TMI Blog2019 (3) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ion the findings of the lower appellate authority with respect to the working out of the netting principle in the facts of this case. No substantial question of law arises in this regard. Miscellaneous income reported from sale of scrap, including cheque bouncing charges, late payment charges etc. - whether it could be treated as business income having regard to the fact that the assessee is a telecommunications company - HELD THAT:- It is not disputed that this question has been decided against the Revenue in Principal Commissioner of Income Tax-09 v. M/s. Vodafone Mobile Services Ltd. [2019 (1) TMI 472 - DELHI HIGH COURT] by a Division Bench of this Court. - ITA 785/2017 - - - Dated:- 18-2-2019 - MR. S. RAVINDRA BHAT AND MR. PRATEEK ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .01.2009 (in ITA No.1369 2000/Ahd/2008) held as follows: 26. Before us, the Ld. Counsel for the assessee argued that the assessee earned certain interest income which has been treated by the assessee as well as by the AO as income chargeable to tax under the head Business . It being the income derived from the business by the telecom undertaking, the assessee claimed deduction u/s 80IA in respect of such interest income as well. The AO has disallowed the claim for such deduction relying upon the decision of the Supreme Court in the case of Pandian Chemicals Ltd. (supra) to hold that interest income is not eligible for the tax holiday. The Ld. Counsel for the assessees stated that the decision of the Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0IA is materially different. While the former requires a direct nexus between the income of the undertaking itself, the later requires the nexus between the income and the business and, therefore, having regard to the fact that interest income is taxed by the AO himself as business income, the application of the foregoing decision by the AO has been misplaced. Having regard to the above, the Ld. Counsel for the assessee argued that interest income be held as income derived from the business by the telecom undertaking and hence eligible for deduction u/s 80IA. The Ld. Counsel for the assessee alternatively argued that if at all the action of the AO is confirmed then in that case, the interest income ought to be adjusted against interest expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FDRs, loan given to Hutchison Essar South Ltd. and interest on refund of DOT are covered by the decision of Hon ble Supreme Court in the case of Pandian Chemicals Ltd. (supra). However, we are of the view that the assessee s alternative contention as regards to netting of interest has not been examined by the lower authorities. None of the authorities below have examined the nexus between the interest income earned on the above deposits on loans vis-a-vis the income earned from industrial undertaking. Accordingly, we set aside these issues to the file of the Assessing Officer to verify the facts, whether there is any nexus between the interest income and income from industrial undertaking and allow netting of interest in terms of the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower appellate findings under challenge. This first substantive ground is thus declined. 4. It is urged on behalf of the Revenue that the principle of netting could be permitted, if at all, if the interest were received in the course of business or in relation to business transaction. In the present case, it was contended, therefore, that having regard to the principles settled by this Court in Shri Ram Honda (supra), netting could not be permitted at all. 5. A plain reading of paras 26 and 27 extracted previously of the earlier order of ITAT makes it clear that the AO had denied deduction under Section 80I-A but not altogether declined that the income received was by way of business. Were it not so, the question of considering th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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