Delhi High Court
Commissioner Of Income Tax Del vs M/S Maruti Udyog Ltd on 30 November, 2011
Author: Badar Durrez Ahmed
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 30.11.2011
+ ITA No.1041/2005
COMMISSIONER OF INCOME TAX DEL ..... Appellant
versus
M/S MARUTI UDYOG LTD ..... Respondent
Advocates who appeared in this case:-
For the Appellant : Mr Sanjeev Sabharwal
For the Respondent : Mr S.Ganesh Sr. Advocate with Mr S.Sukumaran,
Mr Anand Sukumar & Mr Bhupesh Kumar Pathak
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MS JUSTICE VEENA BIRBAL
BADAR DURREZ AHMED, J (ORAL)
1. This is an appeal under Section 260A of the Income Tax Act, 1961
(herein referred to as the said Act) filed on behalf of the Revenue in respect
of the assessment year 1992-1993. The present appeal arises out of the
Income Tax Appellate Tribunal's order/judgment dated 30.11.2004
delivered/passed in ITA No. 2812/Del/1996 and ITA No. 2853/Del/1996
which were appeals filed by the Assessee and the Revenue, respectively.
One of the common issues which arose in the appeals before the Tribunal
was whether interest income earned by the assessee could be assessed under
the head "income from other sources" or under the head "profits and gains
of business or profession". Another issue was with regard to the netting of
interest in the context of clause (baa) of the Explanation below section
80HHC(4A) of the said Act.
2. The Tribunal came to the conclusion that the question of interest on
inter- corporate deposits, interest on securities and interest on bank deposits
ought to be sent back for fresh adjudication. The Tribunal further held with
regard to the interpretation of clause (baa) of Explanation below Section
80HHC(4A) of the said Act as under:-
"Ground No.3.2 in assessee's appeal relates to the
working of profits of business under clause (baa) of the
Explanation below Section 80HHC(4A). The stand of
the assessee is that exclusion of 90% of interest income
should be against net interest i.e. after adjusting the
interest paid while the stand of the revenue is that
exclusion of 90% should be gross interest. This issue
now stands covered by the decision of Special bench in
the case of Lalsons Enterprises, 89 ITD 25 where in it
has been held that 90% exclusion should be of net
interest if there is nexus between the interest received
and interest paid. This aspect requires verification.
Therefore, the order of the CIT(A) is set aside on this
aspect of the issue and the matter is restored to the file
of AO for fresh computation in accordance with the
decision of the Special bench mentioned above."
3. The only issue before us is the question of law which was framed by
virtue of the order dated 24.04.2006 which reads as under:-
"Whether the Tribunal is right in law in holding that the
assessee is entitled to reduce interest paid from interest
received under clause (baa) to Explanation below
Section 80HHC(4) of the Income Tax Act?"
4. We are no longer required to deliberate in detail on the above question
inasmuch as the same has been answered by this Court in CIT v. Shriram
Honda Power Equip: (2007) 289 ITR 475 (Del). In view of the said
decision, we would have to hold that the Tribunal was right in law holding
that the assessee is entitled to reduce interest paid on interest received under
clause (baa) to Explanation below Section 80HHC(4A) of the said Act. We
may also point out that the decision in Shriram Honda (supra) has been
followed by this Court in the case of CIT v. Shahi Export House: (2010)
195 Taxman 163(Del) and Britika Exports P.Ltd. v. CIT-VIII in ITA
No.276/2002 decided on 16.11.2011.
5. It is clear from the above that the Tribunal has remitted the matter to
the Assessing Officer for computation in terms of the directions given
therein. We have upheld the decision of the Tribunal in this regard in view
of the settled position as indicated above. It is obvious that the Assessing
Officer while conducting the exercise would do so in accordance with the
decisions of this Court.
6. In view of the answer given by us to the question formulated, the
appeal is dismissed with the aforesaid observations. Pending applications, if
any, stand disposed of.
BADAR DURREZ AHMED, J
VEENA BIRBAL, J
NOVEMBER 30, 2011
hk
