AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 1344
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....in law and on facts in treating Interest from H P SEB amounting to Rs. 71,285/- as "Income from Other Sources' instead of 'Income from Business and Profession . 3. That the Ld.CIT(A) erred in law and on facts in reducing the following incomes from the profits of the units eligible for deduction u/s 801C of The Income Tax Act, 1961; Particulars Amount Interest from hpseb 71,285 Rent received 1,93,367 Misc. Receipt 1,590 Total 2, 66,242 3. Ground No. I raised by the assessee is general in nature and does not require any specific adjudication. 4. Vide Ground No. 2 the assessee has agitated the action of the lower authorities in treating the interest income from H P SEB amounting to R s. 71,285/- as 'income from other sources' instead of income from business and profession.' 5. The brief facts relating to the issue are that the assessee had earned interest income from the security deposit made with the Electricity Board (H P SEB). The Assessing officer treated the said interest income as 'income from other sources' and did not allow the set off of the same against the interest expenditure incurred by the assessee on the loan amount o....
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....d. 6. Ground N 0.3: The assessee in this ground has agitated the action of the lower authorities in reducing the income from interest from H P SEB, rent received, Misc. receipt etc. from the profits of the unit eligible for deduction u/ s 801C of the Act. So far as the interest income of R s. 71,285/- from HPSEB is concerned, this issue has already been adjudicated by us vide ground N 0.2 of the appeal. It is accordingly held that though the assessee is entitled to netting of such income against business expenditure but the assessee is not entitled to include the said income in the eligible profits of the undertaking in view of the laws laid down by the Hon'ble Supreme Court in the case of 'Pandian Chemicals Ltd Vs. CIT' (supra). So far as the income from rent received i.e. R s. 1,93,367/- is concerned, the same analogy can be applied and the same is not the income derived by the undertaking and, hence, is not eligible for deduction u/s 801C of the Act. So far as the amount of R s. 1,590/- towards Misc. Receipts is concerned, the Ld. Counsel for the assessee has stated at bar that he does not press this issue because of smallness of the amount, however, the issue ....
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....enditure in earlier years. He, however, has submitted that he has no objection if this aspect is examined / verified by the Assessing officer. We accordingly restore this issue to the file of the Assessing officer for the limited purpose to examining as to whether the assessee has already claimed deduction of expenditure including the amount reimbursed to the assessee under TUFS scheme? If, it is found that the assessee has not so claimed it as expenditure in earlier years, the assessee will be entitled to the netting of the said reimbursement amount against the interest expenditure. 9. In the result, the appeal of the assessee is allowed for statistical purposes. 10. Now coming to the Revenue's appeal in ITA No. 569/Chd/2012 for assessment year 2008-09, the Revenue in its appeal has taken the following grounds of appeal: 1. That the [d. CIT(A) has erred in law and facts in directing the A.O. to consider interest income received by the assessee on delayed payments from customers and suppliers amounting to R s. 19, 77,643/- as 'Business Income' instead of 'Income from Other Sources' as considered by the A.O. 2. That the [d. CIT(A) has erred in law and f....
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....ntrary to the above proposition of law laid by the Hon'ble Jurisdictional High Court. The issue is, thus, squarely covered in favour of the assessee. Ground No. I of this appeal, therefore, is dismissed. 13. Vide ground No. 2, the Revenue has agitated the action of the CIT (A) in treating the activity of twisting and texturing of yarn as manufacturing activity for the purpose of deduction u/s 801C of the Act. 14. We have heard the rival contentions and have also gone through the records. This issue has been dealt by Ld. CIT (A) in para 12 onwards of his order. The Ld. CIT (A) after considering the various judgments of the higher Courts on this issue and also considering the activity of the assessee has observed that the assessee has been doing the activity of conversion of yarn into thread which leads to creation of entirely a distinct product meant for specific usage and further that the change effected is irreversible. He has also observed that the average price of the raw material i.e. yarn being R s. 230/- per kg cannot be equated with that of the finished product i.e. thread priced at an average price of R s. 575 per kg. He further relied upon the decision of the Hon&#....
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.... assessee. We agree with the above contention of the Ld. Counsel for the assessee. The purpose of insurance is always to get indemnified against any unforeseen loss. However, the question before us is whether such reimbursement / insurance claim has been paid to the assessee on account of Capital loss or Revenue loss. We accordingly direct the Assessing officer to examine as to whether the insurance claim has been paid to the assessee in view of the loss on capital assets or in view of loss on business assets. If the same is found to be on account of claim of loss of business assets, assessee will be entitled to set off of the same against the business expenses. We order accordingly. 18. So far as the claim of brokerage / discount received on ocean freight interest is concerned, the Ld. counsel for the assessee has submitted that the issue is squarely covered in favour of the assessee with the decision of the Tribunal in ITA No. 1 147/Chd./2014 vide order dated 6.7.2015 in the case of 'V MT Spinning co. Ltd vs. Addl CIT' 19. We have gone through the said decision in the case of 'V MT Spinning Co. Ltd Vs. Addl CIT' (supra) and find that the issue relating to the ....
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....receipt." 22. The first ground is relating to the eligibility of rental income for deduction u/ s 801C of the Act. The Ld. Counsel for the assessee stated at bar that he does not press this ground. This ground is accordingly dismissed as not pressed. 23. Another effective ground is relating to the treatment of interest reimbursement under Technology Upgradation Fund Scheme (TUFS) as capital receipt. This issue has already been adjudicated by us while deciding the additional ground of the assessee's appeal for assessment year 2008-09. In view of our findings given above, this issue is restored to the file of the Assessing officer on the same lines and terms as directed above while adjudicating the additional ground of the assessee's appeal for assessment year 2008-09 (supra) 24. Now coming to the Revenue's appeal for assessment year 2009- 10 bearing ITA No. 2/Chd/2014. 25. The Revenue in this appeal has taken the following grounds of appeal: 1. That the [d. CIT(A) has erred in law and facts in directing the A.O. to consider interest income received by the assessee on delayed payments from customers and suppliers amounting to Rs. 3, 95,297/-as 'Business Inco....