The Supreme Court has remanded the matter to AO to determine the purpose for which short term Fixed Deposit (FD) accounts were opened, and the nature of income.
The bench of Justice B.V. Nagarathna and Justice Nongmeikapam Kotiswar Singh has disposed of this appeal by setting aside the order by remanding the matter to the Assessing Officer for consideration of the issue for Assessment Year 2009-2010 by bearing in mind the nature of business of the Assessee and the purpose for which the short term fixed deposit accounts were opened by the Assessee in the Bank and the nature of income and the treatment of interest income as income from other sources or business income.
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Background
The petitioner/assessee has challenged the order passed by the Division Bench of the Delhi High Court. The assessee drew our attention to the order of the Income Tax Appellate Tribunal, which is for the Assessment Year 2010-2011 in respect of very same Assessee, wherein on the question as to whether the interest income derived from short-term fixed deposit made in a Bank is eligible for deduction for under Section 10-A or 10-B was considered on the basis of certain judgments and the matter was remanded to the Assessing Officer for giving a finding bearing in mind the facts of the Assessee and its business. The direction for remand is in paragraph 42 of the said order of the Appellate Tribunal.
The order, which is for the earlier Assessment year, namely, 2009-2010 was not right in holding that the FDs were not being maintained to meet any requirement of the Bank for opening LC or any other business purpose and therefore, the interest income had to be treated as income from other sources.
The appellant submitted that if the Court is not keen to give a finding having regard to the facts of the case, since the matter has been remanded on the very same aspect by the Appellate Tribunal to the Assessing Officer for the subsequent year, for the year under consideration in this appeal, namely, 2009-2010, a similar remand may be made.
The department contended that in view of remand made by the ITAT for the subsequent period, the matter for the period under consideration may also be remanded to the Assessing Officer so as to give his finding having regard to the nature of business carried out by the Assessee and the purpose for which the short terms fixed deposits were being maintained in the Bank and the treatment to be given to the interest income on the said fixed deposits.
Conclusion By Supreme Court
The court while allowing the appeal observed that the Assessing Officer shall give his finding as expeditiously as possible.
What is the Supreme Court Ruling in XL India Business Services Pvt. Ltd. Versus Income Tax Officer?
The Supreme Court has remanded the matter to the Assessing Officer (AO) to determine the purpose for which short term Fixed Deposit (FD) accounts were opened, and the nature of income.
What is the duty of AO?
The AO must determine the purpose for which short term Fixed Deposit (FD) accounts were opened, and the nature of income.
Case Title: XL India Business Services Pvt. Ltd. Versus Income Tax Officer
Case No.: SLP No. 29313/2016
Date: 24/09/2024
Counsel For Petitioner: Salil Kapoor, Sumit Lalchandani, Ananya Kapoor, Ravi Kumar, Praveen Swarup
Counsel For Respondent: N Venkatraman, Raj Bahadur Yadav, Ashok Panigrahi, Apoorv Kurup, Monica Benjamin, Tanmay Mehta
