2011 (5) TMI 952 - AT - Income Tax

Summary

Issues involved: Cross appeals filed by the rival sides arising from the order of the CIT(Appeals)-IV Surat dated 10.09.2009 for Assessment Year 2005-06.

Assessee's Appeal (ITA No.3148/Ahd/2009 for A.Y. 2005-06):
The main ground was the denial of deduction u/s.10B of the Act on interest income. The assessee relied on a decision of ITAT "D" Bench Ahmedabad regarding the treatment of interest income. The Tribunal held that interest income assessable under "income from other sources" cannot be treated as "income from business" for deduction under section 80IA. The Tribunal dismissed the appeal based on the precedent set by a Coordinate Bench.

Revenue's Appeal (ITA No.3353/Ahd/2009 for A.Y. 2005-06):
The revenue's appeal focused on the disallowance of interest income u/s.10B of the I.T. Act. The CIT(A) partially allowed relief by considering the nexus between interest income and loan expenditure. The CIT(A) deleted part of the disallowance based on the principle of netting and relevant case laws. The Tribunal upheld the CIT(A)'s decision as the assessee failed to prove the nexus for part of the interest income. The Tribunal dismissed the revenue's appeal, citing adherence to the decision of a Coordinate Bench.

In conclusion, both the assessee's and revenue's appeals were dismissed by the Tribunal based on the respective grounds and legal considerations presented during the proceedings.