2018 (6) TMI 55

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....g NIL income after claiming deduction under section 80IC of the I.T. Act. The assessee is a firm consisting of four partners. The factory of the firm is located at Industrial Area of Haridwar which is notified Khasra for claiming deduction under section 80IC of the I.T. Act. The assessee was asked to explain as to why deduction under section 80IC claimed on interest income of Rs. 44,69,949/- may not be disallowed and added to the total income of the assessee. The assessee submitted before A.O. that interest income was on account of interest received from Bank on FDRs pledged as security deposit/performance guarantee with the Government Department in lieu of tender of contracts. The amounts are pledged in terms of the awarded contracts. Furn....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e appeal of assessee is time barred by four months. Assessee filed application for condonation of delay in which it is explained that assessee firm has four partners and is managed by the family member Shri Surender Gupta who was looking after finance, accounts and administration and was maintaining files for the income tax matters including filing of appeals. He was unwell and hospitalized in Dehradun and later on he expired. Learned Counsel for the Assessee, therefore, submitted that there was a sufficient cause for delay in filing the appeal. 5. The Ld. D.R. disputed the contention of the assessee. 6. Considering the explanation of assessee, I am satisfied that assessee was prevented by sufficient cause in not filing the appeal wit....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... on such FDRs has a direct link with the business of the assessee. Learned Counsel for the Assessee submitted that assessee had many options to give security deposit by way of draft/FDR/LDR and in case draft is given, the money of the assessee would have been blocked for indefinite period and in case of FDRs, the assessee has earned interest. Therefore, assessee is entitled for deduction under section 80IC of the I.T. Act. Learned Counsel for the Assessee relied upon the decision of the Hon'ble Supreme Court in the case of CIT vs. Meghalaya Steels Ltd., (2016) 67 taxmann.com 158 (SC) in which it was held as under : "Where assessee received (a) transport subsidy, (d) interest subsidy; (c) power subsidy; and (d) insurance subsidy whi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... own decision in the case of the same assessee dismissed the appeal of assessee. Learned Counsel for the Assessee, therefore, fairly submitted that the order of the Tribunal have been confirmed by the Hon'ble High Court of Uttarakhand in the case of the assessee Conventional Fastners vs. CIT, Dehradun (2017) 88 taxmann.com 163 (Uttarakhand) in which it was held as under: "Since interest income earned from fixed deposits reserves kept as security and as a business pre-requisite had nothing to do with carrying on assessee's business of manufacture and sale of electric meters, same would not be entitled to benefit of deduction under section 80-IC." 10.1. The issue is, therefore, covered in favour of the Revenue by the Judgment of t....