Hon’ble Kerala High Court in the case of Girnar Industries (supra) and Tata Tea Limited (supra), we hold that the assessee is entitled for exemption under Section 10B of the Act on account of blending of tea. Similarly, in our view, the industrial units engaged in the very same activity i.e. blending, packing and export of tea in the free trade zone shall also be entitled to enjoy tax exemption under Section 10A of the Act.
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.
It is very sad that AO without following the principles of natural justice and inspite of clear findings of the ITAT in the order dated 18.06.2010 has repeated the same orders as was done originally way back in 1998. Inspite of levying the cost of 5000/- on AO, which we were informed was paid to assessee, there is no change in the attitude of the Revenue with reference to assessees/assessments are concerned. By taking up the assessment at the fag end of the time barring period and by denying natural justice and not considering the evidence on record, assessees were forced to file appeals before the ITAT unnecessarily by incurring heavy cost of not only appeal fees but also engaging Counsels to defend the case. There should be an end to this sorry state of affairs.
It is noticed that the Hon’ble Supreme Court in the case of Goetze (India) Ltd (refer to supra) has held that the appellate authority being the tribunal did have the powers to direct the Assessing Officer to accept the claim of assessee, though the same has not been made in the original return nor has been claimed in the revised return. In the circumstances, respectfully following the ratio laid down by the Hon’ble Supreme Court in the case of Goetze (India) Ltd (refer to supra), the Assessing Officer is directed to grant the assessee’s claim of deduction u/s. 80GGB of the donations made by the assessee to political parties in respect of Rs.45 lakhs given to Congress party and Rs. 80 lakhs given to BJP.
Payments made for transmission of electricity by the transmission lines owned by PGCIL do not constitute payment for rent under section 194-I, it is not really necessary to go into this aspect of the matter. The question as to whether the definition of expression rent, introduced in section 194-I with effect from July 2006, is prospective or clarificatory is also, given our findings that, even on the touchstone of the definition of rent under the aforesaid provision, the payment for transmission of power will not constitute rent, not really relevant in the present context, and we see no need to deal with the same either.
Assessee entered into an agreement with M/s Reddy Structures Pvt. Ltd., for development and building of the housing project on the land belonging to him. The assessee contributed the land, undertook the developmental activities in the said land and thus complied with all other conditions which have to be fulfilled before claiming the benefit u/s 80IB(10) of the Act. In the present case, it was agreed that after completion of the building in terms of the agreement, the assessee was given 24% of the share of the building area which he was entitled to sell to various persons, it was also clear from the joint development agreement that the undertaking of developing and building housing project was jointly undertaken by the assessee and M/s Reddy Structures Pvt. Ltd., therefore, the assessee was entitled for the benefit of deduction u/s 80IB(10) of the Act.
With reference to the income treated as’income from other sources’, the CIT (A) analyzed the position of the income and noticed that it comprises of bad debts, miscellaneous receipts written back which were to be taxed under section 41(1) of the I.T. Act. With reference to the gratuity written back, he observed that assessee made provision for gratuity in earlier years which was not allowed as expenditure. Hence the write back of the same cannot be considered as income.
In the Tribunal decision rendered in the case of Srivatsan Surveyors (P.) Ltd. v. ITO [2009] 32 SOT 268 (Chennai) the issue was decided against the assessee on the basis that the depreciation on restrictive covenant is ‘a right in persona’ and not a ‘right in rem’ and, hence, depreciation on it is not allowable as per the provisions of section 32(1)(ii). In that case, Rs. 1 crore was paid to one of the directors on the basis of non-compete covenant entered into between the assessee-company and its director R. Srivatsan, as per which the said director agreed not to carry on his individual business of general insurance survey, loss assessment, valuation of assets, etc., for a period of seven years.
In the assessee is entitled to receive interest on refund which is out of any tax. As a matter of fact, the refund arises only on tax portion. There is misconception in the interpretation of the Assessing Officer that interest can be paid only on the tax portion in the refund and not on the entire amount of refund. Moreover, section 244A doesn’t distinguish that the assessee shall be entitled to receive interest only on tax portion in the refund and not on the entire amount of refund as projected by the revenue.
The time taken for clearing of cheques and Government holidays and reasonable cause etc. are not the reasons, which could be considered while levying the interest against the assessee
