TMI Blog2009 (5) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by this common order. 2. The petitioner, an income tax assessee on the file of the Assessing Officer in PAN No.AAACR1709A, is a Company incorporated under the Companies Act and is engaged in the business of manufacture and export of garments. It is the case of the petitioner that they filed returns of income voluntarily for the relevant Assessment years, 1993-94, 1994-95, 1995-96 and 1996-97 on the respective due dates. The details of returns of income as stated by the petitioner in the affidavit would run thus : (a) For the assessment year 1993-94, nil return was filed on 13.10.1993. The gross total income was at Rs.1,35,88,649/- and deduction under Section 80 HHC and 80IA for Rs.1,30,96,450/- and Rs.79,29,191/-, respectively was claimed and interest receipt of Rs.7,82,506/- on deposit with bank was included under Head business. The return was accepted and later a notice under Section 148 of the I.T. Act was issued and reassessment was made and interest was assessed under the head 'other sources' and the total income was determined at Rs.7,82,510/- and charged income-tax for Rs.4,04,950/- and interest under Section 234B for Rs.7,95,629/- The petitioner paid the income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37/- and interest under Section 234B for Rs.4,82,372/-. The petitioner paid the income-tax and 234-B interest demand. 2a. Aggrieved by these orders, the petitioner filed an appeal for the Assessment years 1994-95, 1995-96 and 1996-97 and the CIT(A) also confirmed the orders. The petitioner filed an appeal against the said orders before the Income Tax Appellate Tribunal and the same is still pending. When there was a demand from the Department, the petitioner paid the tax even though he filed an appeal against the assessment. Since there is no provision under the statute for levy of interest under Section 234-B of the Act, the petitioner filed a waiver petition before the Chief Commissioner, the respondent herein and the respondent dismissed the waiver petition on 10.11.2004. According to the petitioner, the impugned orders dated 10.11.2004 with respect to the above said assessment years is wrong, illegal and without basis. Hence, the petitioner is before this court praying to quash the same. 3. The respondent has filed counter affidavit and has stated that the assessment for the assessment year 1993-94 was re-opened on 15.05.1995 itself and the order of the CCIT was not pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of sections 70 and 71 during the assessment year in question. Only in the computation of business income, expenditure or set-off of the loss from the income from business will arise. Thus, on a due consideration of the matter, we are inclined to hold that the Tribunal is not right in this case in holding that the interest receipts cannot be assessed and that the difference between the interest paid and the interest received should be capitalised. We have to, therefore, answer the question referred to us in the negative and against the assessee and hold that the interest earned by the assessee on investment of share capital in call deposits could be assessed separately under the head "Other sources" for the assessment year 1962-63. The assessee will pay the costs to the Revenue. ..." (ii) 216 ITR 535 ( Commissioner of Income Tax vs. Tamil Nadu Dairy Development Corporation Ltd.) "Following the above ruling of the Supreme Court (1959) 37 ITR 171 (CIT vs. Calcutt a National Bank Ltd., we are of the view that the term "business" is a word of very wide connotation and by no means determinate in its scope and has to be considered with reference to each particular kind of activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ", several receipts consisting of interest received form the customers for delayed payments or on the temporary banking of the surplus funds or on cash sundry deposits for obtaining electricity connection or such other business realisation. In so far as the interest received by the assessee from the customers for delayed payments is concerned, we are of the opinion that the assessee is entitled to claim deduction under Sections 80E and 80-I of the Act. The assessee sold the goods on credit and for the delayed payment of the sale consideration, as a part of the sale proceeds, the assessee received the consideration, as a part of the sale proceeds, the assessee received the interest from the customers for delayed payment of price. We are, therefore, of the opinion, there is a close nexus between the interest on delayed payments and the receipts from the job works carried on by the assessee and to that extent, the assessee is entitled to claim deduction under sections 80E and 80-I of the Act. ..." (v) (1999) 240 ITR 24 ( South India Shipping Corporation Ltd. vs. CIT ) "13. The decisions of this court and other courts relied upon by the learned counsel for the petitioner may now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the respondent would contend that the Commissioner has passed a separate order in respect of the assessment year 1996-97, but has omitted to consider the dates and has merely followed the orders of the earlier years. According to the learned counsel, the order of the respondent dated 10.11.2004 in respect of assessment years 1993-94, 1994-95 and 1995-96 may be upheld and the order of the respondent dated 10.11.2004 in respect of the assessment year 1996-97 may be remitted back to the Chief Commissioner for fresh consideration. 