COMMISSIONER OF INCOME TAX Vs. K.D. COKES

JUDGEMENT

(1.) This appeal witnesses a challenge to the judgment and order dt. 11th March, 2011, rendered by the Tribunal, Gauhati Bench, Guwahati (for short hereafter referred to as the learned Tribunal) in ITA No. 80/Gau/2007. The assailment, however, is limited to its finding on the issue as to whether the income of the respondent-assessee by way of interest amounting to Rs. 3,13,91,602 was deductible under s. 80IC of the IT Act, 1961 (for short hereafter referred to as the Act). The learned Tribunal having answered in favour of the respondent-assessee, the Revenue is in appeal. We have heard Mr. S. Sarma, learned counsel for the Revenue and Mr. R.K. Goenka, learned counsel for the respondent-assessee.

(2.) At the time of admission of the appeal, the following substantial question of law was framed:

(3.) The pleaded facts reveal that the respondent-assessee is a private limited company registered under the Companies Act, 1956 with its registered office at Guwahati, Assam and is engaged in manufacture and sales of PVC pipes. In its return of income, submitted on 13th Aug., 2004 for the asst. yr. 2004-05, it declared its total income as nil after claiming 100 per cent deduction under s. 80IC of the Act. It mentioned, inter alia a substantial expansion undertaken in the year 2000-01, thus, claiming relief under s. 80IC of the Act by bringing its case within the purview of sub-s. 2(b)(iii) thereof. In course of the assessment proceedings, the AO being of the view that it had received Rs. 3,28,51,479 "from other sources" required it to provide the necessary break-up thereof. The respondent-assessee filed the details of the miscellaneous income disclosing, inter alia that an amount of Rs. 3,13,19,602 had been received by way of interest by it from the Irrigation Department, Government of Assam, as per the order of this Court for the delay involved in the payment in connection with delivery of goods to it (Irrigation Department) between 22nd Aug., 1991 and 31st May, 1992. The AO refused to grant the deduction of this amount on the ground that having regard to the period relating to the transactions with the Irrigation Department, it was impermissible and, further, the time-limit specified for commencement of production or substantial expansion for the North Eastern States, in terms of s. 80IC(2)(b)(iii) was between the 24th Dec., 1997 and 31st March, 2007. The respondent-assessee being aggrieved preferred an appeal before the CIT(A), who sustained the determination made by the AO.