J.P TOBACCO PRODUCT PVT. LTD.,DAMOH vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE, SAGAR
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Income Tax Appellate Tribunal, JABALPUR BENCH, JABALPUR
IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR
BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER
ITA No.124/Jab/2008 (ASSESSMENT YEAR- 2005-06) J.P.Tobacco Products vs Asst.CIT, Pvt.Ltd., Patharia Phatak, Circle-Sagar (M.P.) Damoh (M.P) (Appellant) (Respondent) PAN No.AAACJ7141G Assessee By Shri G.N.Purohit, Sr.Adv. & Shri Abhijeet Shrivastava, Adv. Revenue By Shri Rajesh Kumar Gupta, Sr.DR Date of hearing 15/09/2023 Date of Pronouncement 22/09/2023
O R D E R PER OM PRAKASH KANT, A.M.: This appeal was earlier adjudicated by the Income-tax Appellate Tribunal ( in short “the Tribunal”) on 30.09.2009 however, by way of order in M.A.No.06/Jab/2010 dated 30.09.2022, the Tribunal has recalled the one of grounds related to deduction u/s 80IA of the Income Tax Act, 1961 (in short “the Act”)on the interest on bank FDRs amounting to Rs.3,24,43,286/-, in view the binding precedent of order of coordinate bench on the case of assessee for AY 2003-04 not followed, observing as under:
ITA No. 3. “We have heard the parties, and perused the material on record. 3.1 The relevant part of the impugned order reads as under:- "21.2 So far as rebate on tendu patta and interest on FDRS is concerned, we are of the opinion that the rebate on tendu patta being rebate allowed the Government on purchases tendu patta and FDRS having been held by us for business purposes, the interest earned on them will qualify for deduction under section 801A of the Act if not set off against interest paid by the assessee. So far as rebate is concerned, the same being directly related to purchase is, also to be considered for the purpose of deduction u/s. SOIA." 3.2 The Tribunal, for AY 2003-04, found the assessee's claim for deduction u/s. 80-IA on interest on bank term deposits as not tenable on the ground that the said interest cannot be said to be derived from the assessee's industrial undertaking, an eligible undertaking u/s. 80-IA. We have for the purpose perused the order by the Tribunal in its entirety, i.e., qua the relevant issue, and not merely the part thereof reproduced by the Revenue in it's MA. Further, there is in the impugned order no reference to either the cited decisions, which rather on the issue are aplenty, viz.Cambay Electrical Supply Inds. v. CIT [1978] 113 ITR 84 (SC); CIT v. Sterling Foods [1999] 237 ITR 579 (SC); (SC); Orissa State Warehousing Corporation v. CIT [1999] 237 ITR 589 (SC); CIT v. Liberty India [2009] 317 ITR 218 (SC), to cite some, i.e., besides in Pandian Chemicals (supra), relied upon by the Tribunal. There is also no reference by the Tribunal to its earlier decision, i.e., for A.Y. 2003-04,
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ITA No. bringing out the distinguishing feature/s, if any, and which we may have prevailed with it in deciding differently, inasmuch as it was otherwise bound to follow the said decision, being not only by a coordinate bench, but in the assessee's own case (refer: Union of India v. Raghubir [1989] 178 ITR 548 (SC)). 3.3 The Tribunal was bound to follow the law laid down by the Apex Court, found applicable by it in the assessee's case for a preceding year. The same renders it's order per incuriam. The same in any case constitutes a mistake within the contemplation of s. 254(2) of the Act, and toward which reference is drawn to the decision in Honda Siel Power Products Ltd. v. CIT [2007] 295 ITR 466 (SC). 4. In view of the foregoing, the MA by the Revenue is entitled to succeed. We, accordingly, restore the assessee's captioned appeal in respect of the said ground/s for adjudication afresh by the Tribunal after hearing the parties in accordance with law. Further, the matter being already long delayed, it be posted for hearing for 21/10/2022. The Registry to accordingly issue notice to the parties for the said date. We decide accordingly.” 3. We have heard Ld. Authorized Representatives of the parties on issue in dispute and perused the relevant material available on record. On the limited issue of deduction u/s 80IA of the Act in respect of interest of bank fixed deposits, the Ld. Counsel for the assessee fairly accepted that the issue in dispute is covered against the assessee by way of the decision of the Hon’ble Supreme Court
