Aerowin International, Baddi vs Assessee

M/s Aerowin International, Vs. The Income Tax Officer, Behind Coca-Cola Factory, Parwanoo. Village Katha, Baddi. PAN: AAIFA8458N (Appellant) (Respondent)

Appellant by : Shri Rakesh Gupta Respondent by : Shri R.K.Gupta, DR

Date of hearing : 02.06.2015 Date of Pronouncement : 04.06.2015

PER BHAVNESH SAINI, J.M. :

This appeal filed by the assessee is directed against the

order of the learned Commissioner of Income Tax (Appeals),

Shimla dated 29.12.2014 for assessment year 2008-09,

challenging the order of learned CIT (Appeals) in disallowing

deduction under section 80IC of the Income Tax Act of

Rs.13,72,264/- on account of interest received from debtors

for the late payment.

2. Briefly, the facts of the case are that the assessee

firm derived income from manufacturing of electric fans. The 2

Assessing Officer noted that the amount of interest received

by the assessee of Rs.13,72,264/- has not been offered for

taxation. The Assessing Officer asked the assessee to explain

why addition should not be made as it has no first degree

nexus with the industrial undertaking. The assessee

contended that the interest has been received from debtors on

account of late payment and it is part of sale. Thus it is

also eligible for deduction under section 80IC of the Act. The

Assessing Officer, however, denied such benefit to the

assessee by following the decision in the case of Liberty India

Vs. CIT, 317 ITR 218 and made the addition.

3. The learned CIT (Appeals) noted that the assessee

neither at assessment stage nor at appellate stage has filed

any evidence in support of the contention that the interest

has been received from the debtors and forms part of the sale.

The learned CIT (Appeals) following the reasoning given by the

Assessing Officer confirmed the addition.

4. We have heard the learned representatives of both

the parties and perused the findings of the authorities below.

The Hon'ble Punjab & Haryana High Court in the case of

Phatela Cotgin Industries P. Ltd. Vs. CIT, 303 ITR 411 held

has under :

"Held, that the Tribunal wa s unjustif ied in not a l l o wi n g t h e b e n e f i t u n d e r s e c t i o n s 8 0 H H a n d 8 0 - I t o t h e a s s e s s e e e s p e c i a l l y wh e n t h e b e n e f i t h a d b e e n a l l o we d f o r the preceding years f or similar activities. T he interest wh i c h wa s r e c e i v e d o n d e l a y e d p a y m e n t s o n a c c o u n t of 3

s a l e t o c u s t o me r s o f m a n u f a c t u r e d g o o d s c o u l d c l e a r l y b e t e r me d to be i n c o me derived from the industrial u n d e r t a k i n g a n d wa s d i s t i n c t f r o m i n c o me o n a c c o u n t o f i n t e r e s t wh i c h h a d b e e n r e c e i v e d f r o m f i x e d d e p o s i t . "

5. The I.T.A.T., Chandigarh Bench also in the case of

M/s Swastik Wire Product Vs. ITO in ITA No.397/Chd/2014

vide order dated 15.7.2014 by following the same decision of

the Hon'ble Punjab & Haryana High Court above, has allowed

the claim of the assessee and directed the Assessing Officer to

allow the claim of deduction under section 80IC of the Act on

the interest income received from the customers. The copy of

the order is placed on record by the learned counsel for

assessee. Considering the facts of the case in the light of

the above decision, it is clear that the assessee would be

entitled for deduction under section 80IC of the Act on the

interest which has been received from the debtors on account

of late payment. However, the learned D.R for the Revenue

contended that the learned CIT (Appeals) noted in the

appellate order that the assessee has neither at the

assessment stage nor at the appellate stage has filed any

evidence in support of the contention that the interest has

been received from the debtors forms part of the sale. In

view of the above facts recorded by the learned CIT (Appeals)

in the impugned order and considering the submission of the

learned D.R for the Revenue, we set aside the order of the

authorities below and restore the matter in issue to the file of

the Assessing Officer with direction to re-examine the issue

and in case interest has been received from debtors on 4

account of late payment being part of the sale, the Assessing

Officer shall allow deduction to the assessee under section

80IC of the Act. The Assessing Officer shall give reasonable

opportunity of being heard to the assessee.

6. In the result, the appeal filed by the assessee is allowed

for statistical purposes.

Order pronounced in the open court on this 4th

day of June, 2015.

(T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 4 t h June, 2015

*Rati*

Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.

Assistant Registrar, ITAT, Chandigarh