Commissioner Of Income-Tax, Chennai v. M/S.indo Matsushita Carbon Co Ltd., Iii Floor, 77 (Old

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 03.03.2006 Coram The Honourable Mr.Justice P.D.DINAKARANandThe Honourable Mr.Justice P.P.S.JANARTHANA RAJA Tax Case (Appeal) No.301 of 2006 Commissioner of Income-Tax,Chennai....AppellantVs. M/s.Indo Matsushita Carbon Co Ltd.,III Floor, 77 (Old No.35),N.H.Road,Nungambakkam,Chennai-600 034...Respondent The above T.C.(Appeal) is preferred under Section 260A of theIncome-Tax Act, 1961 against the order of the Income Tax AppellateTribunal, Madras ‘A’ Bench, dated 10.8.2005 made in ITANos.968/Mds/2003 for the assessment year 1993-94 against the order ofthe Commissioner of Income Tax (Appeal) III, Chennai-34 dated10.1.2003 and made in ITA.No.253/2002-03/A.III, against the order ofthe Deputy Commissioner of Income Tax, Company Circle II(3), Chennai-34 dated 28.3.2002 and made in GI.No./PA No.AAAC15679J/6-1 for theAssessment Year 1993-94. For Appellant: Mr.J.Narayanaswamy---------- The above tax case appeal is directed against the order of theIncome-tax Appellate Tribunal ITA Nos.968/Mds/2003 dated 10.8.2005. 2.1. The Revenue is the appellant. The assessment yearinvolved is 1993-94. The assessee is a company in which public aresubstantially interested. The assessee filed its return of incomefor the assessment year 1993-94 claiming a relief on interest on over https://hcservices.ecourts.gov.in/hcservices/ dues from trade debtors under Section 80HH and 80I. The assessingofficer disallowed the same on the ground that the interest was notderived from industrial activity and therefore, the assessee companyis not eligible for deduction under Section 80HH and brought the sameto tax. Aggrieved by the said order, the assessee preferred anappeal before the Appellate Commissioner of Income Tax, who, by anorder dated 10.1.2003, confirmed the assessment order and held theissue in favour of the Revenue. Hence, the assessee preferredfurther appeal before the Appellate Tribunal, which, set aside theorder of the Commissioner of Income Tax holding that the tradedebtors are derived only from the industrial undertaking and hencethey are to be considered for claiming the deduction under Section80HH and 80I. 2.2. Aggrieved by the order of the Appellate Tribunal, theRevenue has filed the above appeal raising the following substantialquestion of law: "Whether in the facts and circumstances of the case, theTribunal was right in holding that over dues from tradedebtors is eligible for relief under Section 80HH and 80I?" 3. It is fairly conceded by the learned counsel appearing forthe Revenue that the issue raised in the above question of law iscovered against the Revenue by the decision of this Court inCOMMISSIONER OF INCOME TAX VS. MADRAS MOTORS LTD./M.M.FORGINGS LTD.(257 ITR 60). 4. It is settled law that there can be no doubt that theinterest earned on the belated payment would, however, be directlyrelatable to the business of the assessee of forgings. If thepurchasers of the forgings did not make the payments for the forgingsand then agree to pay the interest on the delayed payments, the saidinterest would have direct nexus with the business of forgings. Thetrue test would be whether such interest would be available to theassessee otherwise also. The answer to the question would becertainly in the negative. The interest being directly relatableonly to the amounts receivable by the assessee during the course ofits business on account of the sale forgings, this interest wouldhave to be included as the profits and gains derived from thebusiness of the assessee-vide-COMMISSIONER OF INCOME TAX VS. MADRASMOTORS LTD./M.M.FORGINGS LTD(257 ITR 60). 5. In view of the above well settled proposition of law, we donot find any error or infirmity in the order of the AppellateTribunal, wherein the ratio laid down in the decision referred toabove has been rightly followed and hence, the same is confirmed and 5. In view of the above well settled proposition of law, we donot find any error or infirmity in the order of the AppellateTribunal, wherein the ratio laid down in the decision referred toabove has been rightly followed and hence, the same is confirmed and the appeal is dismissed as no substantial question of law arises forconsideration of this Court. No costs. msk Sd/Asst.Registrar/true copy/Sub Asst.RegistrarTo1. The Registrar,The Income Tax Appellate TribunalMadraa "A" Bench,Rajaji Bhavan, Besant Nagar,Madras-342. The Commissioner of Income Tax (Appeal) III,Chennai-34.3. The Deputy Commissioner of Income TaxCompany Circle II(3)Chennai-34.4. The Commissioner of Income Tax,Chennai.1 cc to Mr.Pushyasitaraman, Advocate, SR.10965vc (co)dv/2.5.06 T.C.(A) No.301 of 2006 https://hcservices.ecourts.gov.in/hcservices/