9911796707
TMI Blog2023 (7) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing inaccurate particulars of income under section 271(1)(c) of the Act for the Asst. Year 1997-98. 2. The grounds raised by the assessee are as under: i) In law and in facts and circumstances of the appellant's case, the ld.CIT(A) has grossly erred in points of law and facts. ii) In law and in facts and circumstances of the appellant's case, the ld.CIT()A) has grossly erred in dismissing appellant's case ground regarding passing order u/s. 271(1)(c) of the Act beyond the prescribed time. iii) In law and in facts and circumstances of the Appellant's case, the ld.CIT(A) has grossly erred in confirming penalty levied u/s. 271(1)(c) of the I.T.Act for Rs. 47,55,054/-. 3. As transpires from order of the authority below penalty un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surance Rs. 4,04,133/- iii) Truck hire charges Rs. 37,50,000/- iv) Rent income Rs. 32,400 v) Other Interest income Rs. 101,88,522 vi) Interest income on loans Rs. 193,93,359/- Deduction u/s 80HH @ 20% Rs. 65,11,211/- 5. The contention of the ld.counsel for the assessee against the levy of penalty on the above was : (i) that majority of the disallowance was on account of interest earned on FDs; that the said interest income earned from FDs and loans granted, was part and parcel of the business activities, and such FDs are made out of regulatory requirements; that netting of interest expenses incurred against the interest income earned was to be allowed. It was pointed out that for the impugned assessment year, the ITAT vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pr.CIT Vs. West Bengal Housing Board, 134 taxmann.com 175 (Cal); iii) R.P. Tarway & Co. Vs. ITO, 71 TTJ 203 (Pat.); iv) Laxminarain Kheta Vs. ITO, 99 taxmann.com 450 (All) 6. He thereafter pointed out that other major component of the income was in the nature of insurance claim which was received by the assessee for damages occurred to the vehicles, and hence, it was contended that it related to the business activities of the assessee. It was also contended that repairs expenses have also been incurred by the assessee which ought to have been netted off against the insurance claim received. The other income component to which our attention was drawn related to truck hire charges which it was explained by the ld.counsel for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue authorities as having no nexus with the business activities of the assessee 9. As is evident from the details noted in the earlier part of our order, majority of the incomes denied deduction pertained to interest earned on FDs and loans, insurance claim and drivers salary. As far as insurance claim received is concerned, we hold, that it is not in the nature of the income at all. It is a compensation which is awarded by the insurance company for the loss incurred by the assessee against which it was insured. Therefore, there arises no question for treating the insurance claim received as being in the nature of income and denying deduction under sections 80HH/80IA of the Act. Considering the nature of insurance claim being c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, in any case, the penalty, if any, which could be levied on the components of the interest income earned on FDs and loans is only on that which remains after netting of interest expenses. The ld.CIT(A), we have noted has given no credence to this fact pointed out by the ld.counsel for the assessee, noting that the Revenue has filed appeal against order of the Hon'ble High Court to the Supreme Court. This cannot be basis for denying the relief granted to the assessee by the Hon'ble High Court. 13. Having said so, we have also noted that on the issue of nature of interest income earned on FDs and loans there are decisions of Hon'ble High Courts holding that it is in the nature of business income more particularly where the FDs have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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