2017 (1) TMI 1585 - AT - Income Tax

Scope of deduction u/s 80 IC - disallowance of interest income received on FDR s, which were pledged as performance guarantee, in terms of the contract awarded by UPCL for manufacture of electronic meters - Held that - Following the assessee s own case 2015 (1) TMI 1388 - ITAT DELHI of the assessee is dismissed.

Summary

Issues:
1. Allowance of deduction under section 80-IC on interest income.
2. Appreciation of submissions made by the assessee and Court pronouncements by CIT(A).

Analysis:
1. The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2009-10, challenging the denial of deduction under section 80-IC on interest income received. The assessee, a partnership firm engaged in manufacturing and selling electronic meters, declared nil income in its return filed electronically. The central issue revolved around the eligibility of interest income received, amounting to ?22,29,129, for deduction under section 80-IC.

2. During the proceedings, the counsel for the assessee and the senior departmental representative presented their arguments. The interest income in question was earned on Fixed Deposit Receipts (FDRs) pledged as performance guarantee for a contract awarded by UPCL. The crucial question was whether such interest income qualified for deduction under section 80-IC of the Income Tax Act.

3. The 1st appellate authority, while deciding the appeal, relied on a previous tribunal decision in the assessee's case for the same assessment year. The appellate authority's order highlighted specific findings from the tribunal's decision, indicating consistency in approach. The tribunal, in alignment with the earlier decision, upheld the allowance of deduction under section 80-IC on the interest income received by the assessee.

4. Ultimately, the tribunal upheld the order of the 1st appellate authority and dismissed the appeal of the assessee. The judgment emphasized the importance of consistency in decisions and adherence to previous tribunal rulings. The appeal outcome favored the assessee, confirming the eligibility of the interest income for deduction under section 80-IC.

5. The judgment was pronounced in open court on 25th January 2017, concluding the legal proceedings related to the allowance of deduction under section 80-IC on interest income for the assessment year 2009-10.