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Issues involved: Condonation of delay in filing appeals u/s 260A of the Income-Tax Act, 1961; Taxability of interest income on FDRs purchased in undivided state and divided between Uttar Pradesh and Uttaranchal.
Condonation of Delay: The delay in filing the appeals was condoned based on the cause shown in the affidavit in support of the application, allowing the Department's appeals u/s 260A of the Income-Tax Act, 1961 against judgments of the Income Tax Appellate Tribunal, Lucknow for different assessment years. Taxability of Interest Income: The Department contended that interest income on FDRs purchased in the undivided state of Uttar Pradesh is taxable, as the FDRs were purchased when the state was undivided and the interest is not taxable in either Uttar Pradesh or Uttaranchal. On the other hand, the assessee argued that post-division of the state, the interest income should be divided in the ratio of 46:54% between Uttar Pradesh and Uttaranchal, as per a notification dividing assets. The Tribunal upheld this division, taxing only 46% of the interest income in the hands of the present assessee and the remaining 54% in the hands of Uttaranchal Forest Development Corporation. Judgment: After considering submissions from both parties and the notification dividing assets between the states, the Court found no reason to interfere with the Tribunal's decision to tax the interest income in the ratio of 46:54%. Therefore, all three appeals filed by the Department were dismissed at the admission stage, upholding the Tribunal's order.
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