2016 (3) TMI 1339 - HC - Income Tax

Claim of deduction u/s 10A in respect of interest on fixed deposits and tax refund by holding it to be income under the head Profits & Gains of Business or Profession - Held that - Revenue has not raised the issue before the Tribunal that as the appellant had not claimed in its Return of Income that interest on deposits is to be classified under the heads Profits & Gains of Business or profession it could not now urge the same before the Appellate Authorities. On being specifically asked Mr. Pinto, the Revenue candidly states that from the reading of the impugned order of the Tribunal, it is clear that such a contention was not raised by the Revenue before the Tribunal. Thus, question no.(a) does not arise from the impugned order of the Tribunal. This issue on merits stand concluded by the decision of this Court in CIT v/s. Pruthvi Brokers & Shareholders Pvt. Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT) where it has been held that not raising an issue before the original authority would not bar the party from raising the issue before the Appellate Authority. Interest on deposit which the impugned order of the Tribunal holds is chargeable to tax under the head Profits & Gains of Business or Profession and consequently eligible for deduction under Section 10A - Held that - When asked, Mr. Pinto fairly states that the issue of classification of interest on tax refund was not agitated before the Tribunal. We are of the view that the above issue of interest on tax refund not to be treated as interest on deposits was not agitated by the Revenue before the Tribunal. Thus this issue not arising from the order of the Tribunal, does not arise for our consideration. In any case we find that the impugned order of the Tribunal has followed its decision rendered in the Assessee s case for A.Y. 2004-05 2009 (6) TMI 677 - ITAT MUMBAI . Mr. Pinto is unable to point out any distinguishable features in the present Appeal which would warrant our taking a different view from that having been taken in the order passed by the Tribunal for the A.Y. 200405. Moreover, nothing has been shown to us which would indicate that the Tribunal s order for the A.Y. 2004-05 has not been accepted by the Revenue. Brought forward unabsorbed depreciation and business loss for set-off against the current year s profit of the same 10A unit - Held that - Issue stands covered against the Revenue by the decision of this Court in CIT v/s. Black & Veatch Consulting Pvt. Ltd. (2012 (4) TMI 450 - BOMBAY HIGH COURT).

Summary

Issues:
1. Deduction under Section 10A for interest on fixed deposits and tax refund
2. Classification of interest on deposits as income from 'Profits & Gains of Business or Profession'
3. Allowance of brought forward unabsorbed depreciation and business loss for setoff against the current year's profit of the same 10A unit

Analysis:

Issue 1: Deduction under Section 10A for interest on fixed deposits and tax refund
The Revenue challenged the Tribunal's order allowing the assessee's claim of deduction under Section 10A for interest on fixed deposits and tax refund. The Revenue argued that the claim was not made in the return of income and, therefore, not allowable. However, the Court noted that the Revenue did not raise this issue before the Tribunal. The Court cited a previous decision to clarify that not raising an issue before the original authority does not bar a party from raising it before the Appellate Authority. Consequently, the Court held that this issue did not give rise to any substantial question of law and was not entertained.

Issue 2: Classification of interest on deposits as income from 'Profits & Gains of Business or Profession'
Regarding the classification of interest on deposits as income from 'Profits & Gains of Business or Profession,' the Revenue contended that the interest on delayed tax refund should not be treated as interest on deposits. However, the Court observed that the Revenue did not raise this specific issue before the Tribunal. The Court also noted that the Tribunal had followed its previous decision for the same assessee in a different assessment year. Since the Revenue failed to present any new arguments or evidence to challenge the Tribunal's decision, the Court held that this issue did not give rise to any substantial question of law and was not entertained.

Issue 3: Allowance of brought forward unabsorbed depreciation and business loss
The Revenue questioned the Tribunal's decision to allow the setoff of brought forward unabsorbed depreciation and business loss against the current year's profit of the same 10A unit. However, the Revenue's counsel acknowledged that a previous decision of the Court was unfavorable to their position. Based on this acknowledgment, the Court concluded that this issue did not raise any substantial question of law and was not entertained.

In conclusion, the Court dismissed the Appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961, as none of the raised issues gave rise to substantial questions of law. No costs were awarded in this matter.