2007 (3) TMI 748 - HC - Income Tax

Summary

Issues involved: Interpretation of deduction under section 80HHC(4A) of the Income-tax Act, 1961 and treatment of interest income as business income.

Interpretation of deduction under section 80HHC(4A): The appeal raised the question of whether the Income-tax Appellate Tribunal was correct in holding that the assessee is entitled to reduce interest paid from the interest received while calculating deduction under section 80HHC(4A) read with Explanation (baa) of the Income-tax Act, 1961. The court noted that the Assessing Officer had held the income to be business income, and since this decision was not questioned thereafter, the court did not permit the reopening of this question. The only issue raised before the Income-tax Appellate Tribunal was regarding the netting of interest, and the Tribunal's finding of nexus was not challenged by the Departmental Representative. Consequently, the court found no reason to interfere with the Tribunal's order and dismissed the appeal.

Treatment of interest income as business income: Although the appellant had raised the question of whether interest from deposits could be treated as business income rather than 'Income from other sources', the court did not admit the appeal on that specific question. The court referred to a previous judgment where it was stated that if the Assessing Officer has determined interest income as business income and this decision has not been questioned subsequently, the question cannot be reopened. Since the Assessing Officer had classified the income as business income in this case and the Departmental Representative did not challenge this finding, the court upheld the decision not to reopen this issue.