The Commissioner Of Income Tax v. M/S. Bhavani Gems

IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. INCOME TAX APPEAL NO.2652 OF 2009 The Commissioner of Income Tax..Appellant. Vs. M/s. Bhavani Gems ..Respondent. .... Mr. Suresh Kumar i/b Ms. Padma Divakar for the Appellant.Mr. Deepak Tralshawala with Mr. V.S. Hudade for the Respondent..... CORAM : DR. D.Y.CHANDRACHUD & J.P. DEVADHAR, JJ. 3 May, 2010. P.C.: Admit. 2.The following question of law has been framed in the appeal by the Revenue under Section 260-A of the Income Tax Act, 1961 :- “Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that expenses which have direct nexus with the earning of interest have to be set off against the income before applying clause (baa) of the Explanation u/s 80HHC?” 3.Counsel appearing on behalf of the Revenue and counsel appearing on behalf of the assessee are agreed in stating before the Court that the aforesaid question is covered in favour of the Revenue and against the assessee by the judgment of this Court in the case of Commissioner of Income Tax v. Asian Star Company Ltd. (ITA 200 of 2009 decided on 18/19 March 2010). In view of the statement made as aforesaid, the question of law is answered in favour of the Revenue and against the assessee. 4.However, counsel appearing on behalf of the assessee submitted that the question as to whether the interest income should be treated as income from other sources or as income from business has not been argued before the authority below and while giving effect to the order passed by the Court, that question may be left open to be urged. Since the question has not been addressed before the Tribunal, we are of the view that it would be only appropriate and proper to remit the proceedings before the Tribunal to decide the aforesaid question. There shall be an order in the aforesaid terms. Counsel appearing on behalf of the Revenue has submitted that he would rely upon the judgment of this Court in Commissioner of Income Tax v. Swani Spice Mills Pvt. Ltd. (ITA 1019 of 2007 decided on 19 April 2010). We express no view on the merits of the rival contentions in this regard. The Appeal is accordingly disposed of. (Dr. D.Y.Chandrachud, J.) (J.P. Devadhar, J.)