Commissioner of Income Tax vs Isher Dass Mahajan and Sons

Jawahar Lal Gupta, J.—The Revenue has filed this appeal against the order of the Income Tax Appellate Tribunal relating to the assessment year 1990-91.

The assessee is a partnership concern. It is engaged in the manufacture and export of goods. The assessee claimed benefit u/s 80HHC of the Income Tax Act, 1961, in respect of its income from business which also included an amount of Rs. 32,400 which had been received by way of rent and Rs. 1,88,807 which had accrued by way of interest. The claim of the assessee for the benefit u/s 80HHC of the Act was disallowed in respect of these two items by the Assessing Officer. Aggrieved by the order, the assessee filed an appeal. The Commissioner found that these two amounts formed part of the assessee''s income from business. He further noticed that the amount could be excluded only with effect from April 1,1992, in view of the insertion of clause (baa) to the Explanation of Section 80HHC. Thus, the appeal was allowed. Aggrieved by the order, the Revenue filed an appeal before the Tribunal. The order of the Commissioner was upheld. Hence, this appeal.

Mr. Sawhney, learned counsel for the Revenue, contends that the income received by the assessee on account of interest and rent cannot be treated as part of the income from business. Resultantly, the Tribunal has erred in dismissing the appeal. The claim made on behalf of the Revenue has been controverted by Mr. Ajay Mittal, learned counsel for the assessee.

A perusal of the order passed by the Tribunal shows that the assessee had earned interest on the deposit it made with Swami Motors for the purchase of car. Another part of the interest had been earned on deposits with the I.D.B.I. The Tribunal on consideration of the evidence has found that both the deposits were made for purposes which were incidental to the normal business activity of the assessee. Still further, even the interest on FDRs was relatable to the running of business as these were used for availing of the credit facilities from the bank. Nothing has been pointed out to show that these findings of fact recorded by the Tribunal, are contrary to any evidence on the file.

As for the amount received by the assessee by way of rent, it is not disputed that a part of the business premises had been let out by the assessee. However, the whole property was shown as an asset in the balance-sheet under the head "Factory land and building". In this view of the matter, the Tribunal has concluded that the entire income of the assessee was relatable to the business. Reliance has been placed by the Tribunal on the decision of their Lordships of the Supreme Court in Commissioner of Income Tax Bombay Vs. Chugandas and Co., Bombay, , wherein it was, inter alia, observed that (page 24): "business income is broken up under different heads only for the purpose of computation of the total income. By that breakup, the income does not cease to be the income of the business . . .".

Besides the above, it also deserves notice that the addition of the clause (baa) to the Explanation to Section 80HHC is indicative of the legislative intent to exclude income on account of interest and rent, etc., from the benefit u/s 80HHC with effect from April 1, 1992, only.

No other point has been raised.

In view of the above, we find no ground to interfere with the concurrent findings of fact recorded by the Tribunal and the Commissioner.

Resultantly, the appeal is dismissed. No costs.