ACIT.-Circle-3, Gwalior V. M/s Tilak Export & Import Pvt.Ltd., Gwalior

ITA 92/AGR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6999 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-05-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 08-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: APPLICATION REJECTED
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 92/AGRA/2010 ASSTT. YEAR : 1996-97 A.C.I.T., CIRCLE 3, VS. M/S. TILAK EXPORT & IM PORT PVT. LTD., GWALIOR. INDUSTRIAL ESTATE, GWALIOR. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI VINOD KUMAR, JR. D.R. FOR RESPONDENT : APPLICATION REJECTED. ORDER PER P.K. BANSAL, A.M. : THIS APPEAL HAS BEEN FILED AGAINST THE ORDER OF T HE CIT(A) DATED 22.01.2010. THE ASSESSEE MOVED AN APPLICATION FOR ADJOURNMENT. SINC E THERE WAS NO PLAUSIBLE REASON AND THE ISSUE BEING COVERED, THE ADJOURNMENT APPLICATION WA S REJECTED. 2. AT THE TIME OF HEARING, IT IS NOTED THAT THE ONL Y ISSUE INVOLVED IN THIS APPEAL RELATES TO THE CLAIM OF DEDUCTION U/S. 80HHC IN RESPECT OF INTERES T INCOME AMOUNTING TO RS.13,14,708/-. THE ASSESSING OFFICER ASSESSED THE INTEREST INCOME AS I NCOME FROM OTHER SOURCES, BUT ADDED THE SUM OF RS.11,82,685/- BEING EXCESS DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80HHC. THE MATTER WAS EARLIER SET ASIDE BY THE ITAT FOR DECIDING THE NATU RE OF THE INTEREST RECEIVED AND RE-ADJUDICATE THE CLAIM OF THE ASSESSEE. THE ASSESSING OFFICER AGAIN DISALLOWED THE EXCESS DEDUCTION U/S. 80HHC AMOUNTING TO RS.11,82,685/- TREATING THE INTEREST I NCOME AMOUNTING TO RS.13,14,708/- AS THE INCOME FROM OTHER SOURCES. 2 3. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT( A) ALLOWED THE APPEAL OF THE ASSESSEE. THE ISSUE RELATING TO INTEREST INCOME TO BE ASSESSE D UNDER THE HEAD INCOME FROM OTHER SOURCES IS DULY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS VS. CIT, 262 ITR 278 (SC). 4. WE HAVE HEARD THE LEARNED DR AND CAREFULLY GONE THROUGH THE RECORD AVAILABLE BEFORE US AS WELL AS THE ORDERS OF THE TAX AUTHORITIES BELOW. IN OUR OPINION, THE ISSUE IS NO MORE RES INTEGRA IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS VS. CIT (SUPRA), IN WHICH THE HONBLE SUPREME COURT HAS HEL D AS UNDER : THE WORDS DERIVED FROM IN SECTION 80HH OF THE IN COME-TAX ACT, 1961, MUST BE UNDERSTOOD AS SOMETHING WHICH HAS A DIRECT OR IMMEDIATE NEXUS WITH THE ASSESSEES INDUSTRIAL UNDERTAKING. ALTHOUGH ELECTRI CITY MAY BE REQUIRED FOR THE PURPOSES OF THE INDUSTRIAL UNDERTAKING, THE DEPOSIT REQUIRED FOR ITS SUPPLY IS A STEP REMOVED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTA KING. HELD ACCORDINGLY, THAT INTEREST DERIVED BY THE INDU STRIAL UNDERTAKING OF THE ASSESSEE ON DEPOSITS MADE WITH THE ELECTRICITY BOAR D FOR THE SUPPLY OF ELECTRICITY FOR RUNNING THE INDUSTRIAL UNDERTAKING COULD NOT BE SAID TO FLOW DIRECTLY FROM THE INDUSTRIAL UNDERTAKING ITSELF AND WAS NOT PROFITS O R GAINS DERIVED BY THE UNDERTAKING FOR THE PURPOSE OF THE SPECIAL DEDUCTIO N UNDER SECTION 80HH. CIT VS. RAJA BAHADUR KAMAKHYA NARAYAN SING [1948] 1 6 ITR 325 (PC) AND MRS. BACHA F. GUZDAR VS. CIT (1955) 27 ITR 1 (S C) APPLIED. CIT V. PANDIAN CHEMICALS LTD. (1998) 233 ITR 497 (M AD) APPROVED. RULES OF INTERPRETATION WOULD COME INTO PLAY ONLY I F THERE IS ANY DOUBT WITH REGARD TO THE EXPRESS LANGUAGE USED. WHERE THE WORDS ARE UNEQUIVOCAL THERE IS NO SCOPE FOR IMPORTING THE RULE OF LIBERAL INTER PRETATION. 5. RESPECTFULLY FOLLOWING THE AFORESAID DECISION, W E ARE OF THE VIEW THAT THE INTEREST HAS TO BE ASSESSED UNDER THE HEAD OTHER SOURCES AND ONCE THE INTEREST INCOME IS ASSESSED AS INCOME FROM OTHER SOURCES, THE PROFITS OF THE BUSINESS TO BE CALCULATED FOR THE PURPOSE OF DEDUCTION U/S. 80HHC(3) WILL AUTOMATICALLY GET REDUCED BY THE AMOU NT OF THE INTEREST. THE EXPLANATION (BAA) OF SECTION 80HHC WHICH WAS INSERTED BY THE FINANCE ACT , 1991 IS APPLICABLE ONLY IN THE CASE IN WHICH THE INTEREST INCOME IS ASSESSED UNDER THE HEA D INCOME FROM PROFIT AND GAINS OF THE BUSINESS AND ONLY THEN 90% OF THE INTEREST INCOME HAS TO BE REDUCED. THE REDUCTION IN 3 EXPLANATION (BAA) HAS TO BE MADE ONLY FOR THE GROSS INTEREST IN VIEW OF THE DECISION OF MUMBAI HIGH COURT IN THE CASE OF ASIAN STAR CO. LTD., 326 ITR 56 (MUM.). BUT IN THE CASE OF THE ASSESSEE, EVEN THOUGH THE INTEREST INCOME WAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES, BUT THE ASSESSING OFFICER HAS REDUCED ONLY 90% OF INTER EST INCOME. EVEN THE GROUND TAKEN BY THE REVENUE BEFORE US DOES NOT RELATE TO THE HEAD OF TH E INCOME AND THE GROUND ONLY RELATES TO THE DIRECTION OF THE CIT(A) TO THE ASSESSING OFFICER FO R DEDUCTION OF 90% OF THE NET INTEREST FOR COMPUTING THE DEDUCTION U/S. 80HHC. WE, THEREFORE, DO NOT HAVE ANY JURISDICTION TO ADJUDICATE THE ISSUE RELATING TO WHETHER THE GROSS INTEREST HA S TO BE EXCLUDED FOR THE PURPOSE OF CALCULATION OF DEDUCTION U/S. 80HHC. BUT SINCE THE ASSESSING OF FICER HAS REDUCED 90% OF THE GROSS INTEREST, WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) ON THI S ISSUE AND RESTORE THE ORDER OF ASSESSING OFFICER DIRECTING THE ASSESSING OFFICER TO REDUCE 9 0% OF THE INTEREST INCOME OF RS.13,14,708/- AS PER EXPLANATION (BAA) WHILE COMPUTING THE PROFIT OF BUSINESS FOR THE PURPOSE OF DEDUCTION U/S. 80HHC. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.06.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 TH JUNE, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY