High Court Of Calcutta
CIT vs. J.J. Exporters Ltd.
Section 28, 80HHC
Asst. Year 1996-97
Pinaki Chandra Ghose & Sankar Prasad Mitra, JJ.
IT Appeal No. 359 of 2004; GA No. 2077 of 2004
17th February, 2009
JUDGMENT
By the court :
We have perused the application for condonation of delay. In our considered opinion sufficient cause has been shown to condone the delay in filing the present appeal. The application for condonation of delay is thus allowed and disposed of. We now take up the application for admission of the appeal.
Mr. Bhowmick, learned counsel appearing in support of this application tried to point out the grievance in this matter is in respect of interest on loan and the interest from bank (short term deposit). The fact of the case is as follows :
This appeal is for the asst. yr. 1996-97. The AO was directed to treat interest income as business income and not income from other sources. Hence, the appeal was preferred by the assessee before the learned Tribunal. The assessee is an exporter of silk fabrics. During the assessment year, the assessee received interest on various heads including the interest on loan and interest from bank (short term deposit). The assessee treated the amount of interest as business income and claimed deduction under s. 80HHC of the Act. According to the assessee, the surplus funds were temporarily invested in loans and advances and earned interest. The learned CIT(A) in its order considered the said issue and directed the AO to treat the interest income as business income and not income from other sources and further directed to recalculate the deduction under s. 80HHC of the said Act. Taking into account such facts the contention of the Department before the leaned Tribunal that the interest income has no business relationship and thus the same could not be considered while calculating deduction under s. 80HHC of the Act. It was submitted on behalf of the assessee that the interest income was not claimed under s. 80HCC(3) of the Act but only 10 per cent of the said amount was claimed for the purpose of deduction under s. 80HHC in terms of Expln. (baa) to sub-s. (4C) of s. 80HHC of the Act.
The learned Tribunal considered these facts and came to the conclusion that the aggregate amount which could not be said to be an income, being the interest income, is a business income and could be considered for deduction under s. 80HHC of the IT Act, 1961. The learned Tribunal also relied upon a decision of the Hon’ble Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT (1997) 141 CTR (SC) 387 : (1997) 227 ITR 172 (SC) and came to the conclusion that the interest earned by the assessee on loans, interest from bank (short term deposit) and the income on the booking of cars and other income, the details of which are mentioned in the account was the interest earned by the assessee by putting the surplus fund arose on account of business carried on by the assessee and the said business was authorized by cl. 18 of the object clause of the memorandum and articles of association of the assessee.
In these circumstances, the learned Tribunal upheld the order of CIT(A) that the interest from the above loan is the income of the assessee during the course of its business and as such it is to be assessed under the head ‘business income’, and therefore, the CIT(A) was justified to direct the AO to consider the said interest.
In these circumstances, we have not been able to find out any illegality or irregularity in respect of the order so passed by the learned Tribunal and we come to the conclusion that in the facts and the material placed before us, there is no substantial question of law involved in the matter to admit the appeal. Hence the appeal is dismissed. Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
[Citation : 324 ITR 329]
