Uttar Gujarat Vij Company Ltd., Mehsana V. The ACIT, Circle 4, Vadodara

MA 98/AHD/2022

AI Insights

The case involves Uttar Gujarat Vij Company Ltd., the appellant, contesting an order by the Assistant Commissioner of Income Tax regarding the classification of interest income from staff loans and advances. The appellant argued that this income should be considered as business income, referencing a precedent set by a co-ordinate bench of the I.T.A.T. in a similar case involving Gujarat Urja Vikas Nigam Ltd. However, the Tribunal's earlier decision did not acknowledge this precedent, leading to the filing of Miscellaneous Applications for rectification. The Tribunal dismissed these applications, stating that the issues had been adequately addressed in the original judgment and that the decisions cited by the appellant were not applicable to the facts of the present case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129895 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-05-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-03-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 24-11-2022
• Other Referred Cases: Gujarat Urja Vikas Nigam Ltd. vs. ITA No.3358 and 1198/Ahd/2015, Odisha Power Generation Corporation Ltd. vs. Hon'ble Orissa High Court
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Question of law
• Section: 254(2)

Judgement Text

M.A. Nos.97, 98, 99 & 100/Ahd/2022 AYs: 2010-11, 2011-12, 2012-13 & 2013-14 respectively Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER M.A. Nos.97, 98, 99 & 100/Ahd/2022 (In ITA Nos.2089/Ahd/2013, 2570/Ahd/2014, 1751/Ahd/2016 & 445/Ahd/2018 respectively) Assessment Years: 2010-11, 2011-12, 2012-13 & 2013-14 respectively Uttar Gujarat Vij Company Ltd., vs. Asstt. Commissioner of Income Tax Visnagar Road, Circle-4, Baroda/Income Tax Mehsana – 384 001 Officer, Ward-2(1)(4), Baroda Gujarat [PAN – AAACU 6551 F] (Appellant) (Respondent) Assessee by : Shri Manish J. Shah, AR Respondent by : Shri Atul Pandey, Sr. DR Date of hearing : 24.03.2023 Date of pronouncement : 17.05.2023 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : These Miscellaneous Applications are filed by the Assessee in respect of order dated 24.08.2022 passed by the Tribunal. 2. Ld. AR submitted that the assessee preferred an appeal before the Income Tax Appellate Tribunal against the order of learned C.I.T. (Appeals) for Asst. Year 2010-11 raising several grounds of appeal, including, challenging the addition with respect to interest income from staff loans and advances amounting to Rs.73,46,000/- as income from other sources as against business income. The Ld. AR stated that, with respect to the said ground of appeal, the Ld. A.R. relied upon an order dated 26.04.2019, of a co-ordinate bench of the I.T.A.T. at Ahmedabad in the case of a group concern, namely, Gujarat Urja Vikas Nigam Ltd. bearing ITA No.3358 and 1198/Ahd/2015 and submitted that the said issue is covered in the favour of the assessee by the said order. However, it seems that the I.T.A.T. while passing the order dated 24.08.2022 has inadvertently not dealt with the aforesaid contention nor noticed the aforesaid M.A. Nos.97, 98, 99 & 100/Ahd/2022 AYs: 2010-11, 2011-12, 2012-13 & 2013-14 respectively Page 2 of 5 order in the case of a group concern. It can be seen from the order passed in the present appeal that, the I.T.A.T. has, without considering the aforesaid order, held in para 10 that, the particular issue of interest on staff loans and advances has not been specifically decided in favour of the assessee in any of the orders relied upon by the Ld. AR. The Ld. AR submitted that, in ITA No.3358/Ahd/2015, the Assessing Officer had added the entire amount under the head "Other Incomes" in the Profit & Loss Account of the Group Concern amounting to Rs.13352.48 lacs as income from other sources as against the claim of business income and on appeal by the assessee, the said addition was deleted by the CIT(A). Thereafter, the revenue had preferred an appeal against such deletion of entire other incomes of Rs.13352.48 lacs and the I.T.A.T. had dismissed the appeal of the revenue by holding that these other incomes are directly related to the business of the assessee and therefore, are in the nature of business income. A copy of the relevant assessment order, appellate order of CIT(A) and the order of the I.T.A.T. in ITA No.3358/Ahd/2015 was filed before the I.T.A.T. along with a chart, during the hearing of the present appeal. The Ld. AR, therefore, submitted that, interest on staff loans and advances was a part of the entire "Other Incomes" amounting to Rs.13352.48 lacs which is held to be business income by the I.T.A.T. and hence, the issue is decided by a coordinate bench of this I.T.A.T. in favour of the assessee and this decision though relied upon, has not been taken into consideration while passing the order in the present appeal. In order to complete the sequence and to confirm the settled position with respect to the aforesaid issue of interest income on staff loans and advances, the Ld. AR further submitted that, the revenue had preferred Tax Appeal bearing TA No.67 of 2020, before the Hon'ble Gujarat High Court, against the order of the I.T.A.T. in ITA No.3358/Ahd/2015. In the said Tax Appeal, revenue had proposed to raise question of law only with respect to the component of interest income on other advances amounting to Rs.75.87 lacs while the Hon'ble I.T.A.T. had held the entire "Other Incomes" amounting to Rs.13352.48 lacs to be business income. The Ld. AR, therefore, submitted that, the revenue has accepted the finding of fact and the position with respect to all the other components of "Other Incomes" to be business income, which also includes the component of interest income on staff loans and advances. The Ld. AR further submitted that, for the purpose of rectification, even without considering the aforesaid order of the Hon'ble High Court, the issue is still covered by the order of the I.T.A.T., which, with due respect, has not been