Case Law Details
Havells India Ltd. Vs DCIT (ITAT Delhi)
Conclusion: AO was not justified in denying the claim of deduction under section 80IC as interest income earned was inextricably linked to the main business activity of assessee as it was earned from fixed deposits which was required to be maintained as per the statutory requirements.
Held: AO noticed that assessee had credited Rs.16,725/- and Rs.6,334/- on account of interest income in the accounts of Baddi Unit and Haridwar Unit. AO disallowed the deduction u/s 80IC on such interest income as it was not derived from the business activity of the industrial undertaking. Assessee made the submissions which were not found acceptable to AO. AO was of the view that as per the provisions of Section 80IC, deduction was available only on income derived from business activity of industrial undertaking and since interest had been derived from fixed deposits, the interest was not eligible for deduction. He accordingly denied the claim of deduction u/s 80IC on such interest income. It was held that the interest income earned was inextricably linked to the main business activity of assessee as it was earned from fixed deposits which was required to be maintained as per the statutory requirements. Hon’ble Delhi High Court in the case of PCIT vs. Bharat Sanchar Nigam Ltd. and the Co-ordinate Bench of Tribunal in the case of M/s. NHPC Ltd. had held that Revenue was not justified in denying the claim of deduction on such income. Thus, AO was not justified in denying the claim of deduction u/s 80IC.
FULL TEXT OF THE ORDER OF ITAT DELHI
Both the appeals by the assessee are preferred against the order of the Commissioner of Income Tax (Appeals)-22 & 44, New Delhi dated 23.10.2015 & 29.10.2015 respectively pertaining to Assessment Year 2009-10. Appeal No 6194/Del/2015 is against the quantum additions confirmed by CIT(A) and appeal No ITA No.463/Del/2016 is against the order passed u/s 154 of the Act.
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