TaxTMI 
TaxTMI 
2021 (3) TMI 554
X X X X Extracts X X X X
X X X X Extracts X X X X
....powers u/s 147 used by the A.O. to review his own order completed u/s 143(3) is illegal and without jurisdiction. 3. That the addition of Rs. 197809/- being the interest on FDR to secure the contract and extricably linked to business of contract was business income and C.I.T. (A) order treating it to be the income from other sources is illegal and arbitrary. 4. That the income from insurance claim at Rs. 210973/- was already included in profit and loss account and subjected to assessment u/s 143(3) already and again to tax it as income from other sources is a double addition and the C.I.T. (A)'s order sustaining it to be added separately is illegal and arbitrary, 5. The appellant craves to add or alter any oth....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the material available on record, including the judgments cited at bar during the course of hearing. 7. Admittedly the assessee is a contractor working for the various government department and for the purpose of getting the contract from them it is essential for the assessee to give bank guarantee and the bank guarantee are issued by the banks on the deposit of like amount in the form of fixed deposit. The assessee in the submissions before the lower authority had categorically mentioned that due to shortage of funds, the assessee has to submit B/G in favour of various departments and as per norms of the bank, the assessee has to provide 25% cash margin in the shape of FDRS. Hence, FDRs have been prepared as per terms of contract and t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essarily be treated as income from other sources and not business income. (vi) Once business income has been determined by applying accounting standards as well as the provisions contained in the Act, the assessee would be permitted to, in terms of section 37 of the Act, claim as deduction, expenditure laid out for the purposes of earning such business income. (vii) In the second stage, the Assessing Officer will deduct from the profits of the business computed under the head "Profits and gains of business or profession" the following sums in order to arrive at the "profits of the business" for the purposes of section 80HHC(3) : (a) 90 per cent of any sum referred to in clauses (iiia), (iiib) and (iiic ) of sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xpenditure by way of interest) for the purpose of earning the interest on the fixed deposit, to draw an analogy from section 37, will require to be shown by the assessee for application of the netting principle." 12. Referring to the aforesaid conclusions, another Division Bench of this Court in CIT v. Shahi Export House [2010] 195 Taxman 163 (Delhi) has held as under:- "7. A conjoint reading of conclusion Nos.1,4, 5 and 6 and particularly No.5 would clearly demonstrate that only in those cases where interest earned on fixed deposits have an immediate nexus with the export business would be treated as income from business and interest earned on fixed deposits which does not have an immediate nexus with the export business,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....006] 284 ITR 389 (Bom.) and CIT v. Lok Holdings [2009] 308 ITR 356/[2010] 189 Taxman 452 (Bom.) and also another decision of the Jurisdictional High Court in the case of CIT v. Paramount Premises (P.) Ltd. [1991] 190 ITR 259 (Bom.) in the light of the above the ground pertaining to chargebility of interest income is allowed. 10. Ground No. 5 of the appeal pertains to the income from insurance claim at Rs. 210973/- , which was already included in profit and loss account and subjected to assessment u/s 143(3) already. On this aspect there was no argument before the ld. CIT(A) and as such there was no occasion for the Commissioner (Appeal) to examine the submission of the assessee. As recorded above none appeared on behalf of the assessee d....