The Income Tax Appellate Tribunal (ITAT), Chennai ruled that simple interest received for late payment will not be recognized as income made through the business operations, entitled for deduction.
Via taxpayer owner of M/s NLC India Ltd appeal for the assessment, years is the disallowance of the additional income for calculating the deduction under section 80IA of the Income Tax Act, 1961.
The taxpayer during calculating the deduction beneath section 80IA of the Act consists of the other income such as tender from sales, hospital receipts, notice pay, hire charges of car recovery from employees, insurance claims, forfeiture deposits, etc., along with the interest from other people. According to the procurement to section 5(3) of the Central Electricity Regulatory Commission, the taxpayer includes a surcharge through the electricity board.
The AO has not counted the other income for the intention of calculating the deduction claimed u/s. 80IA of the Act on the basis of the other income which does not come from the business in order to get entitled for availing the deduction. On raising the petition, the CIT(A) ruled the decisions of the AO by following the Income Tax Appellate Tribunal (ITAT) order in the taxpayer have the cases for the AY 2007-08 to 2010-11, in which the Tribunal has upheld re-computation of income-qualified for deduction beneath section 80IA of the Act.
The two judges V. Durga Rao and G. Manjunatha investigated that availing the taxpayer under proviso to Regulation 5(3) of Central Electricity Regulatory (terms and conditions of tariff) Regulations 2009 and found that a surcharge has been received by the taxpayer from the electricity board for the late payment to the taxpayer. Thus interest received through the taxpayer for the late payment of receivables shall be seen as the income obtained through the taxpayer from the business operations merely for the reason which said receipt is obtained from the supplier.
The council rules that it is simpliciter interest which is obtained through the party for late payment according to the contract. Thus this will not be acknowledged as an income created through the business operations which is liable for deduction beneath section 80IA of the Act.
