) LTD. 10 WHICH ALLOWANCE OR DEPRECIATION IS ADMISSIBLE U/S 32.(SUBJECT TO PROVISO) C) TO THE DEPLETION OF MINERAL OIL IN THE MINING AREA IN RESPECT OF A.Y. RELEVANT TO PREVIOUS YEAR IN WHICH COMMERCIAL PRODUCTION HAS BEGUN AND FOR SUCH SUCCEEDING YEAR OR YEARS AS MAY BE SPECIFIED IN THE AGREEMENT. AND SUCH ALLOWANCES SHALL BE COMPUTED AND MADE IN T HE MANNER SPECIFIED IN THE AGREEMENT, THE OTHER PROVIS ION OF THE SAID BEING DEEMED FOR THIS PURPOSES TO HAVE BEEN MO DIFIED TO THE EXTENT NECESSARY TO GIVE EFFECT TO THE TERMS OF THE AGREEMENT. IF THE PROVISION OF THE ACT IS ANALYSED THAT IT CAN BE CONCLUDED THAT THE PRODUCTION SHARING CONTRACT IS A N INDEPENDENT ACCOUNTING REGIME WHICH INCLUDES TAX TR EATMENT OF COST, EXPENSES, INCOME, PROFIT ETC. IT PRESCRIBE S SEPARATE RULE OF ACCOUNTING AS IT IS A COMPLETE CODE BY ITSE LF. REFERENCE MAY BE MADE TO JOSHI TECHNOLOGIES INTERNATIONAL INC . VS. UNION OF INDIA (2013) 353 ITR 86 (DEL.). THE ADDITI ONAL BENEFITS, APART FROM THE NORMAL ALLOWANCE, ADMISSIB LE UNDER OTHER PROVISIONS OF THE ACT IS TO BE ALLOWED AS A D EDUCTION IN COMPUTING THE BUSINESS PROFIT OF THE ASSESSEE PROVI DED SUCH ALLOWANCES ARE SPECIFIED IN THE AGREEMENT OF THE AS SESSEE ENTERED INTO WITH THE CENTRAL GOVERNMENT ETC. AND T HEN THE ALLOWANCE SHALL BE COMPUTED IN THE MANNER SPECIFIED IN THE AGREEMENT. IN THE PRESENT APPEAL, NEITHER SUCH AGR EEMENT WAS DISCUSSED BEFORE US NOR THERE IS A FINDING IN T HE IMPUGNED FINDING, THEREFORE, WE SET ASIDE THIS ISSU E TO THE FILE OF THE LD. DRP TO EXAMINE THE FACTS AND THEN DECID E THE ISSUE IN ACCORDANCE WITH LAW, THEREFORE, THIS GROUND IS A LLOWED FOR NIKO (NECO) LTD. 11 STATISTICAL PURPOSES. THE ASSESSEE BE GIVEN OPPORTU NITY OF BEING HEARD. (C) NOW WE SHALL DEAL WITH THE CLAIM OF DEPRECIATIO N WITH RESPECT TO ASSETS SUCH AS OFFICE EQUIPMENT FIXTURE AND FURNITURE ETC USED AT THE PROJECT OFFICE OF THE ASS ESSEE. THERE IS A FINDING IN THIS IMPUGNED ORDER THAT DRILLING ACTI VITIES HAS BEEN STARTED THUS THE CLAIM OF DEPRECIATION IS A ST ATUTORY ALLOWANCE, IT HAS TO BE ALLOWED MORE SPECIFICALLY W HEN THE ASSESSEE IS THE OWNER OF THE ASSET WHICH WAS USED F OR BUSINESS PURPOSES. SINCE THE ASSET WAS PUT TO USE A ND OWNED BY THE ASSESSEE, THE DEPRECIATION HAS TO BE ALLOWED . 5. FINALLY, THIS APPEAL OF THE ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. 6. NOW, WE SHALL TAKE UP ITA NO. 6493/MUM/2013, WHEREIN FIRST GROUND PERTAINS TO TREATING THE INCOM E OF RS 1,11,89,253/- EARNED AS INTEREST INCOME FROM SURPLU S FUNDS PARKED IN THE BANK BY WAY OF DEPOSIT. WE HAVE ALREA DY DELIBERATED UPON THIS ISSUE IN THE FOREGOING PARA O F THIS ORDER THUS, THIS GROUND OF THE REVENUE IS ALLOWED AND SUC H INTEREST INCOME IS TREATED AS INCOME FROM OTHER SOURCES AND NOT BUSINESS INCOME. 