TMI Blog2010 (4) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... ins derived from the industrial undertaking. The Commissioner (Appeals) held that the interest income of Rs. 4,36,372 could not be reduced from the business income while computing the Income u/s 80-IB. The Tribunal confirmed the view of Commissioner (Appeals). Held that- for the purpose of deduction u/s 80-IB, the interest income received on unsecured loans did not for part of business income. - 2865 of 2009 - - - Dated:- 21-4-2010 - CHANDRACHUD D. Y. DR., DEVADHAR J. P., JJ JUDGMENT 1. Dr. D. Y. Chandrachud J .-In the appeal which has been filed by the Revenue under section 260A of the Income-tax Act, 1961, the following questions of law have been formulated: "(1) Whether on the facts and circumstances and in law, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchaser is discounted by the assessee with its bankers and the bank deducts its discounting charges. The assessee is reimbursed by the purchaser by payment of interest. The Assessing Officer held that the interest received cannot be regarded as being derived from the industrial undertaking for the purpose of section 80-IB. The Commissioner (Appeals), following the unreported judgment of the Gujarat High Court in Mayank Electro Ltd. v. ITO held that the profits of business of the assessee could not be reduced to the extent of the interest received for determining the extent of deduction under section 80-IB. The view of the Commissioner (Appeals) has been confirmed by the Tribunal. 4. Under sub-section (1) of section 80-IB where the gros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d gains derived from the eligible business. The purchaser, on account of the delay in payment of the sale price also pays to the assessee interest. This forms a component of the sale price and is paid towards the lag which has occurred in the payment of the price of the goods sold by the assessee. On these facts, therefore, the payment of interest on account of the delay in payment of the sale price of the goods supplied by the undertaking partakes of the same nature and character as the sale consideration. The delayed payment charges consequently satisfy, together with the sale price, the first degree test which has been laid down by the Supreme Court in Liberty India. For these reasons, the first question of law, is answered against the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the industrial undertaking and would fail to meet the first degree test laid down by the Supreme Court in Liberty India. The Commissioner (Appeals) was, there-fore, manifestly in error in holding that the interest received on unsecured loans could not be reduced from the business income for the purposes of computing deduction under section 80-IB. The Tribunal has not furnished any independent reasons based on interpretation of section 80-IB, for con-firming the view of the Commissioner (Appeals). For all these reasons, the second question of law, as framed would have to be answered in favour of the Revenue and against the assessee. 7. We make it clear that we have held that for the purpose of deduction under section 80-IB, the interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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