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TMI Blog2016 (4) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... . With these observations, this issue is sent back to the file of the AO. Disallowance of benefit of deduction u/s. 80IB of interest income, rental income and income from other sources - Held that:- This issue is squarely covered against the assessee with the judgement of the Hon‟ble Supreme Court in the case of Liberty India (2009 (8) TMI 63 - SUPREME COURT) wherein it has been held by the Hon‟ble Supreme Court that for granting benefit of deduction u/s. 80IB only the profit and gains which are derived from the industrial undertaking would be eligible to be considered. The ld. Counsel of the assessee was not able to show that the receipts on account of interest and rental income were in any manner derived from the industrial undertaking. - ITA NOS. 4848 & 4849/MUM/2010, ITA NO. 6990/MUM/2011, ITA NO. 266/MUM/2012, ITA NO. 5506/MUM/2013 - - - Dated:- 17-2-2016 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER For The Assessee : Shri Ajay Kumar Rastogi For TGhe Revenue : Shri Amol Kamat, CIT-DR ORDER PER ASHWANI TANEJA, AM : These appeals pertain to the same assessee for different years involving identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, i.e. income from house property‟. It was submitted that the AO had never changed the head of income in the past with regard to this income. It was further submitted that this argument was taken before the ld. CIT(A), but he has also not given any reasoning as to how violation of the principle of consistency was justified. 6. On the other hand, the ld. DR has supported the orders of the lower authorities. It has been argued by him that a particular head has been prescribed under the Act for assessing income from house property and, therefore, it has been rightly assessed under that head by the AO. 7. We have gone through the orders passed by the lower authorities and also heard the submissions made by both the sides before us. It has been argued by the ld. Counsel that the assessee has been showing this income under the head income from business‟ consistently since many years and it has been accepted as such by the AO in all the years. It is noted that neither the facts with regard to assessment of earlier years have been properly brought on record by the assessee before us nor the lower authorities have dealt with these arguments properly before rejecting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction u/s. 80IB of the I.T. Act. In reply to the above query, the assessee company submitted that it was manufacturing various pharmaceutical drugs and hence entitled to 100% deduction on its income u/s. 80IB. However, the AO did not accept the assessee‟s contention because the assessee had deposited the surplus fund available in Fixed Deposit account and had earned interest thereon. The assessee being not in the business of giving loans and advances, when surplus money lying idle was invested in the bank, the interest so earned was not received in the course of business as to make it part of business income and it was to be assessed under the head Income from Other Sources . The AO relied upon the decision of various courts. Thus, the AO while computing the deduction u/s. 80IB excluded the interest income from the profit of the industrial undertaking and taxed it under the head Income from Other Sources . 9. Being aggrieved, the assessee filed an appeal before the ld. CIT(A), wherein he made detailed submissions. Relevant portion of the submissions filed by the assessee before the ld. CIT(A) is reproduced below : It is respectfully submitted that the langu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 12th March 2009 in case of M/s. Midas-Care Pharmaceuticals Pvt. Ltd. vs. ACIT for A.Y. 2003-04 relying on the decisions of the Hon'ble Supreme Court in the case of Sterling Food reported in 237 ITR 579, Cambay Electric Supply Industrial Co. Ltd. v. CIT reported in 113 ITR 84 and Pandian Chemicals Ltd. vs. CIT reported in 262 ITR 278 has held as under:- .. However, as regards the interest on fixed deposits with bank as well as interest on Guarantee Margin Money from Bank, we are of the considered opinion that the same cannot be held as income derived from the Industrial Undertaking and consequently not eligible for deduction u/s. 80IB in view of the decision of the Hon'ble Supreme Court in the case of Pandyan Chemicals Ltd. (supra) wherein it is held that interest earned on deposit with T.N. State Electricity Board is, not derived from the Industrial undertaking for the purpose of section 80HH. 4.5 Keeping in view all these facts and circumstances, it is held that the Assessing Officer has rightly treated interest income as income from other sources. Thus, the ground of appeal is dismissed. 10. During the hearing before us, the ld. Counsel rei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtly allowed for statistical purposes. ITA No. 266/Mum/2012 for A.Y 2009-10 17. In this appeal all the grounds, except ground no. 3, are identical to the grounds raised in the appeal for A.Y 2006-07 and, therefore, the AO is directed to follow our order for A.Y 2006-07. Ground no. 3 is disposed as under: 18. Ground no. 3 : In this ground, the assessee has challenged the action of the ld. CIT(A) in confirming the disallowance of ₹ 15,75,215/- being the amount of fee paid to M/s. Kanga Co., Solicitors on the ground that the same cannot be allowed as deduction against the income from house property. 18.1. The brief facts are that during the course of assessment proceedings, the AO observed that the during the year the assessee has incurred professional fee amounting to ₹ 15,75,215/- to M/s. Kanga Co. The AO asked the assessee to submit the details of professional services rendered by this party and also the allowbility of the same. In reply, the assessee submitted that assessee paid fees to the solicitors on account of their ground floor Andheri office premises which was let out to Aristo Pharmaceuticals P. Ltd. There was a dispute by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Enterprises Ltd. Vs. CIT The assessee further submitted that here there would have been loss of source of income to the assessee in case it would not have undergone a legal battle with the landlord for protecting its tenancy right of the office premises. Any amount spent for protecting loss of source of income is a deductible expenditure u/s 37 of the I.T. Act. However, the ld. CIT(A) was not satisfied with the submissions of the assessee and it was held by him that the amount of fee paid to the solicitors was in connection with protection of tenancy right of the assessee. It was further held by him that the assessee‟s rental income was assessed as income from house property as the income was purely from letting out of the property and no other activity was carried out. Being aggrieved, the assessee filed an appeal before the Tribunal. Both of the parties made their respective arguments before us. 20. We have gone through the submissions made by both the sides as well as the order of the lower authorities. It is noted that vide para 7 of our order, we have sent the issue of determination of head of taxability of rental income back to the file of the AO. The issues raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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