2022 (4) TMI 243 - AT - Income Tax

Assessee wins appeal for Section 80 IC deduction but some incomes excluded

The Tribunal allowed the assessee's appeals by determining the initial assessment year for claiming Section 80 IC deduction as 2006-07. AMC charges were ... Deduction u/s 80 IC - initial assessment year - whether assessment year 2005-06 is the initial assessment year or 2006-07 is the initial assessment year was in question for the purposes of allowing deduction u/s 80 IC? - HELD THAT:- Tribunal while disposing of the appeal of the assessee for the assessment year 2010-11 held that the ‘initial year’ for claiming benefit u/s 80IC of the Act is 2006-07 and going by that assessment year 2010-11 is 5th year. Thus, we hold that the initial year for the purposes of claiming deduction under Section 80 IC of the Act is 2006-07 and not 2005-06. Consequently, the assessment year 2011-12 will be the 6th year and 2012-13 will be the 7th year. Accordingly, we direct the Assessing Officer to consider the initial year as 2006-07 and the assessment years under consideration i.e. 2011-12 and 2012-13 shall be 6th and 7th year respectively for the purpose of allowing deduction under Section 80 IC. Deduction u/s 80 IC on AMC charges, duty draw back, interest on FDRs, other interest and interest on refund - HELD THAT:- On perusal of the order of the Tribunal in assessee’s own case for assessment years 2006-07 and 2007-08, we find that the Tribunal held that AMC charges is income derived from business of the assessee entitled for deduction u/s 80 IC - We direct the AO to allow deduction under Section 80 IC in respect of AMC charges received by the assessee. In so far as the duty draw-back, interest on FDR, other interest are concerned, these incomes are not derived from business of the assessee. Hence, we hold that these incomes are not entitled for deduction under Section 80 IC of the Act. Issues:Deduction under Section 80 IC for assessment years 2011-12 and 2012-13 - Initial assessment year determination - Entitlement of AMC charges, duty draw back, interest on FDRs, other interest for deduction under Section 80 IC.Analysis:1. The appeals were filed by the assessee against the common order of the ld. Commissioner of Income Tax (Appeals) for assessment years 2011-12 and 2012-13. The main issue raised by the assessee was regarding the determination of the initial assessment year for claiming deduction under Section 80 IC of the Income Tax Act, 1961. The assessee contended that the initial year for claiming the benefit was 2006-07, not 2005-06 as held by the Assessing Officer. The Tribunal, in a previous decision for assessment year 2010-11, had held that the initial year was 2006-07. Following this precedent, the Tribunal held that the initial year for claiming deduction under Section 80 IC was 2006-07, making the assessment years 2011-12 and 2012-13 the 6th and 7th years respectively for this purpose.2. Another issue raised by the assessee was the entitlement of AMC charges, duty draw back, interest on FDRs, and other interest for deduction under Section 80 IC of the Act. The assessee argued that based on a previous decision for assessment years 2006-07 and 2007-08, AMC charges were entitled to deduction under Section 80 IC. The Tribunal agreed with this argument and directed the Assessing Officer to allow deduction for AMC charges. However, the Tribunal held that duty draw back, interest on FDRs, and other interest were not derived from the business of the assessee and therefore not entitled to deduction under Section 80 IC.3. In conclusion, the Tribunal partly allowed the appeals of the assessee by determining the initial assessment year for claiming Section 80 IC deduction as 2006-07 and allowing deduction for AMC charges while disallowing deduction for duty draw back, interest on FDRs, and other interest. The decision was based on precedent and the specific nature of each income source in relation to the eligible business of the assessee.