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of <h1>Tribunal Upholds Tax on Book Profits; Interest Income Classified Separately, Denies Section 80-IA Deduction for Assessee.</h1> <h3>Atria Power Corporation Ltd. Versus Deputy Commissioner of Income-tax, Central Circle-2 (1), Bangalore</h3> Atria Power Corporation Ltd. Versus Deputy Commissioner of Income-tax, Central Circle-2 (1), Bangalore - TMI Issues Involved:1. Applicability of Section 115JB when total income computed under normal provisions is nil.2. Classification of interest income from fixed deposits and income-tax refunds under the head 'Profits and gains of business' or 'Income from other sources.'3. Entitlement of interest income for deduction under Section 80-IA(4)(iv).Issue-wise Detailed Analysis:1. Applicability of Section 115JB when total income computed under normal provisions is nil:The assessee argued that since the total income computed under normal provisions was nil, Section 115JB, which mandates the payment of tax on book profits, should not apply. The Tribunal rejected this argument, clarifying that Section 115JB requires a comparison of the tax payable on the total income computed under normal provisions with the tax on book profits. The Tribunal emphasized that the language of Section 115JB uses 'tax payable' instead of 'chargeable,' indicating that the comparison is between the tax figures, not the income figures. Therefore, even if the total income is nil, Section 115JB applies if the book profit tax is higher.2. Classification of interest income from fixed deposits and income-tax refunds under the head 'Profits and gains of business' or 'Income from other sources':The assessee contended that the interest income from fixed deposits and income-tax refunds should be classified under 'Profits and gains of business' and be eligible for deduction under Section 80-IA(4)(iv). The Assessing Officer and the Tribunal disagreed, holding that such interest income does not arise from the core business activities of power generation but from incidental activities. The Tribunal cited various precedents to support the view that income-tax payments and refunds are personal obligations and not business activities. Consequently, the interest income was assessed under 'Income from other sources.'3. Entitlement of interest income for deduction under Section 80-IA(4)(iv):The assessee argued that the interest income should qualify for deduction under Section 80-IA(4)(iv) since it was derived from the business of power generation. The Tribunal rejected this argument, stating that the interest income from fixed deposits and income-tax refunds could not be considered as income derived from the business of power generation. The Tribunal emphasized that income-tax payments are personal obligations and not business expenses. Therefore, the interest income was not eligible for deduction under Section 80-IA(4)(iv).Conclusion:The Tribunal upheld the Assessing Officer's decision that Section 115JB applies even if the total income computed under normal provisions is nil. It also affirmed that the interest income from fixed deposits and income-tax refunds should be classified under 'Income from other sources' and is not eligible for deduction under Section 80-IA(4)(iv). Consequently, the assessee's appeal was dismissed.
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