TaxTMI 
TaxTMI 
2015 (8) TMI 417
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....The principal receipt (income) on which the penalty stands deleted by the first appellate authority is on account of interest receipt consequent to the denial of deduction u/s. 10B claimed by the assessee in its respect in assessment following the decision by the hon'ble apex court in Liberty India vs. CIT [2009] 317 ITR 218 (SC). This is a subsisting issue with the Revenue in the assessee's case, continuing, as far as we can see, since A.Y. 1996-97. The Assessee's case 4.1 The assessee contends to have claimed benefit u/s.10B on the interest income following the decisions in the case of CIT vs. Paramount Premises (P.) Ltd. [1991] 190 ITR 259 (Bom) and CIT vs. Nagpur Engineering Co. Ltd. [2000] 245 ITR 806 (Bom). In fact, as would be evident per the said decisions, the Hon'ble High Court has only upheld the view as taken by the Tribunal. The fact that the hon'ble apex court per its subsequent decision in the case of Liberty India (supra) has ruled otherwise would not detract from the fact that the claim for deduction as made by the assessee was not without a valid basis or, in any case, a basis in law. Rather, the same itself reflects a conflict in the judicial view at the re....
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....or the payment of which it was otherwise entitled. In the facts of that case, the contract amounts due to the assessee, a contractor, were not paid in time on account of disputes between the parties, and the interest was awarded for the delay. The apex court adverted to the settled law that the interest income is assessable as income from other sources only where it cannot be brought within one or the other specific heads of charge (income). In the circumstances of the case, it could not be said, as had been by the tribunal, that the interest was de hors the assessee-respondent's business, being in fact incidental and attributable to the assessee's contract business. 5.3 In the facts of the present case, the interest income stands earned on deposits placed with the bank/s for fixed term/s (FDRs) and inter-corporate deposits (ICDs). The A.O. has further given a categorical finding of the interest income, which is even otherwise apparent, i.e., from the manner in which it is being derived, as having no direct relationship with the assessee's business activity, supporting his case through reliance on a series of decisions, listed in his orders for A.Ys. 1997-98 and 1998-99, some of....
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....der). In fact, the A.O., and only rightly, has gone further to state that the interest income could not be regarded as derived from the assessee's business, adverting to a host of decisions explaining the restricted scope of the word 'derived', some of which we quote as under: i) Cambay Electric Supply Industrial Co. Ltd. (supra); ii) Sterling Foods vs. CIT [1985] 150 ITR 292 (Kar) [affirmed in 237 ITR 579 (SC); iii) Cement Distributors Ltd. (supra); iv) North East Gases (Pvt.) Ltd. (supra); v) Fenner (India) Ltd. vs. CIT [1999] 239 ITR 480 (Mad); and vi) A. M. Moosa, Bharat Sea Foods vs. CIT [1997] 224 ITR 735 That is to say, that the interest income does not form part of the assessee's business, the same could not in any case be said to be derived there-from, a condition precedent for the income of the assessee's export business from being eligible for deduction u/s. 10B, for which reference may be made to the provision of section 10B(1), reproduced hereinabove. Though, therefore, surely, the A.O. has not segregated the interest income, stating the same to have been found to be business income would be clearly incorrect in view of his clear finding of it bein....
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....lue, is the ratio decendi of a decision. The said decision, rendered following the decision in Paramount Premises (P.) Ltd. (supra), thus, cannot be said to lay down any proposition independent and apart from that stated in Paramount Premises (P.) Ltd. (supra), and which we find as no different from that stated by the Hon'ble Apex Court in Govinda Choudhary and Sons (supra). That is, that it all depends on the facts of the case. The Hon'ble High Court, therefore, presumably and inferably, in the latter decision, i.e., Nagpur Engineering Co. Ltd. (supra), again found a direct nexus between the assessee's business and the interest income, leading it to being assessed as business income and, further, of the said nexus as being of first degree, as explained as far back as in Raja Bahadur Kamakhya Narayan Singh (supra), so that the primary condition of 'derived from', as against incidental or attributable to, as is again well settled, stands satisfied in the facts and circumstances of the case, as found by the tribunal. That is, its decision again rests on the edifice of the factual findings by the tribunal, the final fact finding authority. The said decisions, thus, on the contrary, su....
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.... Mak Data (P.) Ltd. vs. CIT [2013] 358 ITR 593 (SC); CIT v. Atul Mohan Bindal [2009] 317 ITR 1 (SC); Union of India v. Dharmendra Textile Processors [2008] 306 ITR 277 (SC); Guljag Industries v. CTO [2007] 293 ITR 584 (SC); K.P. Madhusudhanan vs. CIT [2001] 251 ITR 99 (SC); B.A. Balasubramaniam and Bros v. CIT [1999] 236 ITR 977 (SC); Addl. CIT vs. Jeevan Lal Shah [1994] 205 ITR 244 (SC); CIT vs. K. R. Sadayappan [1990] 185 ITR 49 (SC); and CIT vs. Mussadilal Ram Bharose [1987] 165 ITR 14 (SC), besides by the hon'ble high courts as well, viz: CIT vs. Mohd. Mohtram Farooqui [2003] 259 ITR 132 (Raj); CIT vs. Sree Krishna Trading Co. [2002] 253 ITR 645 (Ker); Shiv Kumar Tak vs. CIT [2001] 251 ITR 373 (Raj); CIT vs. Vidyagauri Natverlal [1999] 238 ITR 91 (Guj); CIT vs. Nathulal Agarwala & Sons [1985] 153 ITR 292 (Pat)(FB) 6. The only other ground in the assessee's appeals, relates to the disallowance of section 10-B benefit on payment to Cybertech International Corporation Ltd. (CIC Ltd.) and its subsidiaries. The penalty stands upheld on this expenditure as the claim for deduction u/s.80-B was found as not bona fide. The same was not pressed before us by the ld. AR, so that the sam....