2026 (4) TMI 131

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..../-. The Department selected the case for scrutiny and issued notice under Section 143(2). After affording opportunity of hearing, the claim of the appellant/assessee, a deduction @ 30% on Rs. 4,37,89,771/- amounting to Rs. 1,21,75,910/- under Section 80IB of the Income Tax Act, 1961 (in short "IT Act") and other income such as miscellaneous income, freight Insurance and Handling charges received interest on income tax refund and commission income, to a tune of Rs. 2,90,47,765/- was disallowed and the assessment was made u/s 143(3) computing the total income as Rs. 3,44,78,240/- vide order dated 25/02/2014. 2. Against the assessment order, the appellant filed appeal before the Commissioner of Income Tax (Appeals) at Chennai on the ground ....

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....tment is assessed to tax under the head 'income from other sources'. Thus, the appeal by the assessee was partly allowed. 5. As against the allowed portion of the appellate authority order, the Department filed appeal before the ITAT on the ground that, allowing the deduction for sales tax incentives, freight and handling charges, interest on short term deposits based on the earlier order of ITAT for the same assessee is not sustainable, since the earlier order of ITAT has not reached the finality and appeal before High Court is pending. 6. As against the disallowed portion, the assessee had filed cross objection on the ground that the commission income of Rs. 3,22,067/- and interest income on IT refund of Rs. 1,73,82,230/- are eligib....

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....on under Section 80IB of the Act. 10. Per contra, the Learned Senior Standing Counsel for the Respondent submitted that, the appeal against the concurrent finding on facts deserves to be dismissed. There is no substantial question of law involved in this case. The sole question of law framed by this Court at the time of admission is to be answered in favour of the revenue since the plain reading of Section 80IB of the IT Act does not contemplate any deduction on the interest paid by the Income Tax Department along with the refund of income tax collected in excess. It is the statutory obligation of the Department to refund the excess tax collected along with the interest prescribed. The interest paid does not form part of the business act....

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....respect of the profit and gains derived from the business activity and not from any other source unconnected to the business activity. The business of the appellant/assessee in this case is manufacturing of colour papers, GAF and X-Ray films. The Interest gained for the tax paid in excess and refunded subsequently is not a profit or gain derived from the business activity of the assessee. 14. The plea of the assessee/appellant is that the interest gain is attributable to the business activities, if not derived directly from business activity. The plea of the assessee/appellant is not impressive to attract Section 80IB. The expression 'derived' used in the provision is not same or similar to the expression 'attributable'. Further, the int....