KARGIL CORPORATION,MUMBAI vs. ITO 20(1)(4), MUMBAI

This appeal by the assessee is arising out of the order of the learned CIT (A)-31, Mumbai passed in appeal No.CIT (A)-31/IT.253/AC.20(1)/09-10 dated 13-08-2010. Assessment was framed by the ACIT, Circle-20 (1), Mumbai for assessment year 2007- 08 vide his order dated 30-11-2009 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

The only issue in this appeal of the assessee is against the order of the learned CIT (A) confirming the action of the AO in disallowing interest on Fixed Deposits amounting to Rs.3,95,376/-, holding the same as income from other sources claimed u/s 80-IB of the Act.

We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the AO has disallowed the claim of deduction u/s 80-IB of the Act in respect to interest income earned by the assessee on Fixed Deposits amounting to Rs.3,95,676/-, holding the same as income from other sources.

At the outset, the learned Counsel for the assessee before us filed copies of Tribunal Order in assessee’s own case for assessment year 2003-04 and 2004-05 in and 2614/Mum/2007 dated 04-02-2009 wherein the issue of similar interest was set aside to the file of the AO by observing in Para 5 and 6 of the order as under:- “5. The second ground is against non-granting of deduction u/s. 80-IB on the interest received on fixed deposits. The Assessing Officer did not allow deduction under this section on the interest income received on fixed deposits, which action was echoed in the first appeal. 6. After considering the rival submissions and perusing the relevant material on record it is observed that similar disallowance was made in the immediately preceding year and when the matter travelled to the Tribunal it held that the matter required reconsideration by the Assessing Officer for want of certain details. Since the facts and circumstances of t he instant year are mutatis mutandis similar to those of the preceding year, we set aside the impugned order and restore the matter to the file of the A. O. for deciding it afresh as per the mandate of the order passed by the Tribunal in the preceding year.” The learned Counsel for the assessee finally filed order giving appeal effect to the ITAT order for assessment year 2003-04 and 2004-05 wherein the AO has not made any disallowance in respect to interest earned by the assessee on Fixed Deposits claimed as deduction u/s 80-IB of the Act.

On query from the Bench, the learned Sr. DR fairly agreed that the issue can be remitted back to the file of the AO in terms of the above decision of the Tribunal.

After hearing both the sides we find that the issue is squarely covered in favour of the assessee and against the Revenue whereby the AO allowed the claim of the assessee while giving appeal effect to the order of the Tribunal. Hence, taking consistent view, we allow the claim of the assessee.

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 17/06/2016.