CONVENTIONAL FASTNERS,HARIDWAR vs. ITO, HARIDWAR

When the appeals were called for hearing, none appeared on behalf of the assessee to represent the case. Even, there is no application seeking adjournment. On perusal of record, it is observed that though the appeals were fixed for hearing on number of occasions earlier, however, the assessee has always remained absent. Thus, it is evident, the assessee is not at all diligent in pursuing the present appeals. Since, sufficient opportunity of being heard has already been extended, the assessee deserves no more leniency. Therefore, we proceed to dispose of the appeals ex parte qua assessee after hearing learned Departmental Representative and considering materials on record.

The only common issue arising in both the appeals relates to disallowance of assessee’s claim of deduction under section 80IC of the Income-tax Act, 1961.

Briefly, the facts are, the assessee is a partnership firm, stated to be engaged in the business of manufacturing and sale of electronic meters. In the return of income filed for the impugned assessment years, the assessee claimed deduction under section 80IC of the Act.

In course of assessment proceedings, the Assessing Officer, while verifying assessee’s claim of deduction under section 80IC of the Act, noticed that while computing deduction, the assessee has included interest received on FDRs as part of business profits. Noticing this fact, the Assessing Officer called upon the assessee to explain how deduction under section 80IC of the Act can be claimed on interest income, as, it is not derived from business. In response to the query raised by the Assessing Officer, the assessee furnished its reply justifying the claim. However, ultimately, the Assessing Officer rejecting assessee’s claim, disallowed the deduction claimed u/s. 80IC of the Act in respect of interest income. While deciding the issue in appeal, learned first appellate authority upheld the disallowance made by the Assessing Officer.

We have heard learned Departmental Representative and perused materials on record. As could be seen from the facts discussed by learned first appellate authority, the interest income was earned by the assessee on fixed deposits pledged to UPCL towards performance guarantee. He has further noted that while deciding identical issue in assessee’s own case in an appeal arising out of order passed u/s. 263 of the Act for the assessment year 2009-10, the Tribunal in has given a categorical finding that deduction under section 80IC of the Act is not available on interest income. Before us, learned Departmental Representative has submitted that the dispute arising in assessment year 2009-10 has, ultimately, been settled by Hon’ble Supreme Court by holding that the interest earned on fixed deposits is not eligible for deduction under section 80IC of the Act. In this context, we may refer to the decision of Hon’ble Supreme Court in case of Conventional Fastners vs. CIT, (2018) 94 taxmann.com 80(SC). Keeping in view the aforesaid factual position, we do not find any reason to interfere with the decision of learned Commissioner (Appeals). Accordingly, grounds are dismissed.

In the result, appeal is dismissed.