Case Law Details
HIGH COURT OF GAUHATI
Commissioner of Income-tax, Guwahati-II
Versus
Universal Pipes (P.) Ltd.
IT APPEAL NO. 25 OF 2011
OCTOBER 19, 2012
JUDGMENT
Amitava Roy, J.
This appeal witnesses a challenge to the judgment and order dated 11.03.2011, rendered by the Income Tax Appellate Tribunal, Gauhati Bench, Guwahati (for short hereafter referred to as the learned Tribunal) in ITA No.80(Gau)/2007. The assailment, however, is limited to its finding on the issue as to whether the income of the respondent-assessee by way of interest amounting to Rs. 3,13,91,602/- was deductible under section 80-IC of the Income Tax Act, 1961 (for short hereafter referred to as the Act). The learned Tribunal having answered in favour of the respondent-assessee, the Revenue is in appeal.
2. We have heard Mr. S Sarma, learned Counsel for the Revenue and Mr. RK Goenka, learned counsel for the respondent-assessee.
3. At the time of admission of the appeal, the following substantial question of law was framed:-
“1. Whether on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in holding that the interest income of Rs. 3,13,91,602/- received by the assessee is derived from the industrial undertaking of the assessee and is eligible for deduction u/s 80-IC of the Income Tax Act, 1961.”
4. The pleaded facts reveal that the respondent-assessee is a private limited company registered under the Companies Act, 1956 with its registered office at Guwahati, Assam and is engaged in manufacture and sales of PVC pipes. In its return of income, submitted on 13.08.2004 for the assessment year 2004-05, it declared its total income as Nil after claiming 100% deduction under section 80-IC of the Act. It mentioned, inter alia a substantial expansion undertaken in the year 2000-01, thus, claiming relief under section 80-IC of the Act by bringing its case within the purview of sub-section (2)(b)(iii) thereof. In course of the assessment proceedings, the Assessing Officer being of the view that it had received Rs. 3,28,51,479/- “from other sources” required it to provide the necessary breakup thereof. The respondent-assessee filed the details of the miscellaneous income disclosing, inter alia that an amount of Rs. 3,13,19,602/- had been received by way of interest by it from the Irrigation Department, Government of Assam as per the order of this Court for the delay involved in the payment in connection with delivery of goods to it (Irrigation Department) between 22.08.1991 to 31.05.1992. The Assessing Officer refused to grant the deduction of this amount on the ground that having regard to the period relating to the transactions with the Irrigation Department, it was impermissible and, further, the time limit specified for commencement of production or substantial expansion for the North Eastern States, in terms of section 80-IC (2)(b)(iii) was between the 24th December, 1997 and 31st March, 2007. The respondent-assessee being aggrieved preferred an appeal before the Commissioner of Income Tax (Appeals), who sustained the determination made by the Assessing Officer.
5. The learned Tribunal, however, reversed this finding in favour of the respondent-assessee on the following grounds:-
(i) There was no dispute –
(a) that the assessee had received interest amounting to Rs. 3,13,19,602/- by way of delayed payment from its trade debtor as per the order of the jurisdictional High Court.
(b) that this amount by way of interest was received by the assessee during the assessment year 2004-05.
(c) that because of the substantial expansion as per section 80-IC (2)(b)(iii), the respondent-assessee was eligible for deduction under section 80-IC.
(ii) While prescribing the benefit under section 80-IC, no distinction has been made between income relating to the pre-expansion and post-expansion business.
(iii) Considering the year during which the amount by way of interest from the trade debtor had been received by the assessee and has been treated as business income, it has to be held as derived from its undertaking, thus making it eligible for deduction under section 80-IC of the Act.
6. Though, Mr. Sarma has sought to dismiss the above grounds by relying on section 80HHC of the Act, on being queried by this Court, the learned counsel could not substantiate any perceptional nexus thereof with section 80-IC of the Act to render the impugned judgment and order non est in law and on facts.
Mr. Goenka to the contrary, while endorsing the reasons recorded by the learned Tribunal placed reliance on the decision of the Hon’ble Apex Court in CIT v. Govinda Choudhury [1993] 203 ITR 881.
7. Upon hearing the learned counsel for the parties and on a consideration of the pleaded facts as well as the findings arrived at by the learned Tribunal on the analysis thereof, we are constrained to sustain the plea raised on behalf of the respondent-assessee. Not only, the learned counsel for the Revenue in course of the arguments could controvert the correctness of the finding of the learned Tribunal, inter alia on the aspect of the eligibility of the respondent-assessee for availing the benefit of deduction under section 80-IC of the Act in terms of sub-section (2)(b)(iii) thereof, no relevant legal provision or any decision of any court of law was cited to construe the amount as not derived by it from its business. In Govinda Choudhury’s case (supra) the Hon’ble Apex Court held that the interest awarded to the respondent-assessee therein in an arbitration proceeding for delayed payments under a contract executed by him was to be recorded as business income and could not be treated as “income from other source”. Various High Courts of the country, as has been referred to by the learned Tribunal have held the similar view.
8. On a cumulative consideration of all above, we are of the unhesitant opinion that the instant appeal lacks in merit, which is, accordingly, dismissed. No costs.