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ITA No. in the case of Pandian Chemicals Ltd vs CIT 262 ITR 278 (SC). We find that the Tribunal in Assessment Year 2003-04 in ITA No.291/Jab/2006 in the case of the assessee, rejected the claim of deduction u/s 80IA on interest on fixed deposits observing as under:-
“We have considered the issue in view of material placed on record, rival submissions and the case laws cited. The Hon'ble Apex Court in the case of Pandian Chemicals Ltd. Vs. CIT (supra) has held as under: "The words "derived from" in section 80HH of the Income- tax Act, 1961, must be understood as something which has a direct or immediate nexus with the assessee's industrial undertaking. Although electricity may be required for the purpose of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking. Held accordingly, that interest derived by the industrial undertaking of the assessee on deposits made with the Electricity Board for the supply of electricity for running the industrial undertaking could not be said to flow directly from the industrial undertaking itself and was not profits or gains derived by the undertaking for the purpose of the special deduction under section 80HH" It has also been held that "Rules of interpretation would come into play only if there is any doubt with regard to the express language used. 4 | P a g e
ITA No. Where the words are unequivocal there is no scope for importing the rule of liberal interpretation." It is also observed that in the case of CIT VS. Producin P. Ltd (supra) it has been held that what is business income and what is not business income has to be determined on the facts of each case. In that case the interest was derived from the money received as advance in the export business and the assessee instead of keeping the amount idle deposited the same by way of short-term deposit in the bank. The Hon'ble Karnataka High Court, therefore, held that the interest derived from the deposits had a close link with the business activities of the assessee and the interest on bank deposit was, therefore, assessable as business income. With due respect the facts of the case of the assessee are different in so far as the interest income has no direct nexus with the profits of the industrial undertaking as per provisions of section 80-IA of the Act and the ratio laid down by the Hon'ble Supreme Court in the cases of Pandian Chemicals Ltd. Vs. CIT (supra) and CIT Vs. Sterling Foods (supra). In view of the decision of the Hon'ble Apex Court in the case of CIT Vs. Pandian Chemicals Ltd. (supra), with due respect, other cases cited by the Ld. Counsel are not considered applicable to the facts of the case of the assessee. We are, therefore, of the considered opinion that the interest on fixed deposits cannot be considered as income derived from industrial undertaking for deduction u/s. 80-IA of the Act. The claim of the assessee has, therefore, been rightly rejected by the lower authorities. Thus ground of appeal of the assessee fails.”
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ITA No. 4. The issue in dispute being identical to the issue decided by the Tribunal in Assessment Year 2003-04, therefore, respectfully following the same, the deduction u/s 80IA of the Act on the interest on bank fixed deposits is disallowed. The relevant ground raised by the assessee is accordingly, dismissed. The appeal of the assessee to the extent of deduction u/s 80IA of the Act on interest on fixed deposits is dismissed.
In the result, the appeal filed by the assessee is dismissed as indicated above.
Order pronounced in the open Court on 22/09/2023.
Sd/- Sd/- (PAVAN KUMAR GADALE) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER
*Amit Kumar* Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR 6. Guard File
Asstt. Registrar Jabalpur Bench
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ITA No.
Draft dictated .09.2023 Draft placed before author .09.2023 Approved Draft comes to the Sr.PS/PS 09.2023 Order signed and pronounced on 09.2023 File sent to the Bench Clerk Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order. Date of uploading on the website 09.2023
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