Itta/82/2007 Of The Commissioner Of Income Tax v. M/S. Avanthi Feeds Limited

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) PRESENTTHE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. NO.82 OF 2007 DATED: 06-02-2014 Between: The Commissioner of Income TaxHyderabad-1 … Appellant And M/s Avanthi Feeds Limited … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA ANDTHE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. NO.82 OF 2007 JUDGMENT:(per Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal was admitted on 01-03-2007 by this Court. However, no substantial question of law has been formulated asrequired under Section 260A of the Income-tax Act, 1961 (for brevity,‘the Act’). Therefore, we formulate the following substantial question oflaw: “Whether the learned Tribunal, after coming to the fact findingthat the particular interest income is not a business income, can givebenefit under Section 80-IA of the Act in an indirect way ?” 2. This appeal is directed against the judgment and order of thelearned Tribunal dated 17-03-2006 in relation to the assessment year1999-2000. In this case, the issue is whether the interest incomederived from a fixed deposit towards margin money can be said to be abusiness income in order to get benefit under Section 80-IA of the Act. The learned Tribunal, on facts, found that this income was not derivedin the course of business or in connection with the business and it wasderived from a fixed deposit and that the assessee is not carrying onbusiness of any investment. 3. Sri J.V. Prasad, learned counsel appearing for the appellant,says that the last two sentences of the judgment and order of thelearned Tribunal are inconsistent with the other portion of thejudgment. When the learned Tribunal held that this particular income is not a business income, he contended that the relief under Section80-IA of the Act should not have been granted and hence it was notopen to the learned Tribunal to grant the relief in an indirect way. 4. Sri Y. Ratnakar, learned counsel appearing for the assessee,says that the learned Tribunal has not treated this particular income asbusiness income, but it said in totality that if the net interest is derivedby the assessee in connection with the business, it should be treatedas interest income from the business as required under Section 80-IAof the Act. He therefore contends that the last portion of the judgmentand order is not inconsistent with the other portion of the judgment. 5. We have heard the counsel and we have seen the factfindings of the learned Tribunal. There is no dispute that the interestincome has been derived from a fixed deposit of margin money andthe assessee is not carrying on investment business. According to thelearned Tribunal also, the interest income cannot be said to have beenderived in connection with or in the course of business. In order togive benefit under Section 80-IA of the Act, the precondition is that theinterest income should be derived in connection with the business.Accordingly, the learned Tribunal held so correctly and there is noquarrel with this finding by any of the parties. But the last portion of thejudgment and order, in our view, is inconsistent with the former portionof the judgment. According to us, once it was held that the interestincome was derived from a deposit of margin money, it cannot beploughed back with other interest income of the whole business,meaning thereby, the earlier portion of the judgment rendered by thelearned Tribunal has been negatived by it in an indirect way byincluding this portion of interest income with other interest incomes ofthe business. Therefore, while answering the above question, it isheld that the learned Tribunal was not justified in granting such reliefand hence, we set aside the judgment and order of the learnedTribunal. 6. The appeal is accordingly allowed. No costs. ______________________ K.J. SENGUPTA, CJ _____________________ SANJAY KUMAR, J 06-02-2014Svv