PCIT Vs Madhya Gujarat Vij Company Limited (Gujarat High Court)
The Gujarat High Court examined tax appeals filed by the revenue under Section 260A of the Income Tax Act, 1961, challenging a common judgment and order dated 18.08.2023 passed by the Income Tax Appellate Tribunal for the Assessment Year 2011–12. Since both appeals involved the same issue, the facts of Tax Appeal No. 380 of 2024 were treated as the lead matter.
The principal question of law proposed by the revenue was whether the Tribunal was justified in setting aside an addition of ₹93,90,000 made by the Assessing Officer by treating interest income earned from staff loans and other advances as business income, instead of “income from other sources,” when the assessee was not engaged in the business of lending to staff.
The assessee company filed its original return of income on 30.09.2011 declaring nil income after setting off brought-forward business losses and unabsorbed depreciation. A revised return was filed on 28.03.2013. The assessee reported book profits of ₹38,20,27,827 under Section 115JB of the Act. The return was processed under Section 143(1), and the case was selected for scrutiny assessment under Section 143(3). Notices under Sections 143(2) and 142(1) were issued, calling for audited financial statements and other details, which were duly furnished. Subsequent proceedings were attended by the authorised Chartered Accountant of the assessee.
