TaxTMI 
TaxTMI 
2023 (7) TMI 226
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.... PER: BENCH: Batch of appeal was filed by both the revenue and the assessee against the order of the ld. Commissioner of Income Tax (Appeals), Bathinda,[in brevity the 'CIT (A)'] order passed u/s 250(6) of the Income Tax Act 1961, [in brevity the Act] related to A.Ys. 2013-14and 2016-17.The impugned order was emanated from the order of the ld. Dy. Commissioner of Income Tax, Circle-I, Bathinda (in brevity the AO) order passed u/s 143(3)/263 of the Act. 2. At the outset all the appeals of the assessee and revenue are under a common issue and have the same factual ground. All the appeals are taken together, heard together and adjudicated together. For the sake of convenience, we take ITA No.506/Asr/2019 of revenue and ITA No. 495/Asr/2019 of the assessee as lead case. ITA No. 506/Asr/2019 appeal of Revenue for AY 2013-14 3. The revenue has taken the following grounds which are extracted as below: "(i) The CIT(A) erred in holding that the interest earned on FDRs and other interest had an immediate nexus with the business of the assessee without appreciating that the assessee failed to prove how the interest earned on FDRs and other interest related to his busines....
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....sted with loss of "high sea sale" of imported goods. The said interest is considered as 'Income of Other Sources' by the ld. AO. In other issue, the revenue has taken the "high sea sale" of imported goods as speculative transaction U/s 43(5) & the loss is treated as speculative loss which is barred to adjust with the interest. The assessee has grievance that the entire transaction is not a speculative and also the interest derived/earned is related to the business of the assessee which is considered as business income not as 'Income from other sources'. Aggrieved assessee filed an appeal before the ld. CIT(A). After considering the submission of the assessee the ld. CIT(A) upheld the observation of the ld. AO related to "high sea sale" of imported goods & considered as speculative transaction u/s 43(5). But in the addition of interest, the ld. CIT(A) has changed view & treated as business income. Accordingly, ld. CIT(A) has rejected the view "Income from other sources". In this point, the ld. CIT(A) rejected the observation of the ld. AO. Being aggrieved both revenue and assessee have filed appeal before us by challenging the appeal order. 6. The ld. DR vehemently argued and ....
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....tter of credit against interest payable on borrowed fund without even examining under which provision of Act said set off had been claimed, Commissioner was justified in passing revisional order setting aside assessment in question" 7.1 The ld. DR respectfully relied on the order of the Hon'ble High court of Uttarakhand. The assessee's SLP is dismissed by the Hon'ble Supreme Court. The relevant paragraph is extracted here: High Court of Uttarakhand in the case of conventional Fastners v. Commissioner of Income-tax, Dehradun, [2017] 88 taxmann.com 163 (Uttarakhand) "24. We are afraid that the said contention is misplaced. What the Officer has stated is only that it is treated as a business income, which means that it would be income under Section 28 of the Act, but he has been careful enough to say that the said income is not derived within the meaning of Section 80-IC. Any income, which may be derived from carrying on the business, even if it is incidental, would qualify as business income under Section 28, but that is not the same thing as saying that it is a business income, which is derived from the said business. Therefore, we see no merit in the ....
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....e on the ground that it would go to reduce interest on borrowed amount which would be capitalised. Subsequent to the said decision of the Hon'ble Supreme Court, the issue of taxation of interest on short term investments has been decided differently on the theory of nexus with the business [CIT Vs. Karnal Co-operative Sugar Mills Ltd.; CIT Vs. Bokaro Steel Ltd.]. This issue also came up for consideration before the Hon'ble High Court of Delhi in the case of CIT Vs. Shahi Export House [2010] 195 taxmann 163, where the issue for consideration was whether interest earned on FDRs had to be taken into consideration while computing the benefit under section 80HHC and netting of the interest was to be allowed by deducting the same from the interest paid by the assessee on certain guarantees made by it from banks. The appellant has already quoted the Head Notes of this decision ibid." 8.1 The ld. AR further argued & placed the brief synopsis which is reproduced as under: "1. This is an appeal filed by the department raising various grounds of appeals. The ground of appeal in the appeal of the department is that the Ld. CIT(A) has erred in giving a finding that the inter....
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....t be dismissed. iv) Further, this assessment order has been passed u/s 143(3) read with section 263 by the PCIT, Amritsar and in that order in para 6.2, it has been stated by the PCIT as under:- "The assessee has declared in his VAT return of purchase as import from outside India and sales as "High Sea' claimed exempt under VAT and has shown net weight subject to VAT or purchase eligible for ITC as Nil." v). Further, the department has taken a ground of appeal No.3 with regard to alleged violation of rule 46A by the Worthy CIT(A) and it is submitted that there was no new evidence submitted before the Ld. PCIT and all the submissions are as per the record of the department during original assessment proceedings and this issue was also there in the relied upon case of 'M/s G.H. Crop Sciences Pvt. Ltd. and 'M/s Apex Fibre India Ltd.' as cited supra. The same ground was there in that case also and which is borne out from para 8 of the order of Hon'ble ITAT and the finding has been given in para 10 of the order, and thus, this ground of appeal is not borne out from the records. Hence the appeal of the department be dismissed." 9. The ld AR placed the in the....
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....of the opinion that CIT (Appeals) as well as Income-tax Appellate Tribunal has rightly applied the principle laid down in Shri Ram Honda Power Equip's case (supra). It may be useful to mention that in Shri Ram Honda Power Equip's case (supra) this court specifically affirmed the judgment of Special Bench of the Tribunal in Lal sons Enterprises v. CIT [2004] 89 ITD 25 (Delhi) and particularly the following observations which were extracted by this Court as under:- "if the interest received is found to have a nexus with the business, still it remains to be excluded from the profits of the business by virtue of Explanation (baa )(1), but the claim is that the quantum of such interest income to be excluded must be determined in accordance with the computation provisions relating to business by allowing expenditure by way of interest which bears a nexus with the interest receipt. The computation provisions included section 37(1) under which any expenditure incurred or laid wholly and exclusively for the purpose of the business is to be allowed as a deduction. Therefore, any expenditure incurred which has a connection or nexus with interest receipt has to be allowed as a....
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....is only confined related to speculative transaction is delivery of the goods. When the delivery of the goods is executed, there is no treatment of the speculative transaction. The assessee placed a written submission and mentioned the details document that the said goods are duly taken delivery by the assessee during the purchase from sellers. There is no such any paper transaction or the transfer of the goods before taken the delivery. The ld. AR submitted the chart with documentary evidence which is depicting that the 'edible oil' purchased from Singapore / Malasysia with a. invoice, bill of lading, purchase and other necessary documents which are annexed APB A1 to A8, b. copy of purchased account along with "high sea sale" accounts as per books of account. APB page A9 to A11 c. copy of invoice showing import made by the assessee from outside party as per purchase account and "high sea sale" made on imported edible oil as per sale account along with evidence of custom clearance to whom the "high sea sale" has been made APB page 1 to 290. 11. We respectfully followed the order of the Hon'ble Apex Court and Hon'ble High Court it is clear view that when....