Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 534 - ITAT MUMBAIDeduction u/s 80IB denied - treating the interest income on LC, FD and bank guarantee, interest on VAT, refund and interest on HDFC asset management as income from other sources - HELD THAT:- Assessee being in the business of manufacturing of aluminum ingots has availed various credit facilities in the form of cash credit, buyer credit, LC, bank guarantee etc. from State Bank of India for which it has to keep the necessary deposits as securities as per the bank mandate and the assessee has earned interest income as has been stated hereinabove. CIT(A) in A.Y. 2010-11 has decided the issue in favour of the assessee by following the decision of CIT vs. Koshika Telecom Ltd. [2006 (2) TMI 140 - DELHI HIGH COURT] wherein it has been held that interest flowing from deposits made by the assessee which are in extricably linked to the business of the assessee can not be treated as income from other sources. In the case of CIT vs. Jaypee Dsc Ventures Ltd. [2011 (3) TMI 309 - DELHI HIGH COURT] it has been held that where the money is deposited into bank not as surplus money but out of business exigencies and necessities, then the interest acquires the character of business receipts. In the case of CIT vs. Indo Swiss Jewels Ltd. [2005 (9) TMI 47 - BOMBAY HIGH COURT] the interest earned on short term deposits kept apart for the purpose of business has to be treated as income earned from business and can not be treated as income from other sources. Similarly, in the case of CIT vs. Koshika Telecom [2005 (9) TMI 47 - BOMBAY HIGH COURT] which has been relied upon by the predecessor CIT(A) to decide the appeal in favour of the assessee in A.Y. 2010-11 has the same ratio. Accordingly, we respectfully following the decisions as discussed hereinabove direct the AO to treat the interest and the various deposits as stated hereinabove as income from business and not from income from other sources. Accordingly, the assessee is entitled to deduction under section 80IB. - Decided in favour of assessee.
|