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2018 (2) TMI 1529
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....inality due to the reason that appeal in ITA No.1638/Bang/2013 against the said revision order was dismissed on limitation by the ITAT? ii) Whether the benefit of deduction under Section 80-IA(4)(iv)(c) could be denied to the items of income that were derived by the business undertaking which were inextricably linked to its business operations especially when such items of income went to reduce the element of cost of running of business? iii) Whether the Tribunal was right in law in upholding the orders of the lower authorities which treated certain items of income that were derived by the business undertaking from its business and that had gone to reduce the cost of operation of the business as 'other income' and not as 'income from profits and gains of business'? iv) Whether the order of the Tribunal is good in law in as much as the Tribunal has not considered the ratio of the judgment of the Apex Court in CIT Vs. M/s. Meghalaya Steels Ltd. (2016) 383 ITR 217 (SC)? 3. The following substantial questions of law are raised in ITA No.100028/2017. i) Whether the Tribunal was right in law in dismissing in limine the appellant's plea of condonation of delay, without cons....
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.... believe that the assessee has to await fresh order before further course of action is taken. Due to the said bonafide belief, the appeal was not filed against the said order of revision within a period of limitation. Belated appeal filed against the order of revision was dismissed by the ITAT solely on the ground of limitation. Subsequently, consequential assessment order under Section 143(3) read with Section 263 of the Act was passed by the assessing authority, without authority of law. Assessing authority instead of treating the claim made by the assessee as 'income from profits and gains of business' relating to certain items treated the same as 'income from other sources'. Thus, no deduction was given under Section 80-IA(4)(iv)(c) of the Act, and the same was brought to charge. 6. Aggrieved by the same, an appeal was preferred by the assessee against the order of the assessment under Section 143(3) read with Section 263 of the Act before the Commissioner of Income Tax (Appeals) (for short, 'the CIT(A)') which came to be dismissed. The appellant filed an appeal before the ITAT against the said appellate order passed by the CIT(A). In the meantime, assessment orders for the ....
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....setting aside the assessment order without directing a fresh assessment is contrary to the provisions of Section 263 of the Act. Appeal filed by the assessee belatedly with a delay of 913 days was not condoned by the appellate authority and the same came to be rejected in further appeal before the ITAT. The assessee was under a bonafide impression that a fresh order of the assessing authority shall be passed before further course of action is taken. However, when the consequential order was passed by the assessing officer, an appeal was filed before the CIT(A), which was heard on merits and then it was realized that the appeal ought to have been filed under Section 263 of the Act before the ITAT. The ITAT however, failed to appreciate the same in a right perspective. Hence, dismissal of the appeal has caused mis-carriage of justice and collection of tax without authority of law, contrary to Article 265 of the Constitution of India affecting the rights of the assessee is unjustifiable. 10. It was contended that the assessing officer had no quarrel on the proposition that the assessee is entitled to deduction in respect of profits and gains of industrial undertaking engaged in inf....
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.... the miscellaneous recovery from the employees, obviously is neither the income derived from the industrial undertaking nor the realization to reduce the cost of manufacturing/cost of sale of manufactured goods. It is essential that the amount of recovery of certain expenses recovered by the assessee and debited to profit and loss account, some material has to be placed on record to reduce the profits from profit of the assessee. The items disallowed by the Tribunal cannot be held to be unjustifiable. The Tribunal being last fact finding authority has examined the factual aspects in a great detail and allowed the benefit of deduction under Section 80-IA(4)(iv)(c) of the Act to the items which were denied by the assessing authority and the appellate authority. No further deduction can be allowed, not relatable to income derived by the industrial undertaking. Merely for the reason that the same is characterized as income from the business by the assessee, the same cannot be construed as allowable deduction under Section 80- IA(4)(iv)(c) of the Act. 14. It was submitted that the revisional authority exercising the power under Section 263 of the Act revised the order of the Assessin....
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....urt has observed thus: " 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 the amounts which were determined to be payable to the assessee in respect of certain contracts executed by the assessee and in regard to the payments under which there was a dispute between the two parties. 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 c....
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.... "10. Thus, it is clear that the income from fixed deposit placed for business purpose cannot be treated as income from other source but must be seen as part of the assessee's business income. In the present case also the assessee was compelled to park a part of its funds in fixed deposits under the insistence of the financial institutions and therefore the income received thereupon cannot be termed to income from other sources." 23. In the light of these judgments, it can be held that the income from cash assistance, by whatever name called, received or receivable by any person chargeable under the head "profits and gains of business or profession", shall be included under the same head and not under the head "income from other sources". 24. The Hon'ble Apex Court in the case of Meghalaya Steels Ltd. (supra), was dealing with the case where assistance was received to the assessee by way of subsidies, which were reimbursed on the incurring of costs relatable to a business. Similarly, in the case of Govinda Choudhury & Sons (supra), when the interest received by an assessee on the amount which are determined to be payable to the assessee in respect of certain contracts exec....
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....discernible that this income is not derived by an industrial undertaking nor it reduces the cost of manufacturing/cost of sale of the assessee. Hence, this view of the ITAT stands confirmed in disallowing the deduction. 30. It was argued by the learned counsel appearing for the appellant that the assessee is entitled to deduction towards Commission for collection of electricity duty. Electricity duty is collected by the assessee from the consumers of electricity and the same is remitted to the government, in that process, commission is collected for the said service. This commission is nowhere related to the business activities of the assessee. Hence, we are of the opinion that the rejection of the claim made towards income derived by the undertakings for collection of commission under Section 80-IA(4)(iv)(c) of the Act by the authorities is justifiable. 31. It was pointed out that in terms of Section 4(2) of the Karnataka Electricity (Taxation Consumption) Act, 1959, licensee may be granted a rebate of such amount as made from time to time to be determined by the State Government regard being had to the cost of collection of the electricity tax incurred by such licensee. How....