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2013 (1) TMI 394 - ITAT MUMBAIPenalty u/s. 271(1)(c) - interest income assessed by the AO as income from other sources and not as business income - non-indication per its return of income by the assessee that the said income stands imbedded in its (reduced) claim for interest expenditure on borrowings income for which is exigible to deduction u/ss. 10A & 10B - Held that:- With regard to the assessment of the impugned income as from other sources, as against from business, which is a prerequisite for it to be considered as exigible for deduction u/s. 10A(1) or s.10B(1), what is relevant and is to be seen is the assessee’s return of income, per which the claim stands made, and not its treatment by the AO, which though not disputed by the assessee, would yet not detract from the merits of the assessee’s explanation in having returned it only as business income and, further, as derived by its eligible undertaking, so as to be eligible for deduction u/s. 10A(1) or, as the case may be, s.10B(1), in view of ss. 10A(4) and 10B(4) respectively. The issue qua head of income under which the same is to assessed stands clarified by the hon’ble jurisdictional high court in the case of CIT vs. Indo Swiss Jewels Ltd. (2005 (9) TMI 47 - BOMBAY HIGH COURT ), since followed by the tribunal in Tropicate Textiles Pvt. Ltd. (2012 (7) TMI 57 - ITAT, MUMBAI) wherein held that the interest earned on the short-term deposits of the money kept apart for the purpose of business has to be treated as income earned on business and cannot be treated as income from other sources Thus the impugned penalty is liable to be deleted also drawing support from the decisions in the case of ITO v. Jewelex International Pvt. Ltd. (2010 (9) TMI 906 - ITAT MUMBAI) and ITO v. Greytrix (I) Pvt. Ltd. (2013 (1) TMI 381 - ITAT MUMBAI) .
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