The Commissioner of Income-tax, Bangalore/The Asst. Commissioner of Income-tax, Circle-11(5), Bangalore v. JSW Steel Limited, (Formerly known as Jindal Vijayanagar Steel Limited)
[Citation -2020-LL-0213-49]

Metadata

Citation 2020-LL-0213-49
Appellant Name The Commissioner of Income-tax, Bangalore/The Asst. Commissioner of Income-tax, Circle-11(5), Bangalore
Respondent Name JSW Steel Limited, (Formerly known as Jindal Vijayanagar Steel Limited)
Court HIGH COURT OF KARNATAKA
Relevant Act Income-tax
Date of Order 13/02/2020
Assessment Year 2005-06
Judgment View Judgment
Keyword Tags interest income earned • business loss • written off • inter-corporate deposit • income from other source • interest on deposit
Bot Summary: The interest income earned in the earlier 3 years was assessed under the head income from other sources 2) Whether the Appellate Authorities were correct in relying on the order passed or the earlier assessment year in granting relief to the assessee without examining the facts of the present case had applying the legal position to it 2. In respect of the assessment year 2005-2006, the assessee filed the return of income tax on 29.10.2005, by which the income was declared as NIL. The Assessing Officer passed an order dated 31.12.2007 and held that the deposits given to M/s Sky Build Pvt. Ltd., was not in the course of business and the interest income earned on such deposits was liable to tax under the head income from other sources. The Commissioner of Income - Tax(Appeals)-I by an order dated 10.07.2009 inter-alia held that the Income Tax Appellate Tribunal in the case of the assessee itself for the earlier assessment year has held that the amount was liable to be allowed. The aforesaid order was challenged before the Income Tax Appellate Tribunal. Learned counsel for the revenue submitted that the Assessing Officer was justified in holding that the income derived from interest on the deposits was liable to be taxed under the head of income from other sources and Section 57 of the Act did not provide for allowing of such an expenditure by writing off the same. On the other hand, learned Senior counsel for the assessee has supported the order passed by the Income Tax Appellate Tribunal. It is pertinent to mention here that the Income Tax Appellate Tribunal Bengaluru Bench in the assessee s case for the assessment year 1995-96 by an order dated 12.11.2002 held that the Memorandum of Association of the assessee company enables it to carry on the business of investment for inter-corporate deposits and the assessee has indulged in such business by virtue of special resolution passed by the shareholders as required by the Company s Act.

Judgment



IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 13TH DAY OF FEBRUARY 2020 PRESENT HONBLE MR. JUSTICE ALOK ARADHE AND HONBLE MR. JUSTICE RAVI V. HOSMANI ITA No.385/2010 BETWEEN: 1. Commissioner of Income-tax, C.R.Building Queens Road, Bangalore. 2. Asst. Commissioner of Income Tax, Circle-11(5), C.R.Building Queens Road, Bangalore. APPELLANTS (By Sri. K.V Aravind, Advocate) AND: M/s JSW Steel Limited, (Formerly known as Jindal Vijayanagar Steel Limited) Jindal Mansion, 5A, Dr. G Deshmukh Marg. Mumbai 40026 RESPONDENT (By Sri. Shankar, Senior Advocate, a/w Sri Venkatesh K Pani, Advocate) 2 THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 31.5.2010 PASSED IN ITA NO.931/BANG/2009,FOR ASSESSMENT YEAR 2005-2006. THIS APPEAL COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED FOLLOWING: JUDGMENT Sri. K.V. Aravind , learned counsel for revenue. Mr. Shankar, learned senior counsel along with Mr. Venkatesh K Pani, learned counsel for respondent. This appeal, under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as Act for short) has been filed by revenue, which was admitted by Bench of this Court vide order dated 26.03.2012 on following substantial questions of law: 1. Whether Appellate Authorities were correct in holding that amount of Rs.29,94,876/- inter -corporate deposit paid to M/s Sky Build Pvt. Ltd., should be written off as expenditure when this deposit was not advanced in course of business of assessee of manufacture of steel etc., and interest income earned in earlier 3 years was assessed under head income from other sources ? 2) Whether Appellate Authorities were correct in relying on order passed or earlier assessment year in granting relief to assessee without examining facts of present case had applying legal position to it? 2. facts giving rise to filing of this appeal briefly stated are that, assessee is carrying on business of manufacturing and sale of pellets, hot/cold rolled coils/sheets and plates and slag cement. In respect of assessment year 2005-2006, assessee filed return of income tax on 29.10.2005, by which income was declared as NIL. Assessing Officer passed order dated 31.12.2007 and held that deposits given to M/s Sky Build Pvt. Ltd., was not in course of business and interest income earned on such deposits was liable to tax under head income from other sources . As section 57 of Act did not provide for allowing such expenditure by writing off same, it was disallowed. Being aggrieved appeal was preferred. 4 3. Commissioner of Income - Tax(Appeals)-I by order dated 10.07.2009 inter-alia held that Income Tax Appellate Tribunal in case of assessee itself for earlier assessment year has held that amount was liable to be allowed. aforesaid order was challenged before Income Tax Appellate Tribunal. Tribunal by order dated 31.05.2010 affirmed order passed by Income Tax Appellate Tribunal. In that factual back ground, this appeal has been filed by revenue. 4. Learned counsel for revenue submitted that Assessing Officer was justified in holding that income derived from interest on deposits was liable to be taxed under head of income from other sources and Section 57 of Act did not provide for allowing of such expenditure by writing off same. 5. On other hand, learned Senior counsel for assessee has supported order passed by Income Tax Appellate Tribunal. 5 6. We have considered submissions made by learned counsel for parties. It is pertinent to mention here that Income Tax Appellate Tribunal Bengaluru Bench in assessee s case for assessment year 1995-96 by order dated 12.11.2002 held that Memorandum of Association of assessee company enables it to carry on business of investment for inter-corporate deposits and assessee has indulged in such business by virtue of special resolution passed by shareholders as required by Company s Act. Therefore, submission made on behalf of assessee that loss was in nature of business loss was accepted. It was further held that amount of inter-corporate deposits written off by assessee was entitled for deduction in computing taxable income. aforesaid decision was upheld by Division Bench of this Court by order dated 17.08.2011 passed in ITA No.150/2003 and was answered against revenue. 7. For aforesaid mentioned reasons and for reasons assigned by Bench of this Court vide order dated 17.08.2011 passed in ITA No.150/2003, substantial 6 questions of law framed by Bench of this Court are answered against revenue and in favour of assessee. In result, appeal fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE Commissioner of Income-tax, Bangalore/The Asst. Commissioner of Income-tax, Circle-11(5), Bangalore v. JSW Steel Limited, (Formerly known as Jindal Vijayanagar Steel Limited)
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