7. I have given careful consideration to the submissions made by the learned counsel on either side, perused the material documents and analysed the relevant provisions. 8. The assessee is a company engaged in the business of manufacture and export of garments and is entitled to the relief under Sections 80HHC and 80IA of the Income Tax Act. In the case on hand, the amounts of interest levied under Section 234-B of the Act for shortfall or deficiency in the payment of advance tax on the basis of the assessments made are Rs.7,95,629/-, Rs.15,73,463/-, Rs.22,03,165/- and Rs.4,82,372/- for the assessment years, 1993-94, 1994-95, 1995- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances, the question which arises for consideration is whether the respondent is right in holding that the interest from 'bank deposits' should be assessed under the head 'business' or under the head 'income from other sources'. 12. A reading of the impugned order would reveal that as early as 1984, this court in the case of CIT vs. Seshasayee Paper and Boards Ltd. (156 ITR 542) delivered an exactly identical decision as was done by the Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. (227 ITR 72). The Supreme Court approved of the decision of this court in the case of Seshasayee Paper and Boards Ltd. The decision of this court is binding on both the assessing officer as well as the assessee. However, a contention was raised by the assessee therein that the Supreme Court decision was delivered much after the dates of filing of returns. 12a. It is further seen in the impugned order that whatever money that was available with the assessee as surplus and not required by the business was kept in the form of bank deposits. Money kept in deposits was not utilised for the purpose of its business for the period of three years. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessable under the head 'business'. Therefore, this court in Tamil Nadu Dairy Development Corporation's case followed the decision of the Supreme Court in the case of CIT vs. Calcutta National Bank Ltd. (1959 (37) ITR 171) and held that the term 'business' is a word of very wide connotation and by no means determinate in its scope and has to be considered with reference to each particular kind of activity and occupation of the person concerned. It is also the case of the petitioner that though the aforesaid two judgments, viz., 216 ITR 535 and 228 ITR 354 were rendered on 23.03.1995 and 08.01.1997, respectively, the assessment year involved therein was 1974-75 and that therefore, the ratio laid down therein would be applicable to the assessment years 1993-94 to 1996-97 involved in these petitions and that on the basis of the principles laid down in these decisions, the interest income was not chargeable to tax. 15. This court has already held that the interest received on short-term bank deposits by an assessee carrying on business and having the business income are not to be treated as 'income from other sources' but as 'business income'. Such ruling of this court has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eries Case on 08.01.1997 does not have relevance for considering waiver of interest sought by the petitioner for the assessment years 1993-94, 1994-95 and 1995-96, as the date of assessment falls on 15.03.1993, 15.03.1994 and 15.03.1995, respectively. Therefore, there is no scope of interference in the order of the respondent, dated 10.11.2004 in respect of the assessment years, 1993-94, 1994-95 and 1995-96. This court does not find any infirmity in the order of the respondent dated 10.11.2004 in this regard and the same is upheld. 19. The petitioner's claim for waiver of interest in respect of the assessment year 1996-97 can be determined by the authorities concerned based on the benefit of the judgments of this court and the Supreme Court, referred to supra. In view of the same, the order of the respondent dated 10.11.2004 in respect of the assessment year 1996-97 is interfered with and the same is set aside, and in that regard, the matter is remitted to the Chief Commissioner of Income Tax, Chennai - II for fresh consideration. In fine, W.P.Nos.2104 to 2106 of 2005 are dismissed and W.P.No.2107 of 2005 is allowed to the extent of modification indicated above. No costs. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
