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of <h1>Interest on Fixed Deposit Not Deductible Under Section 80IC Income Tax Act</h1> <h3>Unipatch Rubber Ltd. Versus Principal Commissioner Of Income Tax</h3> Unipatch Rubber Ltd. Versus Principal Commissioner Of Income Tax - TMI Issues:The appeal concerns the Assessment Year 2014-15. The main issue raised is whether interest received on a fixed deposit, created pursuant to a court order to secure payment of entry tax, is eligible for deduction under Section 80IC of the Income Tax Act, 1961.Summary:Issue 1 - Eligibility for Deduction under Section 80IC:The appellant/assessee appealed against the order of the Income Tax Appellate Tribunal (Tribunal) regarding the eligibility of interest received on a fixed deposit for deduction under Section 80IC of the Income Tax Act. The Tribunal ruled against the appellant, stating that such income cannot be categorized as 'derived' from an eligible business.Background:The appellant was required by an interim order of the High Court of Himachal Pradesh to pay a portion of the disputed entry tax and secure the remaining amount by creating fixed deposits. This order was related to a challenge to the Himachal Pradesh Tax on entry of Goods into the Local Area Act, 2010.Arguments:The appellant created fixed deposits to secure the unpaid disputed tax liability, resulting in the accrual of interest. The appellant sought deduction under Section 80IC by treating the interest as part of the income derived from the eligible business. The appellant argued that if deduction under Section 80IC was to be denied, the interest should have been treated as 'income from other sources.'Court's Decision:The court agreed with the respondent that the interest accrued on fixed deposits, meant to secure payment of entry tax liability, cannot be considered income derived from an eligible business under Section 80IC. The court noted that even if the characterization of the income was incorrect, it would not affect the tax burden on the appellant. The court declined to interfere with the Tribunal's order, stating that no substantial question of law arose for consideration.Conclusion:The appeal was closed, and the court upheld the Tribunal's decision regarding the ineligibility of interest received on a fixed deposit for deduction under Section 80IC of the Income Tax Act, 1961.
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