TaxTMI 
TaxTMI 
TaxTMI 
2013 (11) TMI 739
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....so earned." 2. We have heard Sri Shambhu Chopra learned counsel for the appellant income tax department and Sri Bhupesh Jain, learned counsel appearing for the respondent assessee and perused the records. 3. The only ground pressed by Sri Chopra to challenge the impugned order is that the ITAT was not justified to hold that interest received from the debtors / customers on the delayed payment was not income derived from the industrial undertaking and thus the deduction under Section 80 HH and 80 I of the Act was not admissible on the amount so earned. Sri Shambhu Chopra supporting the findings recorded by the Assessing Officer on the issue of admissibility of deduction under Section 80 HH and 80 I of the Act, submits that the respondent assessee claimed Rs. 1,60,52,674/- and Rs. 2,00,65,843/- being deductions Section 80 HH and 80 I of the Act respectively on the gross total income which includes Rs. 22,31,082/- and Rs. 30,420/- representing the amount of interest received and the profit on sale of assets respectively. This resulted in excess claim of deductions under Section 80 HH and 80 I of the Act. Before the Assessing Officer the assessee took the stand that it had paid Rs. 3....
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....ron Ltd. v. CIT: [2007] 165 TAXMAN 191 (Ori.). (viii) CIT v. Indo Matsushita arbon Co. Ltd.: [2006] 286 ITR 201 (Mad.) (ix) Nirma Industries Ltd. v. DCIT: [2006] 286 ITR 201 (Guj.). Our Findings : 5. We find that as per Section 80HH of the Act where the gross total income of an assessee includes profit and gains derived from an industrial undertaking or the business of a hotel, to which this Section applies, there shall, in accordance with and subject to the provisions of this Section, be allowed, in computing the total income of the assessee, deduction from such profit and gains of an amount equal to 20% thereof. 6. While considering the facts of the case and with regard to question of admissibility of deduction under Section 80 HH and 80 I of the Act to the respondent assessee, the CIT(A) has recorded the findings in paragraphs 10 and 11 as under : "10. Ground no.8 is regarding disallowance of deduction u/s 80 HH & 80 I in respect of interest income and profit on sale of assets. The ld. Counsel of the appellant has not pressed for such deduction in respect of profit on sale of asset or Rs. 30,480/-. Hence this amount representing sale of assets is not considered. Regarding ....
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....unt of allowance u/s 80 HH from the gross total income and calculated allowance on the remainder holding that it was in accordance with Sub Section (8) of Section 80 HH. The ld. A.R. of the appellant submitted that the A.O. misrepresented the provision of Section 80 HH (9) and restriction of allowance u/s 80 I was not according to the provision of law. The appellant relied on the decision of ITAT, Jaipur Bench in appeal no. ITA 653/JP/85 for A.Y.83-84 and Ramnath Exports Pvt. Ltd. Vs. IAC (Delhi) in ITA No. 14 (I) /Del/88 for A.Y.84-85 of ITAT Delhi Bench considering the above decision and provision of Section 80 HH (9), it is sent that the A.O. has misrepresented the provisions of calculation for purpose of allowing deduction u/s 80 I has to be done on the whole amount of gross total income and not on the remainder after giving allowance u/s 80 HH. The A.O. is, therefore, directed to allow deduction u/s 80 I on gross total income of the appellant." 8. In CIT v. Govinda Choudhury & Sons (supra), Hon'ble Supreme Court has held in paragraph 6 as under : "6. This brings us to a consideration of the second question. The sum of Rs. 2,77,692 was received by the assessee as interest on ....
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....n to offering of cash discount and thus the transaction remains the same and there is no distinction as to the source. 5. Considered from this point of view, interest becomes part of the sale price and, therefore, would be clearly derived from the sales made and was not divorced therefrom. Consequently, it was held that such interest would be the direct result of the sale of goods and the income would definitely fall within the expression "derived from" the business of industrial undertaking as appearing in Section 80 IB of the said Act." 10. In the case of CIT v. Jackson Engineers Ltd. (supra), the Delhi High Court held that delayed payment from customers against sale would curtail the character of price itself and would be included in the sale consideration and thus, that income would be treated as income derived from business. The relevant paragraphs no. 9 and 11 of the said judgment are reproduced below : " 9. In this case, the interest was received from customers. The AO held that the interest income was not derived from the undertaking and therefore, did not allow deduction under S. 80-IA in relation to the said interest. The Tribunal, however, has allowed this claim holdi....
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....ading receipts in the following manner : "... The assessee is a contractor. His business is to enter into contracts. In the course of the execution of these contracts, he has also to face disputes with the State Government and he has also to reckon with delays in payment of amounts that are due to him. If the amounts are not paid at the proper time and interest is awarded or paid for such delay, such interest is only an accretion to the assessee's receipts from the contracts. It is obviously attributable and incidental to the business carried on by him. It would not be correct, as the Tribunal has held, to say that this interest is totally de hors the contract business carried on by the assessee. It is well-settled that interest can be assessed under the head 'Income from other sources' only if it cannot be brought within one or the other of the specific heads of charge. We find it difficult to comprehend how the interest receipts by the assessee can be treated as receipts which flow to him de hors the business which is carried on by him. In our view, the interest payable to him certainly partakes of the same character as the receipts for the payment of which he was otherwise enti....
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....ies (P) Ltd. v. CIT: [2008] 303 ITR 411 (Punj. & Har.) (ii) CIT v. Flender Macneil Gears Ltd. [1984] 150 ITR 83 (Cal.). (iii) Tata Sponge Iron Ltd. v. CIT [2007] 292 ITR 175 (Ori.) (iv) CIT v. Indo Matsushita Carbon Co. Ltd. [2006]286 ITR 201 (Mad.) 16.There is no reason to depart from the aforesaid view taken consistently by various High Courts, which is in tune with the principle laid down by the Supreme Court in Liberty India (supra). We answer this question in favour of the assessee and against the revenue." 12. In the case of Phatela Cotgin Industries (P) Ltd.(supra), the Punjab and Haryana High Court while considering the similar question with reference to Section 80HH read with section 80 I of the Act held that the interest received on delayed payments of the sale consideration of manufacturer goods is clearly income derived from industrial undertaking. That being so the Tribunal was clearly unjustified in not allowing benefit under Section 80 HH and 80 I to the appellant. 13. In the case of Tata Sponge Iron Ltd. v. CIT (supra), the Orissa High Court also considered the admissibility of deduction under Section 80 HH with regard to the interest earned from customers for....