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2009 (2) TMI 79 - HC - Income TaxInterest income SC in the case of APOLLO TYRES LTD has held that merely because the income from dividend is shown under a different head of income, would not deprive the assessee of benefit u/s 32AB, so long as it is found that the investment made by the assessee is in the course of its Eligible Business in instant case interest earned by the assessee is part & parcel of the business income, therefore, deduction under Section 32AB of the Act in respect of interest income is granted
Issues:
- Whether the Appellate Tribunal erred in allowing deduction under section 32AB of the Income Tax Act in respect of interest income? Analysis: The judgment delivered by Justice D.A.Mehta addressed the issue of whether the Appellate Tribunal's decision to allow deduction under section 32AB of the Income Tax Act in relation to interest income was erroneous. The court noted that the Apex Court had previously ruled on a similar issue in the case of APOLLO TYRES LTD Vs. COMMISSIONER OF INCOME-TAX, (2002) 255 ITR 273, establishing that the mere classification of income from dividends under a different head would not disqualify the assessee from claiming benefits under Section 32AB, as long as the investment was made in the course of Eligible Business. The Assessment Year in question was 1990-1991, and both the Commissioner (Appeals) and the Tribunal had deemed the interest earned by the assessee as part of the business income related to manufacturing and selling goods. The Tribunal's order, based on the findings of the appellate authorities, confirmed the allowance of interest as a deduction under Section 36 of the Act. The court further highlighted that a previous order dated 20/9/2000 in a related case had been dismissed by the Court, reinforcing the acceptance of the issue's settled nature. Consequently, the court concluded that there was no error in the Tribunal's decision to grant deduction under Section 32AB of the Act for interest income. The judgment dismissed the appeal, citing no costs to be awarded. The decision was grounded in the established legal principles and interpretations provided by the Apex Court, ensuring consistency and adherence to the provisions of the Income Tax Act in determining the eligibility for deductions related to interest income within the context of business activities.
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