2021 (12) TMI 728 - HC - Income Tax

Revenue appeal dismissed, Tribunal decisions upheld on deductions, interest income, exempt investments.

The Court dismissed the revenue's appeal, upholding the Tribunal's decisions on all three issues raised. The deductions under Section 80IB for 'common ... Deduction u/s 80IB in respect of “common expenses”of its Units at Pandicharry, Goa and Jammu - HELD THAT:- Tribunal followed the assessee’s own case for the assessment years, namely, 2000-01 and 2001-02 and allowed the deduction as claimed under Section 80IB of the Act. As against the said order of the Tribunal, the revenue preferred appeal before this Court and the appeal preferred by the revenue in . was dismissed by [2009 (11) TMI 1017 - CALCUTTA HIGH COURT] a judgement dated 20th November, 2009 on the ground of unexplained and inordinate delay. With regard to the assessment year 2002-03, the Tribunal granted relief to the assessee and the revenue carried the matter on appeal to this Court [2019 (9) TMI 1621 - CALCUTTA HIGH COURT] which was dismissed by judgement on the ground that no question of law arises for consideration. Thus, the decision rendered by the Tribunal does not call for any interference. Claim for deduction under Section 80IB on the sale of scrap - This issue is no longer res integra and there are several decisions which are in favour of the assessee and the Tribunal had followed the decision of this Court in the case of Reckitt Benckiser (India) Ltd. [2015 (2) TMI 506 - CALCUTTA HIGH COURT] and granted relief to the assessee. We find that the revenue has not made out any ground to interfere with the said finding rendered by the Tribunal which is taken note of the correct legal position. Disallowance u/s 14A r.w.r. 8D - there were borrowed capitals and investments out of such borrowed funds were also made in making investments that yielded exempt income - HELD THAT:- Tribunal granted relief taking note of the decision in favour of the assessee by placing reliance in the case of Commissioner of Income Tax, Central-I, Calcutta –vs- Ashish Jhunjhunwala [2015 (12) TMI 905 - CALCUTTA HIGH COURT] The said decision lays down the correct legal principle. Therefore, there is no error in the order passed by the Tribunal. Appeal decided against revenue. Issues:1. Deduction under Section 80IB for 'common expenses' apportionment2. Deduction under Section 80IB for 'interest income' on scrap sale3. Addition under Section 14A for investments yielding exempt incomeAnalysis:Issue 1: Deduction under Section 80IB for 'common expenses' apportionmentThe appeal by the revenue challenges the Tribunal's decision to allow deduction under Section 80IB of the Income Tax Act for 'common expenses' of a significant amount. The revenue argued that the apportionment was incorrect. However, the Tribunal upheld the deduction, citing the assessee's previous cases and dismissing the revenue's appeal due to unexplained delay. The Court noted that previous decisions favored the assessee, and no legal grounds existed for interference. Therefore, the Tribunal's decision was upheld, and the appeal failed.Issue 2: Deduction under Section 80IB for 'interest income' on scrap saleThe second substantial question of law revolved around the claim for deduction under Section 80IB for 'interest income' on the sale of scrap. The Tribunal, following precedent, granted relief to the assessee based on established legal decisions. The Court found no grounds for interference, as the Tribunal's decision aligned with correct legal principles. The revenue's appeal was dismissed, affirming the Tribunal's decision in favor of the assessee.Issue 3: Addition under Section 14A for investments yielding exempt incomeRegarding the third substantial question of law, the Tribunal deleted the addition made by the Assessing Officer under Section 14A for investments yielding exempt income. The Tribunal's decision was based on a favorable decision for the assessee, citing legal precedent. The Court found no error in the Tribunal's order, as it followed the correct legal principle. Consequently, the appeal failed, and the substantial questions of law were answered against the revenue.In conclusion, the Court dismissed the appeal by the revenue, upholding the Tribunal's decisions on all three substantial issues raised. The legal principles and precedents cited in each issue supported the assessee's position, leading to the rejection of the revenue's claims. The connected application was also dismissed accordingly.