considered. M.A. Nos.97, 98, 99 & 100/Ahd/2022 AYs: 2010-11, 2011-12, 2012-13 & 2013-14 respectively Page 3 of 5 2.1 On perusal of the order in the present appeal, it can be seen that, the I.T.A.T. has also stated in para 10 therein that, though the contentions of the assessee with respect to interest income on staff loans and advances were quoted by the Hon'ble Orissa High Court in its judgement dated 11.03.2022, but whether the same was accepted or not is not mentioned in the judgement. It is also stated that, the decision of the Hon'ble Orissa High Court has not specifically mentioned the nomenclature of interest on staff loans and advances. The relevant contentions raised by the learned counsel for the assessee in the case of Odisha Power Generation Corporation Ltd. as quoted in the aforesaid judgement dated 11.03,2022 are reproduced hereunder in verbatim: “..........It was submitted that revenue receipt in the form of interest on loans and advances given to the employees, receipts of rent and electricity charges, receipts from sale of scrapes, receipts derived from sale of surplus stock and sundry receipts etc. would reduce the revenue expenditure of other related expenditures. Thus, according to Mr. Mohanty, the abovementioned receipts and related expenses are inextricably linked and is having direct and proximate connection/nexus with the Assessee's business of generation and distribution of power." The Hon'ble Orissa High Court had accepted these contentions by noting in the judgement dated 11.03.2022 as under: "12. The Assessee offered an explanation regarding interest income earned by it, from advances given to its employees as well as provision of electricity and water charges collected from water through its employees and contractors for facilities in the township, receipt from transit hostel, sale of scrap, insurance claim etc. The facilities were given to its employees for better conditions of employment. This was to improve the overall efficiency of the undertaking which is devoted to the single purpose of generation of power. The Court, therefore, has no difficulty in accepting the submission of the Assessee that the interest received on advances and loans given to its employees are receipts in normal course of carrying its business and should be considered as income derived from its essential business activities. ..." 2.2 The Ld. AR, therefore, submitted that, the facts noted in the order passed in the present appeal are inadvertently wrongly noted as far as the judgment has clearly noted the issue about interest earned on loans and advances given to its employees and has also recorded the acceptance of the Assessee's contentions of it being business income. In this view of the matter, the Ld. AR submitted that, non- M.A. Nos.97, 98, 99 & 100/Ahd/2022 AYs: 2010-11, 2011-12, 2012-13 & 2013-14 respectively Page 4 of 5 adjudication or non-consideration of the order relied upon by the A.R. of the appellant during the course of hearing as well as holding non-applicability of the judgement of the Hon'ble Orissa High Court on the basis of wrong facts are mistakes apparent from record within the meaning of section 254(2) of the Act, and hence, prayed that order passed u/s.254(l) dated 24.08.2022 be recalled and rectified to the aforesaid extent in the interest of justice. 2.3 The Ld. AR further prayed that the appeal be restored and rectified to adjudicate ground no.2 raised by the assessee. 3. The Ld. DR submitted that the Tribunal has considered the decision of Hon’ble Gujarat High Court and Hon’ble Orissa High Court as well as the decision of the Tribunal. The Ld. DR further submit that in paragraph no.10 the Tribunal has given its own finding and the assessee is seeking review of the order which is not permissible under Section 254 of the Income Tax Act, 1961. 4. We have heard both the parties and perused all the material available on record. The contention of the Ld. AR was that the Tribunal has not adjudicated/not considered the orders relied upon by the Ld. AR during the course of hearing as well as holding that non-applicability of the judgement of the Hon’ble Orissa High Court is a mistake apparent from record within the meaning of Section 254(2) of the Act but the Tribunal has taken cognisance of the decision of Hon’ble Orissa High Court and has given its view on the aspect of interest on staff loans whether business income or not. The view taken by the Tribunal is independent view after considering the decisions of the Hon’ble Gujarat High Court and the Hon’ble Orissa High Court and the Delhi Tribunal. The Tribunal has categorically noted the distinction on facts that in the said cases the interest earned on staff loan/advances was treated as business income noting the fact that they were given as mandatory incentives. This fact being not demonstrated in the present case, therefore, all these decisions were held to be not applicable in the present case. This cannot be termed as mistake apparent from record as the decisions cited by the Ld. AR were adjudicated and considered while expressing the view by the Tribunal in order dated 24.08.2022 and applicability of the decision of the Hon’ble Orissa High Court has also been taken into account after expressing our view. The ITAT has a limited scope/power of rectifying the mistakes M.A. Nos.97, 98, 99 & 100/Ahd/2022 AYs: 2010-11, 2011-12, 2012-13 & 2013-14 respectively Page 5 of 5 apparent from record within the meaning of Section 254(2) of the Act. At this juncture, the assessee is seeking review of the order dated 24.08.2022 passed by the Tribunal which is not as per the provisions of Section 254(2) of the Act. Thus, the present Miscellaneous Applications do not survive and hence are dismissed. 5 In the result, all the Miscellaneous Applications filed by the assessee are dismissed. Order pronounced in the open Court on this 17 th May, 2023. Sd/- Sd/- (ANNAPURNA GUPTA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 17 th day of May, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad