Https://Hcservices.ecourts.gov.in/Hcservices v. Ito [(2007) 294 Itr 484] In Which It Has Been Heldthat The Interest On Bank Deposit, If Earned During The Courseof Business Can Be Considered For The Benefit Un

T.C.(A).Nos.998, 999 and 1000 of 2009 Prayer in all TCAs : Tax Cases (Appeals) are filed underSection 260-A of the Income Tax Act, 1961, against the order ofthe Income Tax Appellate Tribunal, Chennai 'D' Bench, dated29.01.2009passedinI.T.A.NO.2048/Mds/2007,I.T.A.No.2049/Mds/2007 and I.T.A.No.2050/Mds/2007 respectively,for the Assessment Year: 1995-96, 1996 - 97 and 1997 - 98respectively against the order of the Income Tax AppellateTribunal, Chennai Bench 'D' Chennai dated 25.08.2006 made inI.T.A.NO.216 to 219/mds/05 and against the order of theCommissioner of Income Tax (Appeals)II, Coimbatore dated10.11.2004 made in I.A.A.No.170-C/02-03 Assessment year 1995-1996, 1996-1997 & 1997-1998. For Appellant : Mr.R.Kumar (in all TCA's) for T.N.Seethuaraman For Respondent: Mr.T.R.Senthikumar (in all TCAs) for K.G.Usha Rani Sr.Standing counsel The Assesee has filed these Appeals against the order of thelearned Income Tax Appellate Tribunal dated 29.01.2009 by whichthe Assessee's Appeals were dismissed for Assessment Years1995-96, 1996-97, 1997-98 on the issue relating to validity ofthe reassessment proceedings under Section 147 of the Act onmerits and the issue relating to availability of deductionunder Section 80 HHC on the interest earned by the Assessee onthe bank deposits. https://hcservices.ecourts.gov.in/hcservices/ 2. The relevant portion of the order of Tribunal is quotedbelow for ready reference. "4. In the present appeal, the questioncropped up for our consideration was whether theassessee could raise the question of validity ofjurisdiction assumed by the Assessing Officerunder Sec.147 in the course of proceedings takenpursuant to the restoration of the appeals to thefirst appellate authority by the Tribunal. 5. We find that this issue stands covered infavour of the Revenue by the decision of theHon'ble Madras High Court rendered in the case ofM.S.P. Senthil Kumar v.CIT [241 ITR 502]. Nocontrary decision of binding nature was broughtbefore us. We, therefore, respectfully followingthe precedent, decide this issue in favour of theRevenue and against the assessee. 6. Adverting to the merits of the case, wefind that the only issue put forth before us wasin relation to allow ability of deduction undersec.80HHC in the context of bank deposits. Wefind that this issue stands adjudicated againstthe assessee by the decision of the Hon'bleJurisdictional High Court rendered in the case ofDollar Apparels vs.ITO [2007] 294 ITR 484. Inthis case, the Hon'ble High Court has held thatincome earned from bank deposits cannot beconsidered as income from export. There exists nonexus between the interest income and exportearning. Respectfully following the precedent, wedecide this issue also in favour of the Revenueand against the assessee. In the result, the appeals filed by theassessee stand dismissed. " 2. These Appeals were admitted by the Co-ordinate Bench ofthis Court on 27.10.2009 on the following substantial questionsof law: "Whether on the facts and circumstances of thecase, the Appellate Tribunal was right in law inholding that, the question of validity ofjurisdiction assumed by the Assessing Officerunder Section 147 cannot be raised in the Courseof the proceedings taken pursuant to therestoration of the appeal to the first appellateauthority by the Tribunal?" 3. The learned counsel for the Assesee urged before us thatthe question of Validity of reassessment proceeding under https://hcservices.ecourts.gov.in/hcservices/ 2. These Appeals were admitted by the Co-ordinate Bench ofthis Court on 27.10.2009 on the following substantial questionsof law: "Whether on the facts and circumstances of thecase, the Appellate Tribunal was right in law inholding that, the question of validity ofjurisdiction assumed by the Assessing Officerunder Section 147 cannot be raised in the Courseof the proceedings taken pursuant to therestoration of the appeal to the first appellateauthority by the Tribunal?" 