THE COMMISSIONER OF INCOME TAX vs. INDIAN RENEWABLE ENERGY DEVELOPMENT LTD.

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ITA - 1229 / 2009HC Delhi21 October 20117 pages
For Petitioner: MR.SANJEEV SABAHRWAL
AI SummaryRemanded

What did the High Court hold?

The High Court found that the ITAT's orders lacked proper reasoning and examination of facts. Therefore, the matter was remitted back to the ITAT for a fresh decision on both the classification of income and the applicability of Section 10(23G) exemption.

What were the facts?

The Revenue appealed against ITAT orders concerning assessment years 1998-99 to 2002-03. The primary issue was whether various incomes should be classified as 'business income' or 'income from other sources'. An additional issue concerned exemption under Section 10(23G) of the Income Tax Act.

What were the issues?

Whether various incomes are 'business income' or 'income from other sources', and whether the assessee is eligible for exemption under Section 10(23G).

Which sections of the Income-tax Act were involved?

Section 260A,Section 10(23G)

AI-generated summary — verify with the full judgment below

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IN THE HIGH COURT OF DELHI AT NEW DELHI

+ ITA 645/2009

COMMISSIONER OF INCOME TAX ..... Appellant

Through: Mr. Sanjeev Sabharwal, Adv.

DEVELOPMENT AGENCY LTD. ..... Respondent

Through: Mr. S.Ganesh, Sr. Adv. with

+ ITA 1228/2009

Through: Mr. Sanjeev Sabharwal, Adv.

Mr. S.Ganesh, Sr. Adv. with Ms. Anuradha Dua, Mr. Pawan Sharma and Ms. Ekta Kapil,

+ ITA 1229/2009

Mr. S.Ganesh, Sr. Adv. with

+ ITA 1234/2009

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Mr. S.Ganesh, Sr. Adv. with Ms. Anuradha Dua, Mr. Pawan

Sharma and Ms. Ekta Kapil,

+ ITA 1235/2009

Mr. S.Ganesh, Sr. Adv. with Ms. Anuradha Dua, Mr. Pawan Sharma and Ms. Ekta Kapil

Sharma and Ms. Ekta Kapil,

+ ITA 1238/2009

Mr. S.Ganesh, Sr. Adv. with

CORAM:

HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE R.V.EASWAR

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ORDER 21.10.2011

These appeals under section 260A of the Income Tax Act, 1961 ('Act' for short) have been preferred by the Revenue against orders passed by the Income Tax Appellate Tribunal ('Tribunal' for short) which relate to the assessment years 1998-99 to 2002-03. ITA No.645/2009 which relates to assessment year 1998-99, with the consent of parties is treated as the lead case. Another issue arises for consideration in ITA No.1234/2009 and ITA No.1235/2009 which relates to the assessment year 2002-03. The said issue has been discussed separately.

2.

Common Issue - The following question of law is framed:-

"Whether income in nature of interest on deposits, interest on staff loan, interest on Government securities, service charges for handling UNDP programme, miscellaneous income, profit on sale of fixed assets, difference in exchange rate, commitment fee and charges, application fee and MNES service charges is chargeable under the head; "business income" or under the head; "income from other sources?".

3.

We have gone through the orders passed by the assessing officer, Commissioner of Income Tax (Appeal) and Tribunal for the assessment year 1998-99 and other years. In the year 1998-99, the assessing officer held that the aforesaid incomes had no nexus with the business of the assessee. He relied upon the decision of the Supreme Court in Orissa State Warehousing Corporation vs. CIT, (1991) 237 ITR 589 (SC) and also decision of the Madras High Court

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014; DHC:12020-DB

what manner the income had arisen. The three main heads for the assessment year 1998-99 were interest on deposits amounting to Rs.5,91,32,543/-, miscellaneous income of Rs.82,22,894/- and commitment fee and charges of Rs.2,58,71,825/-. There is no discussion or consideration as to the nature and character of the said incomes. Even the Memorandum and Articles of Association have not been examined and gone into. In these circumstances, we feel that the matter requires a remit and a fresh decision by the Tribunal. If required, the Tribunal will give liberty to the parties to file additional documents. The question of law is accordingly answered. The impugned order of the Tribunal is set aside for fresh decision.

Additional Issue

6.

As noticed above in ITA No.1234/2009 and 1235/2009 an additional issue arises for consideration. The following question of law is framed:-

"Whether income of the respondent-assessee is exempted under Section 10(23G) of the Income Tax Act, 1961?"

7.

The Tribunal has examined the said aspect and decided the issue in favour of the assessee recording as under:-

"Ground No.1 is to the effect that on the facts and in the circumstances of the case, the Id. CIT(A) erred in allowing exemption u/s 10(23G) of the Act. It was the common case of both the parties that this issue stands covered by paragraph 8 of "B" Bench of Delhi Tribunal in ITA No.3742(Del)/2001 from assessment year 1998-99 (Supra), the necessary consequence of which is that

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the assessee is entitled to exemption u/s 10(23G). This paragraph has already been reproduced by us in order on ITA No.2630(Del)/2005(Supra). Relying on this order, it is held that the assessee is entitled to deduction u/s 10(23G)."

- 8. Learned counsel for the parties agree that the aforesaid finding is cryptic and no reasons have been given. The matter requires a fresh decision by the Tribunal. On the second issue we therefore remit the matter for Tribunal for a fresh decision in accordance with law. - 9. The appeals are accordingly disposed of. No costs.

SANJIV KHANNA, J.

M.....................................

OCTOBER 21, 2011 mm

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