2019 (3) TMI 1628 - HC - Income Tax

Addition of interest income under the head Income from Other Sources - whether income is not derived from the business activity of the assessee company ? - HELD THAT - Revenue would contend that this issue is covered by the Judgment of Supreme Court in case of Commissioner of IncomeT ax Vs. Karnal Co-Operative Sugar Mills Ltd. . 1999 (4) TMI 7 - SC ORDER He further pointed out that the Tribunal, in the impugned Judgment, has referred to and relied upon the decision in case of this Assessee in earlier assessment years. Though, the Revenue had filed Income Tax Appeal to challenge the Judgment of the Tribunal in the said case, the present issue was not raised in such Appeal. Under the circumstances, on this ground, this question is not entertained in the present Appeal. Addition of expenses incurred in relation to Increase in Authorised Share Capital - HELD THAT - we note that the amount involved is extremely small. Only on that ground, without entering into the controversy, this question is not entertained. Appeal is admitted for consideration of following substantial question of law - Whether on the facts and in the circumstances of the case and in law, the Hon ble ITAT was justified in deleting addition on account of depreciation on toll road of ₹ 40,12,50,880 ?

Summary

Issues:
1. Deletion of addition on account of depreciation on toll road
2. Deletion of addition of interest income under the head Income from Other Sources
3. Deletion of addition of expenses incurred in relation to Increase in Authorised Share Capital

Analysis:
1. The first issue revolves around the deletion of addition on account of depreciation on a toll road amounting to ?40,12,50,880. The Revenue challenged the decision of the Income Tax Appellate Tribunal (ITAT) by raising a substantial question of law. The Tribunal's decision was based on the contention that the interest income earned by the Assessee was not part of the business income. The Revenue cited a Supreme Court judgment and previous Tribunal decisions, but the Court did not entertain the question in the present Appeal due to procedural grounds related to a previous appeal.

2. The second issue concerns the deletion of the addition of interest income of ?1,34,59,582 under the head Income from Other Sources. The Revenue argued that this income was not derived from the business activity of the assessee company. However, the Court did not delve into this issue due to the small amount involved, without entering into the controversy.

3. The third issue pertains to the deletion of addition of expenses incurred in relation to the Increase in Authorised Share Capital amounting to ?8,64,400. The Court did not entertain this question as well, solely due to the minimal amount in question. The Registry was directed to provide a copy of the order to the Tribunal for reference in the future. The Respondent's counsel waived service for the Respondent, indicating cooperation in the legal proceedings.