Appeals Granted in Part: Deduction Disallowed on Interest Income, Other Issues Remanded for Fresh Decision

Swiss Glass Coat Equipment Ltd. Versus ACIT

Swiss Glass Coat Equipment Ltd. Versus ACIT - TMI Issues Involved:
1. Confirmation of additions by disallowing the claim of deduction under section 80-IB.
2. Adjudication on other receipts disallowed by AO claimed as deduction under section 80-IB.
3. Initiation of penalty proceedings under section 271(1)(c).
4. Levy of interest under sections 234A, 234B, and 234C.

Detailed Analysis:

1. Confirmation of Additions by Disallowing the Claim of Deduction Under Section 80-IB:
The assessee contested the confirmation of additions made by the AO by disallowing the claim of deduction under section 80-IB on "other income." The AO disallowed the deduction on various receipts such as interest on FDRs, insurance claims, miscellaneous income, excess provision for IT, sales tax refund, inspection charges, packing charges, and scrap income, arguing that these were not derived from the business of the industrial undertaking. The CIT(A) upheld the AO's decision, particularly on the interest income, citing precedents like Tuticorin Alkali Chemicals and Fertilizers Ltd. [1997] 227 ITR 172 (SC), which held that interest on deposits is not business income but income from other sources. The Tribunal agreed with this view, emphasizing the need for a direct nexus between the income and the industrial undertaking for eligibility under section 80-IB.

2. Adjudication on Other Receipts Disallowed by AO Claimed as Deduction Under Section 80-IB:
The assessee argued that the CIT(A) failed to adjudicate on other receipts disallowed by the AO. The Tribunal noted that the CIT(A) did not provide a detailed examination or findings on whether these receipts were derived from the actual conduct of the business. The Tribunal highlighted the need for a speaking order, reflecting application of mind to the issues raised. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the issue back for a fresh decision, instructing the CIT(A) to clearly determine whether the receipts were derived from the business of the industrial undertaking.

3. Initiation of Penalty Proceedings Under Section 271(1)(c):
The assessee raised a ground against the initiation of penalty proceedings under section 271(1)(c). However, the Tribunal noted that mere initiation of penalty proceedings is not appealable. As no specific arguments were presented on this ground, it was dismissed.

4. Levy of Interest Under Sections 234A, 234B, and 234C:
The assessee contested the levy of interest under sections 234A, 234B, and 234C. The Tribunal cited the mandatory nature of these interest levies as established in Commissioner Of Income Tax v. Anjum M. H. Ghaswala And Others, 252 ITR 1 (SC) and affirmed by the Supreme Court in CIT v. Hindustan Bulk Carriers [2003] 259 ITR 449 (SC) and CIT v. Sant Ram Mangat Ram Jewellers [2003] 264 ITR 564 (SC). Therefore, this ground was dismissed, with a note that the AO should allow consequential relief, if any, while giving effect to the Tribunal's directions.

Conclusion:
The Tribunal partly allowed the appeals for statistical purposes, upholding the disallowance of the deduction under section 80-IB on interest income and remanding the issue of other receipts back to the CIT(A) for a fresh decision. The grounds related to penalty proceedings and interest levy were dismissed.