COMMISSIONER OF INCOME TAX vs. UNIVERSAL PIPES PRIVATE LIMITED

We have heard Mr. S Sarma, learned Counsel for the Revenue and M r. RK Goenka, learned counsel for the respondent-assessee.

At the time of admission of the appeal, the following substantia l question of law was framed: - 1. Whether on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in holding that the interest income of Rs. 3,13,91, 602/- received by the assessee is derived from the industrial undertaking of the assessee and is eligible for deduction u/s 80 IC of the Income Tax Act, 1961. 

The pleaded facts reveal that the respondent-assessee is a priva te limited company registered under the Companies Act, 1956 with its registered office at Guwahati, Assam and is engaged in manufacture and sales of PVC pipes. In its return of income, submitted on 13.08.2004 for the assessment year 2004-05 , it declared its total income as Nil after claiming 100% deduction under sectio n 80 IC of the Act. It mentioned, inter alia a substantial expansion undertaken in the year 2000-01, thus, claiming relief under section 80 IC of the Act by bri nging it’s case within the purview of sub-section 2 (b) (iii) thereof. In course of the assessment proceedings, the Assessing Officer being of the view that it had received Rs. 3,28,51,479/- from other sources  required it to provide the n ecessary breakup thereof. The respondent-assessee filed the details of the misc ellaneous income disclosing, inter alia that an amount of Rs.3,13,19,602/-had be en received by way of interest by it from the Irrigation Department, Government of Assam as per the order of this Court for the delay involved in the payment in connection with delivery of goods to it (Irrigation Department) between 22.08.1 991 to 31.05.1992. The Assessing Officer refused to grant the deduction of this amount on the ground that having regard to the period relating to the transactio ns with the Irrigation Department, it was impermissible and, further, the time l imit specified for commencement of production or substantial expansion for the N orth Eastern States, in terms of section 80 IC (2) (b) (iii) was between the 24t h December, 1997 and 31st March, 2007. The respondent-assessee being aggrieved p referred an appeal before the Commissioner of Income Tax (Appeals), who sustaine d the determination made by the Assessing Officer.

The learned Tribunal, however, reversed this finding in favour o f the respondent-assessee on the following grounds: - i) There was no dispute - a) that the assessee had received interest amounting to Rs. 3,13,19,602/- by way of delayed payment from its trade debtor as per the order of the jurisdictional High Court. b) that this amount by way of interest was received by the assessee during the a ssessment year 2004-2005. c) that because of the substantial expansion as per the 80 IC (2) (b) (iii), the respondent-assessee was eligible for deduction under section 80 IC.

Though, Mr. Sarma has sought to dismiss the above grounds by rel ying on section 80 HHC of the Act, on being queried by this Court, the learned c ounsel could not substantiate any perceptional nexus thereof with 80 IC of the A ct to render the impugned judgment and order non est in law and on facts. Mr. Goenka to the contrary, while endorsing the reasons recorded by the learned Tribunal placed reliance on the decision of the Hon’ble Apex Court in Commissio ner of Income Tax, Orissa Vs. Govinda Choudhury & Ors., Gosaninuagaon, Orissa, 2 003 ITR 881 (SC).

Upon hearing the learned counsel for the parties and on a consid eration of the pleaded facts as well as the findings arrived at by the learned T ribunal on the analysis thereof, we are constrained to sustain the plea raised o n behalf of the respondent-assessee. Not only, the learned counsel for the Reven ue in course of the arguments could controvert the correctness of the finding of the learned Tribunal, inter alia on the aspect of the eligibility of the respon dent-assessee for availing the benefit of deduction under section 80 IC of the A ct in terms of sub-section (2) (b) (iii) thereof, no relevant legal provision or any decision of any court of law was cited to construe the amount as not derive d by it from it’s business. In Commissioner of Income Tax, Orissa Vs. Govinda Ch oudhury & Ors., Gosaninuagaon, Orissa, (Supra), the Hon’ble Apex Court held that the interest awarded to the respondent-assessee therein in an arbitration proce eding for delayed payments under a contract executed by him was to be recorded a s business income and could not be treated as income from other source . Variou s High Courts of the country, as has been referred to by the learned Tribunal ha ve held the similar view.

On a cumulative consideration of all above, we are of the unhesi tant opinion that the instant appeal lacks in merit, which is, accordingly, dism issed. No costs.