Deductibility and income classification principles upheld for cess, provident fund contribution, and interest on business funds.

Cess on green leaf was treated as deductible because the issue was covered by binding jurisdictional High Court precedent. Employees' contribution to provident fund paid after the due date was held allowable, following the Supreme Court ruling in Alom Extrusion Ltd. and the jurisdictional High Court's application of that principle. Interest earned from deployment of surplus business funds was held to arise from business activity and to be assessable as business income, not income from other sources. The first appellate authority's relief on each issue was therefore upheld, and no sustainable ground for interference remained.

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Issues: (i) whether the disallowance relating to cess on green leaf was deductible; (ii) whether employees' contribution to provident fund paid beyond the due date was allowable; (iii) whether interest income arising from deployment of business funds was assessable as business income or as income from other sources.

Issue (i): whether the disallowance relating to cess on green leaf was deductible.

Analysis: The addition had been deleted by the first appellate authority by following the jurisdictional High Court decision in AFT Industries Ltd. The Revenue did not show any basis to disturb that approach. The issue was treated as covered by binding precedent.

Conclusion: Decided in favour of the assessee and against the Revenue.

Issue (ii): whether employees' contribution to provident fund paid beyond the due date was allowable.

Analysis: The issue was held to be covered by the jurisdictional High Court decision following the Supreme Court ruling in Alom Extrusion Ltd., on the basis that the amount was deductible even though payment was made beyond the due date.

Conclusion: Decided in favour of the assessee and against the Revenue.

Issue (iii): whether interest income arising from deployment of business funds was assessable as business income or as income from other sources.

Analysis: The Tribunal followed its earlier co-ordinate bench view that interest earned on deployment of surplus business funds, in the course of an established business, springs from business activity and is assessable as business income. The first appellate authority had correctly applied that principle.

Conclusion: Decided in favour of the assessee and against the Revenue.

Final Conclusion: The appeal raised no sustainable ground for interference, and the additions deleted or reliefs granted by the first appellate authority were upheld.

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