TaxTMI 
TaxTMI 
2019 (6) TMI 534
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..... The Learned Commissioner of Income Tax (Appeals) erred in considering the Interest Income received on LC, FD and Bank Guarantee, Bank Interest, Interest on VAT Refund and Interest on HDFC Asset Management as Income from other sources and not as Business Income and thereby denying deduction u/s 80.1B of Income Tax Act. 2. The Learned Commissioner of Income Tax (Appeals) also erred in ignoring the Commissioner of Income Tax (Appeal) order for Assessment Year 2010-11 which was on similar grounds and the appeal was allowed in favour of the assessee company. 3. The Learned Commissioner of Income Tax (Appeals) erred in charging Interest u/sec.234B and 234C of the I.T Act, 1961 and having regard to the fact and the circumstance....
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....letter dated 03.02.2015. The AO rejected the contentions of the assessee and treated the same as income from other sources on the ground that same is not emanating from business activity of the assessee by relying on the decision in the case of Murli Investment Co. vs. CIT 167 ITR 368 (Raj), Godavari Sugar Mills Ltd. vs. CIT 191 ITR 359 (Bom) and South India Shipping Corporation Ltd. vs. CIT (1999) 240 ITR 24 (Madras). The AO further relied on the case of Kinfra Export Promotion Industrial Ports Ltd. vs. DCIT (2013) 59 SOT 57 (URO Kochin) wherein it has been held that if interest income is not derived from eligible undertaking it is not eligible for deduction. According to the AO, there is no direct nexus between the interest income with....
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....ertaking". The Hon'ble Apex Court accordingly affirmed the order of the Hon'ble Madras High Court holding that the interest on deposits with Tamil Nadu Electricity Board cannot be treated as income derived by the industrial undertaking for the purpose of Section 80HH. It is, therefore, settled law now that incidental business receipts which have no nexus with the manufacturing activity of the industrial undertaking will not be eligible for deduction u/s section 80IB, The interest income earned had no direct or immediate nexus with the manufacturing activity of the appellant. It is, at best an incidental business receipt and will not be eligible for the purpose of claiming deduction u/s 801B. The disallowance made by the Assessing Of....
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....sue has already been decided in favour of the assessee by the Ld. CIT(A) in A.Y. 2010-11, the same may kindly be allowed in the current year also as the income earned has the nexus with the manufacturing of aluminum ingots as these fixed deposits were required as security in order to avail the credit facilities from State Bank of India for the purpose of manufacturing activity of the assessee. 7. The Ld. D.R., on the other hand, relied heavily on the orders of lower authorities by submitting that the interest income has rightly been treated as income from other sources by the AO and rightly confirmed by the Ld. CIT(A) as there is no direct nexus between the business of the assessee and the interest income for the purpose of allowing dedu....