TaxTMI 
TaxTMI 
2019 (3) TMI 17
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....Ram Honda Power Equipments 2007 (289) ITR 475 (Del). 2. The facts necessary for this order is that the respondent/assessee, a telecommunications company had claimed benefit of Section 80-IA of the Act. Apparently, it also reported a loan transaction to its group company - M/s. Hutchison Essar South Ltd. The facts relating to this aspect are that the assessee had borrowed sums towards its business undertaking; they were in turn loaned to the said group company. The amounts were borrowed from the bank carrying an interest rate of 7%. The interest received by the assessee from its sister concern was 9%. The assessee had, in the course of proceedings, claimed that this income was derived from the tax deductable activity covered by Section 80....
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....y an undertaking or an enterprise from any business refered to sub-section (4). Having regard to the clear shift in language of the provision the intention of the legislature is clear that all income derived from the business of the undertaking should be eligible for deduction. The AO himself has taxed interest income as income under the head "business" and not under the head "other sources". It was argued that the decision of the Supreme Court in Pandian Chemicals Ltd. (supra), which relates to Section 80HH, cannot be applied to the provision of Sec. 80IA which is differently worded. The AO has also relied upon the decision of the Supreme Court in CIT v. Sterling Foods 1999 237 ITR 579 for disallowing interest. It is submitted that this....
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....T revised its calculation as a result of which the assessee is entitled to refund as well as interest on refund if there is any delay in making payment of refund to the assessee. The assessee has received refund from DOT as well as interest theron. The said refund is received on excess demand recovered by DOT and, therefore, it has direct nexus with rendering telecommunication services. Therefore, such interest would qualify for deduction u/s 80IA of the Act. Similar arguments were made by the Ld. Counsel for the assessee as regards to FDR interest as well as interest on refund received from the Department of Telecommunication. Similar alternative claimed was also made as regards to netting of interest. On the other hand the Ld. DR relie....
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.... issues to the file of the Assessing Officer to find out the nexus and allow netting in view of the above decisions cited. In the result, these issues are partly allowed." 3. The AO, in the second round, after remission, disallowed the claim altogether holding that the amount received was not business income but income from other sources. The CIT(A) deleted the addition made. The ITAT affirmed that order, stating as follows: "Heard both parties reiterating their respective stand. There is no dispute that instant proceedings are consequential ones confined to nexus aspect only qua impugned interest expenses and interest income in question. It has already come on record that assessee availed loan @7% followed by the same being advanced ....