GKW LTD vs. COMNR.OF INCOMETAX

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ITA/51/2006HC OrissaODHC01002598200616 August 2022Bench: DR. JUSTICE S. MURALIDHAR (CJ),MR. JUSTICE CHITTARANJAN DASH2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court, following a previous decision for the same assessee and a different assessment year, held that the interest income was not taxable. Consequently, the issue of deduction for interest expenditure became infructuous.

What were the facts?

The assessee claimed deduction under Section 57(iii) for interest expenditure incurred on funds that generated interest income. The Assessing Officer and CIT(A) disallowed this deduction, leading to the appeal.

What were the issues?

Whether interest expenditure incurred on funds generating interest income is deductible. Whether interest income received is taxable.

Which sections of the Income-tax Act were involved?

Section 57,Section 56

AI-generated summary — verify with the full judgment below

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IN THE HIGH COURT OF ORISSA AT CUTTACK

ITA No.51 of 2006

GKW Ltd. …. Appellant Mr. Jagabandhu Sahoo, Senior Advocate along with Mr. Ronit Ghosh, Advocate -versus- Commissioner of Income Tax, Bhubaneswar …. Respondent Mr. T.K. Satapathy, Senior Standing Counsel

CORAM: THE CHIEF JUSTICE JUSTICE CHITTARANJAN DASH

ORDER 16.08.2022 Order No.

6.

1. This Court by its order dated 23rd March 2017 framed the following questions in the present appeal by the Assessee

“(a) Whether and in any event, the Assessee is entitled to deduction under Section 57 (iii) of the Act in respect of the interest expenditure incurred in respect of the funds which gave rise to interest income assessable under Section 56?

(b) Whether the Tribunal was justified in law in upholding the taxation of interest received amounting to Rs.17,35,985/- for the assessment year 1992-93?”

2.

In view of the decision rendered today in ITA No. 50 of 2006, by the same Assessee for the Assessment Year (AY) 1991-92, the aforementioned two questions framed by this Court in the present appeal which is for AY 1992-93 are answered as under:

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(i) Question (b) is answered in the negative i.e., in favour of the Assessee and against the Department. (ii) In view of the answer to Question (b), Question (a) need not be answered. 3. The impugned order of the ITAT and the corresponding orders of the CIT (A) and the Assessing Officer are accordingly set aside to the above extent. The appeal is disposed of in the above terms. 4. Issue urgent certified copy of this order as per rules.

(Dr. S. Muralidhar) Chief Justice

(Chittaranjan Dash) Judge S.K. Guin

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