2020 (3) TMI 1362

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....IT(A) erred in treating interest income of Rs. 1,48,450/- from bank, Rs. 2,55,50,690/- from customers, Rs. 4,13,633/- from security deposit relates to business activities." 2. Brief facts of the case are that the assessee company carries on the business of manufacturing and trading of iron and steel products and it had filed return of income for AY 2014-15 declaring total income of Rs. 5,654/- under normal provisions of the Act representing non-operating miscellaneous income after claiming 100% deduction of the business profit of Rs. 4,17,64,799/- u/s. 80IC(2)(a)(i) of the Income-tax Act, 1961 (hereinafter referred to as the "Act") and showed book profit of Rs. 3,82,04,075/-. The assessee company has an industrial area in Bonda, Narang, ....

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....e for deduction under the section 80IC of the Act. Accordingly, this ground is partly allowed." 4. Aggrieved the Revenue is before us assailing the aforesaid action of Ld. CIT(A). However, we note that the Ld. CIT(A) at page 15 of the impugned order has confirmed the action of the AO in respect of disallowance of interest income from fixed deposit. However, has mistakenly typed the figure as Rs. 5,52,844/- in place of Rs. 20,37,345/-. Since the interest income from fixed deposit cannot be having first degree nexus with the profit and gain derived from the undertaking which is eligible for deduction u/s. 80IC of the Act, we confirm the order of the Ld. CIT(A) and correct the mistake of the figures shown as Rs. 20,37,345/- in place of Rs. ....

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..... Coming the interest income earned for delayed payment from customers, we note that assessee manufactures C. R. Coil and sell the same to the customers on credit. And if there is any delay in receipt of payment from the customers and since it affects the assessee's working capital, the assessee is compelled to borrow external funds for which it incurs interest expenditure. In order to compensate the loss of any interest payment, assessee charges interest from the customers/sundry debtors for the delay in making payment to it. It was pointed out by the Ld. AR that as per the mandatory accounting standard and the Companies Act, the same are reported as income and expenses separately. According to Ld. AR, such interest income and interest pay....