2013 (3) TMI 94 - HC - Income Tax

Powers of ITAT to recall the own orders - Held that - As the appellant could not place any material to show as to why the order dated 4th November, 2008 was recalled by the Tribunal and as directed to file copy of the Tribunal s order but he failed to do so appeal dismissed. Interest received on the FDR - income relating to business of civil construction or interest income - Held that - The interest received on the FDR is treated as part of income relating to business of civil construction or interest income will not make any difference to the tax liability of the assessee, therefore, the ground raised by the revenue be comes only of academic importance. As the department could not dispute the above findings of the Tribunal appeal dismissed.

Summary

Issues:
1. Recalling of order by the Income Tax Appellate Tribunal without proper justification.
2. Tax treatment of interest income earned from Fixed Deposit Receipts (FDRs) in relation to the business income of the assessee.

Analysis:
1. The first issue pertains to the Tribunal recalling its own order dated 4th November, 2008, which was upheld by the AO. The appellant raised a question regarding the Tribunal's authority to recall an order under the Income Tax Act. However, the Court noted that the appellant failed to provide any material to justify the recall of the order. As a result, the Court concluded that the question regarding the Tribunal's authority to recall the order did not arise from the Tribunal's decision. Hence, this issue was not considered further in the judgment.

2. The second issue revolves around the tax treatment of interest income earned from FDRs in relation to the business income of the assessee. The Tribunal had specifically addressed this issue and found that whether the interest income from FDRs is treated as part of the business income or not, it would not impact the tax liability of the assessee. The Tribunal highlighted that the taxation of the interest income under different heads would not alter the tax liability. The Court reproduced a portion of the Tribunal's decision emphasizing that the treatment of interest income under different heads was of academic importance only. The Court noted that the department's appeal on this issue was frivolous and infructuous. The Court criticized the department for filing such appeals and advised the Income Tax Department to take appropriate steps to avoid such appeals in the future. Consequently, the Court dismissed the appeal summarily, indicating that the tax treatment of interest income from FDRs did not affect the tax liability of the assessee, making the appeal unnecessary.

In conclusion, the judgment addressed the issues of recalling an order by the Tribunal and the tax treatment of interest income from FDRs. The Court found the first issue irrelevant due to lack of justification for the order's recall. The second issue was resolved by the Tribunal's determination that the tax treatment of interest income did not impact the tax liability of the assessee, leading to the dismissal of the appeal by the Court.