High Court Of Madhya Pradesh : Indore Bench
CIT vs. Ferro Concrete Construction (India) (P) Ltd.
Section 260A
Asst. Year 2001-02
A.K. Patnaik & A.M. Sapre, JJ.
IT Appeal No. 291 of 2007
17th March, 2009
Counsel Appeared :
R.L. Jain & Ku. Veena Mandlik, for the Appellant
ORDER
By the court :
This is an appeal under s. 260A of the IT Act, 1961 (for short ‘the Act’).
2. The relevant facts briefly are that for the asst. yr. 2001-02, the respondent filed the return of income along with audit report under s. 44AB showing total income of Rs. 42,18,260. The Asstt. CIT, 4(1), Indore in his assessment order dt. 18.th Aug., 2004 added inter alia a sum of Rs. 9,91,508 received by the respondent as interest on FDR. Along with other additions, the respondent was assessed to a total income of Rs. 57,68,420 and demand notice was issued accordingly. The respondent carried an appeal to the CIT(A)-II, Indore and CIT(A) deleted the addition of Rs. 9,91,508 received by the respondent by way of interest on FDR after considering the claim of the respondent that the amount of Rs. 9,91,508 was duly credited to the P&L a/c and after finding that the claim of the respondent was genuine. Aggrieved, the appellant filed an appeal before the Tribunal, Indore Bench, but the Tribunal after considering the details submitted in the paper book, recorded that the respondent has shown interest on FDR which was verified by the CIT (A) correctly and that the interest on FDR had been duly shown by the respondent in the P&L a/c and accordingly, dismissed the appeal by order dt. 9th Feb., 2007. Aggrieved, the appellant has filed this appeal. Mr. R.L. Jain, learned senior counsel appearing for the appellant submitted that interest on FDR should have been shown by the respondent as income from other sources, but the respondent had shown the interest income of Rs. 9,91,508 on FDR in P&L a/c. He has submitted that the computation of income from business and the computation of income from other sources have to be done separately in accordance with the provisions of the Act relating to the aforesaid two heads and therefore, interest amount of Rs. 9,91,508 on FDR received by the respondent could not have been shown as part of income from business and ought to have been shown as income from other sources. He further submitted that this Court in the appeal for earlier assessment year in the very case of the respondent had held that interest earned by the respondent on FDR has to be treated as income from other sources and not income from business.
While we find full force in the submissions of Mr. Jain, but we are not inclined to admit this appeal under s. 260A of the Act, because an appeal under s. 260A lies to the High Court from an order passed by the Tribunal only if the High Court is satisfied that the case involves a substantial question of law and in this case, we are not satisfied that it involves a substantial question of law for the reasons which we will now state. Under s. 100 of the Civil Procedure Code 1908 (for short ‘the CPC) an appeal similarly lies to the High Court from an appellate decree passed by any Court subordinate to the High Court, if the High Court is satisfied that the case involves a substantial question of law. In Sir Chunnilal V. Mehta & Sons Ltd vs. Century Spinning & Manufacturing Co. Ltd. the Supreme Court held that the proper test for determining whether a question of law raised in the case is a substantial question of law would be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the privy council or by the federal Court or is not free from difficulty or calls for discussion of alternative views. In the aforesaid case of Sir Chunnilal V. Mehta & Sons Ltd. the question involved in the appeal was construction of the managing agency agreement and the Supreme Court held that the question was not only one of law but also was neither simple nor free from doubt and in the circumstances it involved a substantial question of law and on the construction of the managing agency agreement the success or the failure of the parties with respect to their claim for nearly Rs. 26,00,000 depended.
When we apply the aforesaid tests laid down by the Supreme Court Chunnilal Mehta and M. Janardan’s cases (supra) to the facts of the present case, we find that the question whether the interest amount of Rs. 9,91,508 received by the respondent on the EDR should have been shown by the respondent as income from business or income from other sources may be a question of law but is not a substantial question of law inasmuch as on the answer to question, the appellant is not entitled to higher or lessor amount of tax from the respondent. As we have seen, the respondent was assessed to a taxable income of Rs. 57,68,420 in the assessment order and by giving effect to the addition of Rs. 9,91,508 received by the respondent as interest on FDR. The CIT(A) and the Tribunal have held that since the assessee had shown this receipt of Rs. 9,91,508 in P&L a/c the further addition of Rs. 9,91,508 was not warranted. The case of the Department before us is that Rs. 9,91,508 earned by way of interest on the FDR by the respondent should not have been shown as income from business. Even if we accept the stand of the Department, the taxable income of the respondent will remain the same and the Department will not be entitled to any higher tax in this case. In other words in the facts of the present case, the Department would not be entitled to any additional tax, if interest on FDR amounting to Rs. 9,91,508 received by the respondent was shown as income from other sources instead of income from business. Since no substantial question of law is involved in this case, we are not inclined to admit this appeal and we accordingly, dismiss the same.
[Citation : 323 ITR 658]
