9911796707
TMI Blog2025 (1) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Odisha Power Generation Corporation Ltd. [ 2022 (3) TMI 539 - ORISSA HIGH COURT] and provided a well-reasoned conclusion to delete the additions made by the AO. Now in the case of Gujarat Urja Vikas Nigam Ltd. [ 2020 (3) TMI 232 - GUJARAT HIGH COURT] also upheld that interest income earned on loans and advances provided to its employees is directly related to the business operations of Power Companies. Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... loyees. Similarly, in the assessment order dated 28.12.2018, the AO classified Rs. 8,00,35,000/- under "income from other sources" with the same rationale. 3.1. The issue travelled before the Tribunal in the first round of appeal and the Co-ordinate Bench remanded the matter to the CIT(A), observing that the order lacked a comprehensive evaluation of judicial precedents. 3.2. The CIT(A) allowed the appeal of the assessee in case of both A.Y. 2012- 13 and A.Y. 2016-17. The CIT(A) adjudicated both cases pursuant to directions from the Tribunal to reassess the matter in light of judicial precedents, particularly the decision of the Hon'ble Orissa High Court in Odisha Power Generation Corporation Ltd. The CIT(A) found that the activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of case and in law, the Ld.CIT(A) is justified in deleting the addition of Rs. 800.35 lakhs made by the AO on account of treating Interest income earned from loans to staff and other loans as "Income from other sources" without appreciating the fact that the assessee is not in the business of advancing loans to the staff? ii) The appellant craves leaves to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal." 5. During the course of hearing before us, the Authorized Representative (AR) of the assessee argued that the interest income from staff loans and advances was incidental to the business of power generation and should be classified as "business income." The AR relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations. 7. We have heard the contentions of both the parties and have carefully perused the material on record, including the assessment orders, the orders of the CIT(A), and the judicial precedents relied upon by the parties. The AR contended that the interest income from loans and advances provided to employees is incidental to the business of power generation and should be classified as "business income." The AR relied on the findings of the CIT(A) and judicial precedents, particularly the decisions of the Hon'ble Orissa High Court in Odisha Power Generation Corporation Ltd. and the Hon'ble Gujarat High Court in Gujarat Urja Vikas Nigam Ltd., which support the assessee's position. The DR, on the other hand, argued that the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business operations of power companies. Such income enhances operational efficiency and is incidental to the business, qualifying as 'business income.' 7.3. It is important to note that the loans and advances were provided solely to employees to ensure their welfare, retention, and operational efficiency, which are critical in the power sector. We also note that the loans were not made to the public at large but were restricted to eligible employees, demonstrating their integral connection to the business. Judicial precedents relied on by the assessee are binding precedents and are directly applicable to the facts of the present case and support the CIT(A)'s conclusion. 7.4. The DR sought to distinguish the facts of the present case fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
