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TMI Blog2023 (10) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... interest on income-tax refund is not part of the business activity of the assessee and therefore, same cannot be form part of the total revenue from the operations also therefore, same should be excluded for the purpose of quantum of total revenue from the operations. We find that the Tribunal [ 2020 (4) TMI 13 - ITAT MUMBAI] has also directed the Assessing Officer to exclude the interest on income tax refund both from the profits and gains of the business as well as total revenue from the operations. We accordingly set aside the finding of the lower authorities and direct the AO to reduce the quantum of interest of income-tax refund from the total revenue from operations and thereafter compute the deduction u/s 36(1)(viii) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of the assessee on 31.12.2012 determining total income at Rs. 1285,98,53,832/-. Subsequently, the Principal Commissioner of Income tax -3, Mumbai ( in short the PCIT ) called for the assessment record and after examination and providing due opportunity to the assessee, set aside the assessment order invoking provisions of section 263 of the Act and directed the Assessing Officer to make fresh assessment in respect of following issues: (i) Allowance of Deduction of Rs. 22,49,00,000/- towards provision for restricting of asset written back. (ii) Allowance of deduction for Rs. 1,44,25,367/- towards provision for bad and doubtful debt written back. (iii) The interest on Income tax refund of Rs. 22,94,71,711/- should ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undergo a change. Accordingly, the deduction allowable to the assessee company u/s. 36(1)(vili) is allowed on the revised income taking into the said aspects in to consideration. The working of deduction allowable to the assessee is as under: Rs. Rs. I. Business Income as per return 1363,07,75,789 Add: Addition made in the order u/s 143(3) OF THE Act Dated 31.12.2012 confirmed by the Commissioner of Income Tax(A) (i) Amortization of Rent 60,79,783 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance 938,85,59,239(B) Total Revenue from operations 3072,02,05,538(C) Deduction allowable 20%*A*B/C 80,96,44,862 Accordingly, the deduction U/s. 36(1)(vi) is allowed at 80,96,44,862/-. 3. On further appeal, the Ld. CIT(A) upheld the finding of the Assessing Officer that the interest on income tax refund is part of the total revenue from the operations. The relevant finding of the Ld. CIT(A) is reproduced as under: Decision on Ground No. 2 The appellant company has received an amount of Rs. 22,94,72,711/- by way of Interest on Income Tax refund. The appellant has not considered the same as Income fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Before us, the Ld. Counsel of the assessee referred to the order of the Tribunal passed in ITA No. 2996 and 2997/Mum/2015 for assessment year 2010-11 and 2011-12, wherein the Tribunal has quashed the order passed by the Ld. PCIT u/s 263 of the Act in respect of two issues namely issue of allowance of deduction of Rs. 22.43 crores towards provision for restructuring of assets written back and Rs. 1.44 crores towards provision of bad and doubtful debt written back. As far as 3rd issue of excluding interest on income-tax refund for computation of deduction u/s 36(1)(viii) of the Act, the Tribunal directed that order of the Assessing Officer was prejudicial to the interest of the revenue however directed that while computing the excess deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en reduced while computing profits and gains of business. However, this was not done, leading to excess allowance of deduction by Rs. 1,40,26,066/- and the detailed working is as under: (in rupees) Profit and gains of business as per para 6 of A.O] 13532935769 Less: Income from other sources 229472711 Profits and gains of business 13303463058(A) Revenue from long term finance 9388559239(B) Total Revenue from operations 30720205538 (C) Deduction allowable 20%*A*B/C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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