Tribunal allows interest income as business income under section 80IB

The Tribunal ruled in favor of the assessee, allowing interest income on delayed payment of sale proceeds to be treated as business income eligible for deduction under section 80IB. The decision was based on the Jurisdictional High Court's ruling in a similar case. The Tribunal upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal.

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Issues:
1. Whether interest received on delayed payment of sale proceeds of power generated from windmills can be treated as business income eligible for deduction under section 80IA of the Income Tax Act, 1961.
2. Whether the decision of the Jurisdictional High Court in a similar case is applicable to the present scenario.

Analysis:
1. The Revenue challenged an order regarding the assessment year 2009-10, where the Assessing Officer excluded interest income of Rs. 10,41,315 from the deduction claimed under section 80IA, treating it as income from other sources. The Revenue contended that the interest cannot be considered as derived from the industrial undertaking engaged in power generation, thus not eligible for deduction under section 80IA. However, the Commissioner (Appeals) directed the Assessing Officer to treat the interest as business income allowable for deduction under section 80IB, citing a decision of the Jurisdictional High Court in a similar matter.

2. The assessee argued that the interest was related to delayed payment of sale proceeds of power generated from windmills, directly linked to its business activities. The Tribunal noted that the assessee was in the business of power generation from windmills and had sold power to a company that delayed full payment, resulting in interest payment to the assessee. Referring to the decision of the Jurisdictional High Court in a similar case, the Tribunal held that the interest received was akin to a component of the sale price of goods, thus eligible for deduction under section 80IB. The Tribunal upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal.

In conclusion, the Tribunal ruled in favor of the assessee, allowing the interest income on delayed payment of sale proceeds to be treated as business income eligible for deduction under section 80IB, based on the decision of the Jurisdictional High Court. The Tribunal found the Commissioner (Appeals) direction legally and factually correct, ultimately dismissing the Revenue's appeal.

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