IN THE INCOME TAX APPELLATE TRIBUNAL
`B' : NEW DELHI
DELHI BENCH `B
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND
GARG, JUDICIAL MEMBER
SHRI CHANDRA MOHAN GARG,
No.1851/Del/2013
ITA No.
2009-10
Assessment Year : 2009-
M/s Essel Shyam Vs. Assistant Commissioner of
Communication Limited, Income Tax,
Naraina Industrial
C-138, Naraina Circle-2,
Central Circle-
Phase-I,
Area, Phase- New Delhi.
New Delhi 110 028.
PAN : AAACE2299Q.
(Appellant) (Respondent)
Appellant by : Smt. Rano Jain, CA.
Respondent by : Smt. Parwinder Kaur, Sr.DR.
ORDER
PER G.D. AGRAWAL, VP :
This appeal by the assessee is directed against the order of
learned CIT(A)-III, New Delhi dated 5th February, 2013 for the AY 2009-
10.
2. Ground No.1 of the assessee's appeal is of general nature and
needs no adjudication.
3. Ground Nos.2 & 3 of the assessee's appeal are with regard to
claim of deduction under Section 80IA of the Income-tax Act, 1961 in
respect of interest income earned from FDRs.
4. At the time of hearing before us, learned counsel fairly stated
that this issue is coming from earlier years and in AY 2006-07, vide ITA
No.636/Del/2012, the ITAT set aside the matter to the file of the
Assessing Officer with the following observation:-
2 ITA-1851/Del/2013
"8. We have considered the submissions of both the
parties and have perused the record of the case. Before
Hon'ble Delhi High Court in assessee's own case for
assessment year 2005-06, inter-alia, the following
substantial question of law was there.
" Whether on the facts and in the circumstances of the
case, the Tribunal erred in law in not directing exclusion of
only net interest income, i.e., gross interest income less
expenditure incurred for earning such interest income,
while computing deduction u/s 80 1 (A) of the Income Tax
Act."
9. Hon'ble Delhi High Court upheld the contention of
Revenue that in
view of the decision of Hon'ble Supreme Court in the case
of Liberty India vs. CIT (2009) 9 SCC 328, the assessee was
not entitled for deduction u/s 80 1A in respect of net
interest income and not on gross interest. Hon'ble Delhi
High Court observed as under:
" We have quoted Section 80 1A and (2A) above. For
determining the income derived by an undertaking or
enterprise, we have to compute the total income of the
assessee from the business referred in sub-section (4) to
Section 80(1)(A) . The words used in Section 80 1 (A) (1)
and (2A) are "profit and gains of eligible business". On the
basis of same logic and reasoning, we have to first find out
the profit and
gains of business from the specified activities. Section 80 1
(A) was interpreted and elucidated in Liberty India Vs.
Commissioner of Income Tax,(2009) 9 SCC 328. It was
highlighted Section 80 1 (A) is a profit linked incentive and
only profits "derived from" eligible business are entitled to
deduction. The expression "derived from" covers sources
not beyond the first degree. Devices to inflate or reduce
profits from eligible business should be rejected. On DEPB
utilization and duty drawback it was held:-
"39. Analysing the concept of remission of duty drawback
and DEPB, we are satisfied that the remission of duty is on
account of the statutory/policy provisions in the Customs
Act/ Scheme(s) framed by the Government of India. In the
circumstances, we hold that profits
derived by way of such incentives do not fall within the
expression "profits derived from industrial undertaking" in
Section 80 1 B."
3 ITA-1851/Del/2013
10. Hon'ble Delhi High Court remanded the matter
observing in para 23 as reproduced earlier. Respectfully
following the decision of Hon'ble Delhi Court, we restore
the matter to the file of Assessing Officer to examine the
nexus between the interest paid for earning the interest
income on FDRs. To the extent direct nexus is there, for
earning the interest on FDRs, the deduction is to be
allowed and gross interest, accordingly, be reduced by the
said amount. We may clarify that to the extent deduction is
allowed, the assessee will not be entitled to claim further
deduction u/s 36 (i) (iii).
In the result the assessee's appeal is allowed for statistical
purposes."
5. She, therefore, submitted that the matter may be remitted to the
file of the Assessing Officer in this year also to be readjudicated as per
the above observation of the ITAT Delhi Bench given in the light of the
direction of Hon'ble Jurisdictional High Court in assessee's own case.
6. Learned DR has no objection to this request of the assessee's
counsel.
7. We, therefore, set aside the orders of lower authorities on this
point and restore the matter to the file of the Assessing Officer and
direct him to re-examine the issue as per the above direction of the
ITAT in assessee's own case.
8. Ground No.4 of the assessee's appeal reads as under:-
"On the facts and circumstances of the case, the learned
CIT(A) has erred both on facts and in law in confirming a
disallowance of Rs.42,500/- made by AO invoking the
provision of Rule 8D(2)(iii) under section 14A of the Act in
respect of the investment of Rs.85,00,000/-."
9. At the time of hearing before us, it is submitted by the learned
counsel that the assessee is not interested in prosecuting this ground
due to smallness of the disallowance. She, however, stated that this
4 ITA-1851/Del/2013
should not be taken as a res-judicata against the assessee in the
subsequent year and the assessee reserves its right to challenge the
disallowance under Section 14A in the subsequent year if the facts so
warrant.
10. As the learned counsel for the assessee has not pressed ground
No.4, the same is rejected.
11. In the result, the appeal of the assessee is deemed to be partly
allowed for statistical purposes.
Decision pronounced in the open Court on 8th August, 2014.
Sd/- Sd/-
GARG)
(CHANDRA MOHAN GARG) AGRAWAL)
(G.D. AGRAWAL)
JUDICIAL MEMBER VICE PRESIDENT
Dated : 08.08.2014
VK.
Copy forwarded to: -
1. Appellant Communication Limited,
: M/s Essel Shyam Communication
Phase-I,
C-138, Naraina Industrial Area, Phase-
New Delhi 110 028.
2. Respondent : Assistant Commissioner of Income Tax,
Circle-2, New Delhi.
Central Circle-
3. CIT
4. CIT(A)
5. DR, ITAT
Assistant Registrar
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