SIMPLEX NAIGAI CASTINGS PRIVATE LIMITED,BANGALORE vs. INCOME TAX OFFICER, WARD-6(1)(2), BANGALORE

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ITA 690/BANG/2020Status: DisposedITAT Bangalore01 June 2022AY 2015-163 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, confirming the assessment of interest income under 'Income from other sources' by relying on a Supreme Court decision. The legal ground raised by the assessee was rejected due to lack of supporting material.

What were the facts?

The assessee declared interest income from fixed deposits after deducting expenses. The AO assessed the entire interest income under 'Income from other sources' and disallowed the expenses against it, considering the business loss to be capitalized. The CIT(A) confirmed this addition.

What were the issues?

Whether interest income from fixed deposits should be assessed under 'Income from other sources' and if business losses can be capitalized when setting up a plant.

Which sections of the Income-tax Act were involved?

Not explicitly mentioned, but relates to computation of income and head of income

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, “SMC” “A” BENCH, BENGALURU

Before: Shri B.R. Baskaran

For Appellant: Shri Sreehari Kutsa
For Respondent: Shri Ganesh R. Ghale
Hearing: 01.06.2022Pronounced: 01.06.2022

O R D E R Per: B.R. Baskaran, A.M. The assessee has filed this appeal challenging the order dated 28-02- 2020 passed by Ld CIT(A)-6, Bengaluru and it relates to the assessment year 2015-16. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the addition of Rs.40,78,335/-, which has resulted in assessing interest income separately under the head income from other sources. The assessee has also raised a legal ground contending that the assessment is bad in law as the AO has exceeded his scope and there is lack of jurisdiction.

2.

At the time of hearing, the Ld Counsel appearing for the assessee Shri Srihari Kutsa submitted that the assessee is facing financial problems and M/s. Simplex Naigai Castings P. Ltd.

hence it is not affording proper assistance to him. Accordingly he submitted that he is unable to make any representation on the issues contested by the assessee. In view of the submissions so made by Ld Counsel for the assessee, I proceed to dispose of the appeal on merits on the basis of materials available on record and after hearing Ld D.R.

3.

I heard Ld D.R and perused the record. The assessee is engaged in the business of manufacturing aluminium castings metals, pipes, rods etc. The assessee had kept deposit of Rs.6.91 crores as fixed deposit with Karur Vysya Bank and received interest income of Rs.47,49,673/-. The assessee had incurred expenses of Rs.37,15,365/-. The assessee filed its return of income declaring total income of Rs.6,71,340/-, which was arrived at after deducting expenses from the interest income of Rs.47,49,673/-.

4.

The assessee was in the process of setting up of a plant. The AO took the view that the interest income is assessable under the head “Income from other sources” and the business loss claimed by the assessee should be capitalised. Accordingly he computed NIL income under the head business. Accordingly, the AO assessed entire interest income of Rs.47,49,673/- under the head income from other sources. The Ld CIT(A) confirmed the assessment of interest income following the decision rendered by Hon’ble Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilisers Ltd (1997) (227 ITR 172)(SC).

5.

I notice that the Ld CIT(A) has confirmed the assessment by following the decision rendered by Hon’ble Supreme Court. Accordingly, I do not find any reason to interfere with the order passed by Ld CIT(A).

6.

Though the assessee has raised a legal ground challenging the scope of assessment proceedings, no material was placed before me in support of the said ground. Accordingly, I reject the same.

M/s. Simplex Naigai Castings P. Ltd.

7.

In the result, the appeal filed by the assessee is dismissed.

Order pronounced in the open Court on 1st June, 2022.

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