TMI Blog2023 (7) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... eimbursement of salary. Again, reimbursement of salary received is not in the nature of income, and following the reasoning given by us on the issue of insurance claim, there arises no question of disallowance of any deduction on the salary paid to the drivers and thus, no case for levy of penalty under section 271(1) (c) on the same. Interest income earned on FDs and on loans - There are decisions of Hon ble High Courts holding that it is in the nature of business income more particularly where the FDs have been created for statutory components and regulations. Therefore, there is no doubt that the issue of denial of claim of deduction under section 80HH/80IA of the Act on interest on FDs and others, is a debatable issue, and considering the fact that it is not the case of the Revenue that the assessee has not furnished complete particulars relating to the same or has concealed any particulars of income relating to the same the mere denial of claim of deduction will not tantamount to concealment of income and/or furnishing of inaccurate particulars of income so as to attract levy of penalty under section 271(1)(c) - The proposition of law in this regard has been settled in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 56,67,025/- 4. Incomes pertaining to which the deductions were denied are as under: Section 80IA: Kanpur Division: i) Interest on FD Rs. 2,77,442/- ii) Interest on staff loan Rs. 583 iii) Interest income Rs. 20,300 iv) Rent income Rs. 3,500 Deduction u/s. 80IA Rs. 75,456 Indore Division: i) Interest on FD Rs. 88,66,921/- ii) Interest on loan Rs. 92,06,866/- iii) Interest income from IDBI Rs. 13,000/- iv) Insurance Rs. 3,37,561 v) Warehousing charges Rs. 2,000/- vi) Tank rent Rs. 3,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mandali Division : Rs. 82,98,839/- ii) Trikampura Division : Rs. 9,25,330/- iii) Kanpur Division : Rs. 40,88,063/- iv) Indore Division : Rs. 4,75,178/- Total : Rs. 1,37,87,410/- It was also contended by the ld.counsel for the assessee that the issue of claim of deduction under section 80HH/ 80IA of the Act on interest earned on FDs was debatable issue with several decisions/rulings of the Courts in favour of the assessee. In this regard, our attention as drawn to the following decisions: i) CIT Vs. J.J. Exporters Ltd., (2010) 324 ITR 329 (Cal); ii) Pr.CIT Vs. West Bengal Housing Board, 134 taxmann.com 175 (Cal); iii) R.P. Tarway Co. Vs. ITO, 71 TTJ 203 (Pat.); iv) Laxminarain Kheta Vs. ITO, 99 taxmann.com 450 (All) 6. He thereafter pointed out that other major component of the income was in the nature of insurance claim which was received by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e insurance company for the loss incurred by the assessee against which it was insured. Therefore, there arises no question for treating the insurance claim received as being in the nature of income and denying deduction under sections 80HH/80IA of the Act. Considering the nature of insurance claim being compensatory, there is no profit element involved in the same, and the assessee is only compensated for the loss that the insurance company evaluated the assessee to have incurred in such circumstances. The assessee cannot be said to have claimed any deduction on the income in the nature of insurance claim, therefore, there arises no question of excluding the entire insurance claim for the purpose of claiming deduction under section 80HH/80IA of the Act. 10. On merits, therefore, we hold that the disallowance of deduction of insurance claim was not in accordance with law, and therefore, there arises no question for levy of penalty under section 271(1)(c) of the Act on the same. 11. On the issue of driver s salary, the assessee has repeatedly contended that it was merely a reimbursement of salary. Again, reimbursement of salary received is not in the nature of income, and foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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