D.C.I.T.-CENTRAL CIRCLE-XII, KOLKATA, KOLKATA vs. M/S CENTURY ALUMINIUM MFG. LTD., KOLKATA

Grounds of appeal

The Assessee is a company engaged in the business of manufacturing of aluminium and zinc based alloys and die-cast components. It is not in dispute that the assessee was entitled for deduction u/s 80IB of the Income Tax Act, 1961 (Act) in respect of profits derived from the business of manufacturing and sale of aluminium and zinc based alloys. While computing the deduction u/s 80IB of the Act the assessee -M/s.Century Aluminium Mfg. Ltd. A.Y.2008-09 included the following amounts in the profits of the business of manufacturing on which deduction u/s 80IB of the Act was claimed, viz., Interest received was also taken into account as business income of the industrial unit eligible for claiming deduction u/s 80IB. The AO held that amount of interest received was Rs.77,41,640/- (of the Faridabad Unit) should be deducted from the profit of the Faridabad Unit for calculating eligible profit for claiming deduction u/s 80IB because it cannot be construed as profits of the business of manufacture on which alone deduction u/s.80IB of the Act was allowable. The Assessee had on its own excluded interest on FDs of Rs.17,04,752/- from the interest received of Rs.77,41,640/- from the profits of the business and had included interest income of only Rs.60,36,888/- as income on which deduction u/s.80IB of the Act was to be allowed. . The AO therefore allowed deduction u/s80IB @30% on (Rs.3,96,63,935/- minus Rs.60,36,888/-) i.e. for Rs.3,36,27,047/- instead of Rs.3,96,63,935/- as claimed by the assessee.

Aggrieved by the order of AO assessee preferred appeal before CIT(A). CIT(A) found that the ITAT had allowed similar claim of the Assesee allowed the claim of the assessee in AY 2000-01 & 2001-02 by observing as follows :- “6. After hearing both the parties and going through the decisions cited by the assesee, we are of the considered view that the deductions of Rs.10,96,258/- for A.Y. 2000-01, Rs.27,92,269/- for A.Y. 2001-02 and .29,89,861/- for A.V. 2003-04 made out of the total income to calculate deduction u/s 80lB are not justified and no deduction should be made for calculation of deduction u/s 801B. In other words, deduction should be allowed after adding the interest income which has been deducted from the total income for the purpose of calculation of deduction u/s 80IB.

The CIT(A) following the said decision of ITAT allowed the claim of the Assessee, by observing as follows:

Aggrieved by the order of CIT(A) the revenue has preferred the present appeal before this Tribunal.

At the time of hearing it was brought to our notice that identical issue in assessee’s own case has come for consideration before the Tribunal for A.Y.2007-08 in and the Tribunal vide its order dated 10.02.2012 was pleased to hold that interest receivable on trading should also be treated as part of business profit on which deduction u/s 80IB has to be allowed. Our attention was also drawn to the similar orders for A,Y.2006-07, 200-01 to 2001-02 and 2003-04 in ITA No.216/Kol/2010 and 1535 to 1537/Kol/2006. In view of the above decision of the Tribunal in assessee’s own case we are of the view that there is no merit in this appeal of the revenue. It is also seen that the Hon’ble Bombay High Court in the case of CIT vs Vidyut Corporation 324 ITR 221 (Bom) and the Hon’ble Gujart High Court in the case of CIT vs Pratham Developers 355 ITR 507 (Guj) had also taken a view that interest paid on un paid purchase of goods manufactured while taking the components of the profits and gains derived from the eligible business. In view of the above legal position we do not find any merit in the appeal of the revenue. Consequently the appeal of the revenue is dismissed.

In the result the appeal of the revenue is dismissed.