Income Tax Appellate Tribunal - Ahmedabad
Shreeji Frozen Fruit &Vegetable , Anand vs Assessee on 11 July, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER आयकर अपील सं./ ./ ITA No. 1098/Ahd/2013 िनधा रण वष / Assessment Year : 2009-10 M/s. Shreeji Forzen Fruit & Income Tax Officer, Vegetable, Vs Ward-2, At. Lambhvel, Tal: Anand Anand PAN : ABKFS 0145 B अपीलाथ / अपीलाथ / (Appellant) यथ यथ / थ / (Respondent) Assessee by : Smt. Arti N. Shah, AR Revenue by : Shri Antony Pariath, Sr DR सुनवाई क तारीख/ Date of Hearing : 08/07/2016 घोषणा क तारीख / Date of Pronouncement: 11/07/2016 आदेश/O R D E R This appeal by the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-IV, Baroda dated 15.02.2013 for Assessment Year 2009-10.
2. The solitary ground raised by the assessee reads as under:-
The Learned Commissioner of Income-tax (Appeals)-IV, Baroda has erred in law and on facts of the case by confirming the amount of Rs.74,052/- being interest on electricity deposit to the taxable u/s 56 as held by the Assessing Officer, though the same part of business income is exempt u/s 80IB(11A) of the Act.
3. Briefly stated facts are - the assessee is a partnership firm, it filed return of income on 12.07.2010 declaring total income at Rs.Nil, after claiming deduction of Rs.35,48,919/- u/s 80IB(11A) of the Act. Subsequently, the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Act was framed vide order dated 03.09.2012. While framing the assessment, the Assessing Officer made addition of Rs.74,052/- u/s 56 of the Act towards interest income from Madhya Gujarat Vij Company Ltd (in short "MGVCL") as, according to him, such interest earned on its loans and advances cannot fall within the SMC-ITA No. 1098/Ahd/2013 M/s. Shreeji Frozen Fruit & Vegetable vs. ITO AY : 2009-10 2 category of "income from other sources". On appeal, the ld. CIT(A) confirmed this disallowance made by the Assessing Officer on the ground that such interest income was not derived from any business activities of the assessee.
3.1 Aggrieved by the aforesaid order of the ld. CIT(A), the assessee is further in appeal before me.
3.2 Ld. Counsel for the assessee submitted that the ld. CIT(A) was not justified in confirming the disallowance in question as there is a direct nexus between the interest income earned from MGVCL and the expenditure of the business of the assessee.
3.3 On the contrary, ld. DR supported the orders of the lower authorities and submitted that ld. CIT(A) was justified in confirming the disallowance as the same comes under "income from other sources" which is not eligible for deduction u/s 80IB(11A) of the Act.
4. I have heard the rival contentions, perused the material placed before me and gone through the orders of the lower authorities. I find that the Assessing Officer made the addition in question u/s 56 of the Act towards interest income earned from MGVCL and the ld. CIT(A) confirmed the same by following observations:-
"5.3 Section 80IB(11A) of the Act states that amount of deduction in a case of an undertaking deriving profit from the business of processing, preservation and packaging of fruits and vegetable. The word 'derive' as used in the Section 80IB(11A) has narrow meaning and the only profit which is directly derived from the business of processing, preservation and packaging of fruits and vegetable can be eligible for deduction under such section. The interest received from MGVCL on security deposit given to it at the most can be said to be attributable to the business activities of the appellant, but it cannot be said to be income 'derived' from such business activities. Considering the fact, I am of the view that the interest income of Rs.76,403/- is not eligible for deduction u/s 80IB(11A) of the IT Act as such interest income is not derived from above business activities of the appellant.
SMC-ITA No. 1098/Ahd/2013 M/s. Shreeji Frozen Fruit & Vegetable vs. ITO AY : 2009-10 3 In view of this the disallowance of Rs.76,403/- as made by the AO by treating the same as not eligible for deduction u/s 80IB(11A) of the Act is hereby confirmed. "
I find that the assessee was carrying on the business of processing, preservation and packing of vegetable fruits. It is undisputed fact that, for carrying out such business, electricity connection was obtained from MGVCL and the required charges ware paid to the MGCVL for necessary connection which includes security deposit, service connection charges and line charger. In my considered view, such charges paid to the company against supply of electricity for carrying on business is the expenditure towards the assessee's business and the consequential interest thereof received from the electricity company towards security deposit has a direct nexus with company's business. Thus, the assessee is eligible for deduction u/s 80IB(11A) of the Act on this interest income also. Accordingly, the appeal of the assessee is allowed.
5. In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 11th July, 2016 at Ahmedabad.
Sd/-
R.P. TOLANI
(JUDICIAL MEMBER)
Ahmedabad; Dated 11/07/2016
*Biju T.
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2.
यथ / The Respondent.
3. संबंिधत आयकर आयु / Concerned CIT
4. आयकर आयु (अपील) / The CIT(A)
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदेशानुसार/ BY ORDER, TRUE COPY उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad