Income Tax Appellate Tribunal - Mumbai
Marathon Trading & Investment P. Ltd, ... vs Assessee
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IN THE INCOME TAX APPELLATE TRIBUNAL
"I" Bench, Mumbai
Before Shri D.K. Agarwal (JM) and Shri Rajendra Singh(AM)
ITA No.2357/M/2010
Assessment Year 1991-92
M/s.Marathon Trading & Investment P.Ltd. The ITO-8(2)(3),
Walalce Business Centre Aayakar Bhavan, M.K.Road
Commercial Union House, Mumbai 400 020.
9, Wallace Street, Mumbai 400 001.
PAN : AABCM3973C
Appellant Respondent
Assessee by : Shri Vijay C.Kothari
Revenue by : Shri S.K.Singh
ORDER
PER RAJENDRA SINGH (AM) This appeal by the assessee is directed against the order dated 30.12.2009 of CIT(A) for the assessment year 1991-92. The only dispute raised by the assessee in this appeal is regarding the nature of interest income and allowability of deduction under section 80HHC in respect of said income.
2. Briefly stated the facts of the case are that original assessment in this case had been completed under section 144 on 26.3.97 in which additions were made on account of interest on inter corporate loans and on account of disallowance of commission and brokerage. The assessment was subsequently set aside by the CIT(A) for making fresh assessment denovo after necessary 2 verification and after opportunity of hearing to the assessee. The AO in the fresh assessment order dated 27.3.2000 accepted the income of Rs.6,78,235/- as shown in the profit and loss account as business income. In the said assessment the AO had not allowed any deduction under section 80HHC. The assessee therefore disputed the decision of AO before CIT(A) and tribunal. The tribunal vide order dated 29.12.2004 in ITA No.2556/M/2004 restored the matter to the file of AO for deciding the assessee's claim of deduction under section 80HHC. In the impugned assessment order dated 21.12.2006 the AO did consider the claim of deduction under section 80HHC but did not allow deduction in respect of interest income of Rs.70,720/-which was treated as income from other sources. The assessee disputed the decision of AO before CIT(A) who upheld the order of AO treating the interest income as income from other sources and denying the claim of deduction under section 80HHC. Aggrieved by the decision of CIT(A) the assessee is in appeal before the tribunal.
3. Before us the Learned AR for the assessee submitted that the nature of interest income as business income had already been decided by the AO in the assessment order dated 27.3.2000 in which the returned business income had been accepted. The assessee had raised disputes only in relation to denial of deduction under section 80HHC and the tribunal had restored the issue to the file of AO to only decide the claim of deduction under section 80HHC. The AO however had added the interest income of Rs.70,720/- returned by the assessee as business income as income from other sources which was beyond his jurisdiction. As regards allowability of deduction under section 80HHC it was submitted that the assessment year involved being 1991-92 the provisions of Explanation (baa) were not applicable. He referred to the judgment of Hon'ble 3 Supreme Court in case of K.K.Doshi & Co. Vs CIT (297 ITR 38) in which it has been held that the amended provision of section 80HHC were applicable on from A.Y.1992-93 and not with retrospective effect. It was also submitted that the interest income having been assessed as business income, deduction under section 80HHC had to be allowed. Reliance was placed on the judgment of Hon'ble High Court of Mumbai in case of CIT Vs Punit Commercial Ltd. (245 ITR
550) and the decision of the tribunal in case of Motorola (112 TTJ 562). The Learned DR on the other hand supported the orders of authorities below.
4. We have perused the records and considered the rival contentions carefully. We agree with the Learned AR that the interest income had already been assessed by the AO as business income in the assessment order dated 27.3.2000. The assessee had raised disputes only in relation to deduction under section 80HHC and the tribunal had also restored the matter to the file of AO only for considering the claim of deduction under section 80HHC. Therefore in the fresh assessment AO had no jurisdiction to change the nature of income of interest from business to other sources. We therefore set aside the order of CIT(A) on this point and hold that the interest has to be assessed as business income. As regards allowability of deduction under section 80HHC in respect of interest income, we note that assessment year involved is 1991-92 and therefore provisions of Explanation (baa) are not applicable. Further there are several judgments of Hon'ble jurisdictional High Court such as in case of CIT Vs Punit Commercial Ltd. (supra) in which interest income has been held eligible for deduction under section 80HHC. Therefore in our view the claim of deduction under section 80HHC in respect of interest income has to be allowed. We hold accordingly.
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5. The assessee has also raised an additional ground regarding levy of interest under section 234B etc. This being a legal ground was admitted by the tribunal. However, the Learned AR for the assessee conceded that the levy of interest was only consequential. We therefore direct the AO to recompute the interest at the time of giving effect to this order.
6. In the result appeal of the assessee is allowed.
7. The decision was pronounced in the open court 11.02.2011.
Sd/- Sd/-
( D.K. AGARWAL ) (RAJENDRA SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date : 11.02.2011
At :Mumbai
Copy to :
1. The Appellant
2. The Respondent
3. The CIT(A), Mumbai concerned
4. The CIT, Mumbai City concerned
5. The DR "I" Bench, ITAT, Mumbai
// True Copy//
By Order
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
Alk