2016 (6) TMI 524 - AT - Income Tax

Interest income from trade debtors included in profit calculation for deduction u/s 80IB upheld by Tribunal

D.C.I.T., Central Circle-XII, Kolkata Versus M/s. Century Aluminium Mfg. Ltd.

The Tribunal dismissed the Revenue's appeal, affirming the inclusion of interest income from trade debtors in the profit calculation for claiming ... Eligibility of deduction u/s.80IB - interest receivable on trading - Held that:- Interest receivable on trading should also be treated as part of business profit on which deduction u/s 80IB has to be allowed. See CIT vs Vidyut Corporation [2010 (4) TMI 229 - BOMBAY HIGH COURT] and CIT vs Pratham Developers(2013 (8) TMI 112 - GUJARAT HIGH COURT ) - Decided in favour of assessee Issues:1. Whether interest income should be included in the calculation of deduction u/s 80IB of the Income Tax Act.2. Interpretation of the decisions of the Hon'ble Supreme Court in similar cases.Analysis:Issue 1:The case involved a dispute regarding the inclusion of interest income in the calculation of deduction u/s 80IB of the Income Tax Act. The Assessee, engaged in manufacturing alloys and components, included interest income in its profits for claiming the deduction. The Assessing Officer (AO) disallowed a portion of the interest income, leading to a lower deduction than claimed by the Assessee. The CIT(A) allowed the Assessee's claim based on previous decisions by the ITAT, directing the AO to include the interest income in the profit calculation for deduction u/s 80IB. The Tribunal upheld the CIT(A)'s decision, citing precedents and holding that interest income from trade debtors should be included in the profit for deduction purposes.Issue 2:The Revenue challenged the decision of the CIT(A) before the Tribunal, arguing against the inclusion of interest income in the deduction calculation. The Tribunal, after considering previous decisions in the Assessee's case and legal precedents, dismissed the Revenue's appeal. It noted that interest income on trading should be treated as part of business profit for deduction u/s 80IB, in line with decisions by the Bombay High Court and the Gujarat High Court. The Tribunal found no merit in the Revenue's appeal and upheld the inclusion of interest income in the profit calculation for claiming the deduction.In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the inclusion of interest income from trade debtors in the profit calculation for claiming deduction u/s 80IB of the Income Tax Act. The decision was based on legal precedents and consistent interpretations of the law in similar cases, ultimately upholding the Assessee's position in the matter.