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of <h1>Interest income from Fixed Deposit Receipts assessed under 'income from other sources' with directions on deductible expenses</h1> <h3>Dy. Commissioner of Income Tax, Circle-33 (1), New Delhi Versus Sahdev Jewellers</h3> Dy. Commissioner of Income Tax, Circle-33 (1), New Delhi Versus Sahdev Jewellers - TMI Issues involved:The judgment involves the issue of whether the interest income earned by the assessee from Fixed Deposit Receipts (FDRs) should be assessed under the head 'income from other sources' and the consequent deduction of expenses u/s 57(iii) for the purpose of making or earning such income.Assessment Year 2002-03:The assessee, a 100% export-oriented unit engaged in manufacturing and exporting gold jewelry, claimed exemption u/s 10A for the relevant years. The dispute arose when the Assessing Officer treated the interest income from FDRs as income from other sources, denying the assessee the benefit of netting interest paid against interest earned on FDRs.Decision of Ld. Commissioner of Income Tax (Appeals):The Ld. Commissioner upheld the character of the income from FDRs as 'income from other sources' but allowed the benefit of netting based on the ITAT's decision for the A.Y. 2003-04. However, the Ld. Commissioner did not quantify the deductible amount u/s 57(iii) for the expenses laid out or expended wholly or exclusively for earning such income.Arguments and Ruling:The Departmental Representative argued that the Ld. Commissioner's order should be set aside as the quantification of deductible expenses was not done. On the other hand, the Authorized Representative supported the Ld. Commissioner's decision based on the ITAT's precedent.Judgment and Direction:The ITAT Delhi Bench, considering the precedent set by the tribunal in the assessee's own case, ruled that the interest income from FDRs should be assessed under 'income from other sources.' However, the quantification of deductible expenses u/s 57(iii) was deemed necessary. Therefore, the issue was remanded to the Assessing Officer to determine the allowable deduction strictly as per section 57(iii) for all the assessment years under appeal.Conclusion:All the appeals filed by the Revenue were allowed for statistical purposes, and the issue was remanded to the Assessing Officer for quantifying the deductible amount as per section 57(iii) of the Income Tax Act.
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