2001 (3) TMI 248 - AT - Income Tax

Summary

Issues:
1. Departmental Appeal: Whether interest income qualifies for deduction under s. 80HHC.
2. Assessee's Appeal: Condonation of delay in filing appeal and eligibility of interest income for deduction under s. 80HHC.

Departmental Appeal Analysis:
The Departmental Appeal questioned the allowance of expenditure out of interest earned by the assessee-firm engaged in import and export of diamonds. The Assessing Officer (AO) excluded interest income from business profits, taxing it under "Income from other sources" as it did not qualify for deduction under s. 80HHC. The CIT(A) denied the deduction under s. 80HHC, allowing 50% of the interest earned as an expense. The Tribunal upheld the CIT(A)'s decision, considering the lack of complete correlation between interest bearing funds and interest income. The Tribunal rejected the Department's appeal, affirming the 50% allowance as expenses incurred to earn the income.

Assessee's Appeal Analysis:
The Assessee's Appeal sought condonation of a 3-year and 5-month delay in filing the appeal. The Tribunal analyzed the reasons for the delay, emphasizing that the decision in another case did not warrant the delay in filing the appeal. The Tribunal referred to legal principles regarding the condonation of delay, highlighting that the assessee's satisfaction with the CIT(A)'s decision until after the limitation period expired did not constitute sufficient cause for delay. The Tribunal cited precedents to support the decision not to condone the delay, ultimately dismissing both the Department's and the assessee's appeals due to the unadmitted appeal on grounds of limitation.

In conclusion, the Tribunal's judgment addressed the issues raised in the Departmental Appeal regarding the eligibility of interest income for deduction under s. 80HHC and the Assessee's Appeal seeking condonation of delay. The Tribunal upheld the CIT(A)'s decision in the Departmental Appeal and refused to condone the delay in the Assessee's Appeal, resulting in the dismissal of both appeals.