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Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri A. T. Varkey, JM & Dr. A. L. Saini, AM]
Per Shri A.T.Varkey, JM
The appeal filed by the revenue is against the order of Ld. CIT(A)-3, Kolkata dated 06.04.2016 for AY 2011-12.
This appeal of revenue is time barred by 17 days and condonation petition has been filed. After considering the condonation petition it seems that there is reasonable cause for filing this appeal belatedly by 17 days and since the Ld. AR has got no objection to condone the delay, we condone the delay and admit the appeal for hearing.
The sole ground of appeal of revenue is against the order of Ld. CIT(A) in deleting the addition on account of interest received on FD/KDR. Briefly stated facts are that the assessee was engaged in the business of manufacturing and export of gold ornaments from an SEZ unit and the assessee has been claiming exemption u/s. 10AA of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for the last successive years. During the course of assessment proceedings, the AO from the material on record found that the assessee had earned interest to the tune of Rs.53,62,327/- on fixed deposit during the year under consideration and credited the P&L Account with the said income and the said income was considered for computing the exemption u/s. 10AA of the Act. According to Suman Jewellery (Delhi) P. Ltd., AY- 2011-12 AO, since the said income earned from the FD was in the nature of other sources income, having no direct nexus with the business activity of the assessee carried out from SEZ, the said component of income does not come under the scope of exemption under section 10AA of the Act as claimed by the assessee. As such, the above income of interest on fixed deposit was added back to the total income of the assessee. On appeal, the Ld. CIT(A) deleted the addition. Aggrieved, revenue is in appeal before us.
We have heard rival submissions and gone through the facts and circumstances of the case. We note that the sole ground of appeal of revenue is against the deletion of addition on account of interest received on FD/KDR. We note that during the assessment year, the assessee was engaged in the business of manufacturing and export of gold ornaments from an SEZ unit and the assessee had claimed exemption u/s. 10AA of the Act for the last successive years. During the course of assessment proceedings, the AO from the material on record found that the assessee had earned interest to the tune of Rs.53,62,327/- on fixed deposit and credited the P&L Account with the said income and the said income was considered for computing the exemption u/s. 10AA of the Act. According to AO, since the said income earned from the FD was in the nature of other sources income, having no direct nexus with the business activity of the assessee carried out from SEZ, the said component of income does not come under the scope of exemption under section 10AA of the Act as claimed by the assessee. Accordingly, the above income of interest on fixed deposit was added back to the total income of the assessee. On appeal, the Ld. CIT(A) deleted the addition by observing as under:
“I have considered the AO’s reasoning for addition and the Appellant’s submission in this regard. The jurisdictional ITAT is of the opinion in the case supra that “the assessee company is entitles to claim of deduction u/s. 10AA of the Act ….. and agree with the submission of the assessee that both receipts and payments of interest in this case are of the same genesis. If the profits of the business include certain receipts, which have corresponding costs or if the profits include certain credit and the business has also debits of the same nature and if these are not netted out against each other, the profit of business will present a distorted figure…. Credit and the business has also debits of the same nature and if these are not netted out against each other, the profit of business will present a distorted figure……” It is also seen that the department in the AY 2012-13 has allowed the deduction u/s. 10AA. Following the jurisdictional ITAT’s decision in the case of M/s. Rohit Export (Jewellery) Pvt. Ltd. (a sister concern of the appellant company in respect of the AY 2011-12 in Appeal No. 966/CIT(A)-1/W-2(1)/2013-14 143(3). I allow this ground of appeal. The addition on this ground therefore is deleted.”
Suman Jewellery (Delhi) P. Ltd., AY- 2011-12 5. Since the Ld. CIT(A) deleted the addition by following the decision of ITAT in the case of a sister concern of assessee namely, M/s. Rohit Export (Jewellery) Pvt. Ltd. for AY 2011-12 in similar facts and in the absence of any controverting material brought before us by the Ld. DR, we find no infirmity in the order of Ld. CIT(A) to delete the addition and the same is hereby upheld. Therefore, this ground of appeal of revenue is dismissed.
6. In the result, appeal of revenue is dismissed. Order is pronounced in the open court on 21st March, 2018 Sd/- Sd/- (Dr. A. L. Saini) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 21st March, 2018 Jd.(Sr.P.S.) Copy of the order forwarded to: Appellant – ACIT, Circle-2(2), Kolkata. 1. Respondent – M/s. Suman Jewellery (Delhi) Pvt. Ltd., Sector-V, Salt 2 Lake City, Kolkata-700 091. The CIT(A), Kolkata 3. 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata /True Copy, By order,