2014 (6) TMI 437

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....aised following grounds:-  "1. The CIT(A) erred in confirming the addition for the provision for Income Tax recoverable from Gujarat Urja Vidyut Nigam Limited (GUVNL) and Essar Steel Ltd. amounting to Rs.3.18 Crores while computing income under the normal provisions of the Act. 2. The CIT(A) erred in confirming the disallowance of ½% of the Average value of investment amounting to Rs.3,05,88,538/- as per Rule 8D r.w.s. 14A of the Income Tax Act." 2. The brief facts are that the assessee is in the business of generation and distribution of power. As per the power purchase agreement entered by the assessee with Gujarat Electricity Board and Essar Steels Ltd., the assessee has to recover income tax payable by it from the p....

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....wed in the subsequent years also. Accordingly, following the judicial precedents, we also confirm the said addition and hence the ground No.1 raised by the assessee stands dismissed. 6. In the ground No.2, the assessee has challenged the disallowance under section 14A read with rule 8D. Before us, the ld. counsel submitted that the Assessing Officer as well as the ld. CIT(A) have applied rule 8D while making the disallowance even though, in view of the decision of the Hon'ble Bombay High Court in the case of Godrej Boyce Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT reported in (2010) 328 ITR 81 (Bom), rule 8D is not applicable for the assessment year 2007-08. He submitted that the disallowance is only on account of administrative expen....

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.... all, looking at the nature of accounts and expenses incurred by the assessee under the head "Administrative Expenses". 9. In the result, ground No.2 is treated as allowed for statistical purposes. 10 In the additional ground, the assessee has raised the similar disallowance under section 14A read with rule 8D which has been added back to the computation of book profit under section 115JB. Since the issue of disallowance under section 14A has been set aside to the file of the Assessing Officer, therefore this ground is also remitted back to the file of the Assessing Officer to decide the issue accordingly. 11. In the result, additional ground is treated as allowed for statistical purposes. 12. Now we will take department's appea....

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....hat such an interest income is to be treated as business income, however, the assessee is entitled to deduction under section 80IA on account of interest expenses on pro-rata basis only while computing interest income. Accordingly, he held that interest income of the assessee from these sources is no doubt business income, however, no deduction shall be allowed under section 80IA. 15. Thus, the only issue arising for our adjudication is, whether interest income is business income or not. The issue of claim of deduction under section 80IA, qua this interest income is not subject matter of dispute. We find that the Tribunal has decided this issue after holding that, interest income is to be assessed as business income. This ground has been....