7. THE NEXT GROUND PERTAINS TO FOREIGN EXCHANGE GAI N OF RS. 1,33,11,676/-, WHICH AS PER THE REVENUE IS NOT PART OF BUSINESS ACTIVITIES CARRIED OUT BY THE ASSESSEE THU S CANNOT BE NIKO (NECO) LTD. 12 CONSIDERED AS BUSINESS INCOME. IN EARLIER PARA OF T HIS ORDER, IDENTICALLY, WE HAVE SET ASIDE THIS GROUND TO THE F ILE OF LD. DRP, THEREFORE, THE IMPUGNED GROUND IS SET ASIDE TO THE FILE OF LD. FIRST APPELLATE AUTHORITY TO EXAMINE THE TERMS AND CONDITIONS OF THE AGREEMENT OF THE ASSESSEE AND THE N DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THUS THIS GROUND IS REMANDED BACK TO THE FILE OF LD. COMMISSIONER OF IN COME TAX (APPEALS) TO EXAMINE AFRESH AND AFTER PROVIDING OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE, DECIDE IN ACCORDANCE W ITH LAW. THIS APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATIS TICAL PURPOSES 8. NOW, WE SHALL TAKE UP THE APPEAL OF ASSESSEE IN ITA NO. 8441/MUM/2010 (A.Y. 2007-08), WHEREIN FIRST GROUND PERTAINS TO TREATING THE INTEREST INCOME OF RS. 16, 96,367/- AS INCOME FROM OTHER SOURCES AND NOT BUSINESS INCOME. WE HAVE ALREADY DELIBERATED UPON THIS ISSUE IN PRECEDI NG PARA OF THIS ORDER AND HELD SUCH INCOME AS INCOME FROM OTHE R SOURCES, THEREFORE, THIS GROUND OF THE ASSESSEE IS NOT ALLOWED. 9. SO FAR AS THE GROUND OF FOREIGN EXCHANGE GAIN OF RS. 79,78,203/- IS CONCERNED, THIS GROUND HAS ALREADY B EEN SET ASIDE TO THE FILE OF LD. DRP TO EXAMINE THE TERMS A ND CONDITIONS OF THE AGREEMENT AND THEN DECIDE THE ISS UE IN ACCORDANCE WITH LAW, THEREFORE, THIS GROUND IS ALLO WED FOR STATISTICAL PURPOSES. THE ASSESSEE BE GIVEN THE OPP ORTUNITY OF NIKO (NECO) LTD. 13 BEING HEARD. THIS APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. NOW WE SHALL TAKE UP THE ITA NO. 5972/MUM/2013. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESS EE REQUESTED THE BENCH THAT THE APPEAL MAY BE ALLOWED TO BE WITHDRAWN. THE LD. DR HAD NO OBJECTION TO THE REQUE ST OF THE ASSESSEE, THEREFORE, THIS APPEAL OF THE ASSESSEE IS DISMISSED AS WITHDRAWN. 11. FINALLY, ALL THE APPEALS ARE DISPOSED OF IN TER MS INDICATED HEREIN ABOVE. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 02/12/2015. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' # MUMBAI; ' DATED : 02/12/2015 F| P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. ' 0 ( )* ) / THE CIT, MUMBAI. 4. ' 0 / CIT(A)- , MUMBAI 5. 2!3 - , )*% ) 4 , ' # / DR, ITAT, MUMBAI 6. 5 6# / GUARD FILE. / BY ORDER, .2* - //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' # / ITAT, MUMBAI.