Case Law Details
The assessee has not advanced any arguments with regard to the proposition that on interest income deduction under sec. 80-IC is admissible, therefore, there is no idea to examine the provisions of sec. 80-IC and in what condition the computation for such deduction has to be made. According to the judgment of Hon’ble Delhi High Court in the case of CIT vs. Sri Ram Honda, interest income has to be assessed as a income from other sources. In paragraph 26 of the judgment, Hon’ble Court has observed that interest income on fixed deposit for the purpose of availing of credit facility from the bank does not have an immediate nexus with the export business and, therefore, it has to necessarily be treated as income from other sources and not business income. In brief, the issue squarely covered by the decision of Hon’ble jurisdictional High Court. The only issue left for adjudication is quantification of interest income for the purpose of exclusion from the eligible profit for grant of deduction under sec. 80-IC. According to this decision, it is the net interest income which has to be excluded. The details are not on the record. Learned first appellate authority on an ad hoc basis allocated 50,000 rupees towards administrative expenses for earning interest income. This allocation is also impugned by the revenue in its appeal. Faced with this difficulty, we deem it appropriate to remit the issue to the file of the Assessing Officer for a limited purposes. The assessee shall submit exact details demonstrating the expenses who have direct nexus with earning of interest income. Learned Assessing Officer shall determine such expenses and thereafter worked out the exact amount of interest income which is to be excluded from the computation required to be made for the purpose of section 80-IC of the Act. In view of the above discussion, both the appeals are allowed for statistical purposes.
INCOME TAX APPELLATE TRIBUNAL, DELHI
ITA No.4072/Del/2011 – Assessment Year: 2006-07
Flex Foods Ltd. Vs. Deputy CIT
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