TMI Blog2018 (10) TMI 1751X X X X Extracts X X X X X X X X Extracts X X X X ..... owance and allow this issue of assessee s appeal. Depreciation on computer accessories and printers at 60% - BSES YAMUNA POWERS LLD. / BSES RAJDHANI POWERS LTD. [ 2010 (8) TMI 58 - DELHI HIGH COURT] Interest receipt are business income because the assessee, for a very short period investing in FD s and Mutual Funds and earned interest income which is incidental - ITA No. 8547/Mum/2011, 8576/Mum/2011, 5395/Mum/2013(Assessment Year 2008-09 and 2009-10) - - - Dated:- 12-10-2018 - Sri Mahavir Singh, JM And Sri Nk Pradhan, AM Appellant by: Ms Krupa Gandhi, AR Respondent by: Shri Ajay Kumar Keshari, DR ORDER Mahavir Singh, In these three appeals, two appeals by the assessee and one by the Revenue, are arising out of the orders of Commissioner of Income Tax-21, Mumbai [in short CIT(A)], in appeals Nos. CIT(A)-21/IT/203 /201011 CIT(A)-21/IT/428/2011-12, orders dated 09.09.2011 01.04.2013. The Assessments were framed by the Asst. Commissioner of Income Tax, Circle-10(1), Mumbai (in short ACIT/ AO ) for the A.Ys. 2008-09 200910 vide order dated nil, 06.12.2011 under section 143(3) of the Income Tax Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance made by assessee and the relevant is enclosed in assessee s paper book at page 68. This information was filed by assessee before Assessing Officer. The relevant details of expenses are as under: - Type of expenses Nature Yearly amount No. of empls at lower parel No. of empl. For 1 employee % to be taken Total amount Staff salary CTC Direct 667,853 40% 267,141 Authorised signatory 1% of CTC 5,601,354 1% 56,014 0.1% of ₹ 5173997 (CEO s Deputation Expenses) 6,522,000 0.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as under: - 41. Having regard to the language of Section 14A(2) of the Act, read with Rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the AO needs to record satisfaction that having regard to the kind of the assessee, suo moto disallowance under Section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the AO was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, nature of loan taken by the assessee for purchasing the shares/ making the investment in shares is to be examined by the AO. 7. We are of the view that satisfaction is mandatory in view of the above decision of Hon ble Supreme Court in the case of Maxopp Investment Ltd and in the present case, there is no whisper about rejection of assessee s contention of expenses disallowed suo moto in relation to earning of exempt income. Hence, according to us there is no satisfaction recorded by the AO for rejection of the assessee s disallowance and accordingly, we delete the disallowance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers and scanners was allowable at the rate of 15% as against 60% claimed by assessee. But CIT(A) allowed the claim of depreciation at the rate of 60% by observing as under: - Since in various decisions it had been held that the computer accessories and other items are integral part of computer system and hence allowable depreciation is @ 60%. Following the above decisions, the AO is directed to allow depreciation @ 60% on printers. Aggrieved, Revenue is in appeal before Tribunal. 13. At the outset, the learned Counsel for the assessee filed copies of Tribunals order in assessee s own case in ITA No. 1711/Mum/2011 for AY 2007-08, wherein Tribunal vide order dated 22.07.2015 has allowed the claim of the assessee by observing in Para 5 as under: - 5. Before us, the Ld. Departmental Representative had not raised any cogent reasoning to negate the finding of CIT(A) that the items picked up by the Assessing Officer were part and parcel of the entire computer system and that the same could be operate on a standalone basis. In this view of the matter, we therefore, find no reason to interfere with the ultimate conclusion of the CIT(A) to allow depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest income has been earned on deployment of business receipts. The Hon ble Bombay High Court in the case of CIT vs. Lok Holdings 308 ITR 356 held that where business receipts are used for earning interest income, the interest income was assessable under the head business income. In the case under considerations the business receipts were not surplus funds but were not immediately required for the purpose of business activities. Thus these business receipts were available to the appellant for a very short period during the year which were invested in FDs and mutual funds. Following the Bombay High Court decision in the case of Lok Holding and appeal order of AY 2007-08, the AO is directed to assess the interest income under the head profits and gains of business or profession. This ground of appeal is therefore, allowed. 17. We find that the Tribunal in ITA No. 1711/Mum/2011 for AY 200708 vide order dated 22.07.2015 considered this issue and treated this as business income by observing in para 10 to 13 as under: - 10. On account of the aforesaid business cycle, money collected by assessee on behalf of its client's is retained by it till it is paid-off to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon'ble Madras High Court in the case of CIT Vs. Tamil Nadu Dairy Development Corporation Ltd. 216 ITR 535 (Madras), relied upon by the assessee before us also supports the conclusion drawn by the CIT(A). As per the Hon'ble Madras High Court interest income earned oil term deposits of business funds available with the assessee before the same were utilized for actual business operations was to be treated as an activity incidental to the business income. In the case before us also, factually assessee is earning interest out of an activity incidental to its business operations and, therefore, the impugned interest income has been correctly held to be assessable as business income by the CIT(A). The judgement of Hon ble Kolkata High Court in the caseo f CIT vs. East India Hotels 207 ITR 881 (Kolkata) (HC) and the judgement of Hon ble Karnataka High Court in the case of CIT vs. Production (P) Ltd (2007) 290 ITR 598 (Kar) also supports the aforesaid proposition. 13. In view of the aforesaid discussion an having regard to the material on record, we hereby affirm the action of the CIT(A) in accepting the interest income of ₹ 68,26,326/- as business income. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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