3. The learned counsel for the Assesee urged before us thatthe question of Validity of reassessment proceeding under https://hcservices.ecourts.gov.in/hcservices/ Section 147 of the Act, which was raised before CIT (Appeals)after the remand by the learned Tribunal at the first instancevide order dated 25.08.2006 has not been decided by the CIT(Appeals) on the ground that the learned Tribunal has onlyremanded the issue back to the CIT (Appeals) on the question ofavailability of deduction under Section 80HHC with respect tointerest income earned as to whether the interest receipt is an"Income from Other Sources" or an "Income from Business" andtherefore the learned Tribunal ought to have decided the saidquestion of validity of reassessment proceedings also, whiledeciding the question of availability of deduction in respect ofthe interest on Bank Deposit. He has drawn our attention to thedecision relied on by the Tribunal in the case of DollarApparels Vs. ITO [(2007) 294 ITR 484] in which it has been heldthat the interest on Bank Deposit, if earned during the courseof business can be considered for the benefit under Section 80HHC of the Act. 4. The learned counsel for the Revenue however submittedthat the Assessee had not raised the question of validity ofproceedings under Section 147 of the Act before the learned CIT(Appeals) as is clear from the finding of the learned CIT(Appeals) in its order dated 18.06.2007 that "The order of theITO Ward, I(3) TPR is erroneous in law as unsustainable in thefacts and circumstances of our appellant's case". He submittedthat this ground raised by the CIT (Appeals) cannot beconstrued as challenging the jurisdiction for reassessment underSection 147 of the Act initiated on the basis of the AuditObjection, as is sought to be contended before this Court now.He further submitted that the learned Tribunal while passingthe order dated 29.01.2009 had wrongly passed the order againstthe Assessee on merits in view of the case in Dollar Apparelsstated supra. 5. Having heard the learned counsel for the parties we aresatisfied that as far as the question of jurisdiction forreassessment under Section 147 is concerned, the Assessee havingnot raised the said question in clear terms before theauthorities below cannot be permitted to raise the said questionnow as an after-thought. The said contention of the Assesee isliable to be rejected and the same is accordingly rejected.Thus, the question framed for consideration on 27.10.2009 isanswered as against the Assesee and in favour of the Revenue. 6. However on merits of claim u/s. 80 HHC since at a laterpoint of time, this Court after taking into consideration theearlier decisions of this Court in the case of M/s. AVM CineProducts Vs.The Deputy Commissioner of Income Tax [Tax CaseAppeal Nos.884 & 885 of 2005 dated 22.02.2019] has held thatinterest on Bank Deposits earned in the ordinary course ofbusiness, is taxable as Business income and is excluded from 6. However on merits of claim u/s. 80 HHC since at a laterpoint of time, this Court after taking into consideration theearlier decisions of this Court in the case of M/s. AVM CineProducts Vs.The Deputy Commissioner of Income Tax [Tax CaseAppeal Nos.884 & 885 of 2005 dated 22.02.2019] has held thatinterest on Bank Deposits earned in the ordinary course ofbusiness, is taxable as Business income and is excluded from Section 56 of the Act, in 'Income from Other Sources" we are ofthe opinion that the Tribunal should consider the issue againin view of the later decisions of this Court viz., M/s.AshokLeyland Ltd Vs. The Deputy Commissioner of Income Tax[T.C.A.No.851 of 2008 dated 03.04.2018] and M/s. AVM CineProducts Vs. The Deputy Commissioner of Income Tax[Tax CaseAppeal Nos.884 & 885 of 2005 dated 22.02.2019]. Therefore, weremit the matter back to the learned Tribunal to decide the saidissue afresh on merits in view of the latest decisions of thisCourt . In the result, these Tax Case Appeals are disposed of, withthe aforesaid observations. No order as to costs. s/d- Assistant Registrar(CS VI) True Copy Sub-Assistant RegistrararrTo1. The Income Tax Appellate Tribunal, Chennai 'D' Bench Chennai.2. The Commissioner of Income Tax (Appeals)II Coimbatore.3. The Income Tax Officer Ward I(3) Tirupur.+1 CC to Mr.T.R.Senthikumar, Advocate sr 21904.+1 CC to Mr.T.N.Seetharaman, Advocate sr 27551. T.C.(A).Nos.998 to 1000 of 2009 BR(CO)SP(22/04/2019)