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2015 (7) TMI 783 - HC - Income TaxDeduction u/s.80IB - ITAT confirming the order passed by CIT(A) in directing not to exclude the following income, i.e.Interest on delayed payment from debtors,Interest on loan advances to group concerns,Interest on fixed deposits and Income by way of sale of DEPB entitlement from profit of the business for working of deduction u/s.80IB - Held that - As relying on Nirma Industries Ltd. V/s. Deputy Commissioner of Income-Tax (2006 (2) TMI 92 - GUJARAT High Court) as well as Commissioner of Income-Tax V/s. Nirma Ltd. (2014 (10) TMI 388 - GUJARAT HIGH COURT) wherein it has been held that interest received on delayed payment of sale consideration shall be treated as amount derived from the business and the assessee would be entitled for deduction on such interest on its total income. Decided in favour of the assessee. As far as deduction granted with regard to the income received by the assessee so far as sale received from DEPB is concerned, the Hon ble Supreme Court in the case of Liberty India V/s. Commissioner of Income-Tax (2009 (8) TMI 63 - SUPREME COURT) has categorically held that such income cannot be treated as income from business activities and, therefore, no deduction can be granted under the provisions of 80-IB. Decided against assessee.
Issues:
1. Appeal challenging the order of the Income Tax Appellate Tribunal. 2. Interpretation of provisions under section 80-IB of the Income Tax Act, 1961. 3. Treatment of income derived from sale of Duty Entitled Pass Book Scheme (DEPB). Issue 1: The appellant filed an appeal challenging the order of the Income Tax Appellate Tribunal (ITA) dated 15/05/2009, which partly allowed the appeal preferred by the appellant against the order of the Commissioner of Income Tax (Appeals)-VIII, Ahmedabad. The appellant contended that the Tribunal wrongly allowed the income of DEPB under section 80-IB of the Income Tax Act, 1961. The respondent argued that the appellant should not be entitled to any set off for the income from the sale of DEPB, citing the judgment in the case of Liberty India v. Commissioner of Income-tax. The High Court analyzed the arguments and relevant case laws to determine the correctness of the Tribunal's decision. Issue 2: The main legal question raised was whether the Appellate Tribunal was correct in confirming the order passed by the Commissioner of Income Tax (Appeals) directing not to exclude certain income from the profit of the business for the purpose of deduction under section 80-IB of the Income Tax Act, 1961. The appellant's counsel argued that income received by the assessee from the sale of DEPB should not be allowed as a deduction under section 80-IB, relying on the decision in the case of Liberty India v. Commissioner of Income-tax. On the other hand, the respondent's counsel contended that the Tribunal rightly held that the petitioner was entitled to set off under section 80-IB for interest on delayed payment. The High Court examined the legal provisions and precedents to decide on the correct treatment of the disputed income for the purpose of deduction under section 80-IB. Issue 3: The crucial issue revolved around the treatment of income derived from the sale of DEPB for the purpose of claiming deductions under section 80-IB of the Income Tax Act, 1961. The appellant argued that income from DEPB should not be considered as profits derived from industrial undertaking eligible for deduction under section 80-IB, based on the judgment in the case of Liberty India v. Commissioner of Income-tax. Conversely, the respondent contended that the Tribunal correctly allowed the deduction for interest on delayed payment but disagreed on the treatment of income from the sale of DEPB. The High Court analyzed the legal principles and relevant case laws to determine the eligibility of the assessee for deductions under section 80-IB concerning the income received from the sale of DEPB. This detailed analysis of the judgment provides a comprehensive overview of the legal issues involved, the arguments presented by both parties, and the High Court's decision based on the interpretation of relevant legal provisions and precedents.
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