Addition on account of income arising out of waiver of interest by Banks as income from other sources

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IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH ‘A’ CHANDIGARH

ITA No.586/Chd/2011 – Assessment Year: 2001-02

MOHAN BOTTLING CO PVT LTD

Vs

ASSTT COMMISSIONER OF INCOME TAX

ITA No.587/Chd/2011 -Assessment Year: 2001-02

PURE DRINKS (CALCUTTA) PVT LTD

Vs

ASSTT COMMISSIONER OF INCOME TAX

ITA No.588/Chd/2011 -Assessment Year: 2001-02

PURE DRINKS (BOMBAY) PVT LTD
Vs

ASSTT COMMISSIONER OF INCOME TAX

ITA No.589/Chd/2011 -Assessment Year: 2001-02

PURE DRINKS (NEW DELHI) PVT LTD
Vs

ASSTT COMMISSIONER OF INCOME TAX

ITA No.590/Chd/2011 -Assessment Year: 2001-02

PUNJAB BEVERAGES PVT LTD
Vs

ASSTT COMMISSIONER OF INCOME TAX

ITA No.591/Chd/2011- Assessment Year: 2001-02

SOUTHERN BOTTERS PVT LTD
Vs

ASSTT COMMISSIONER OF INCOME TAX
T R Sood, AM and Sushma Chowla, JM

 

Computing provisions of one head of income can be used for the purpose of computing income under that head only and cannot be used for computing income under another head. Therefore, remission of particular income u/s 41 can be taxed only under the head “business income” and this provision can not be read for computing the income under the head “income from other sources and we are of the opinion that remission of interest by the bank can not be charged to tax as income from other sources. Therefore, we do not find any force in the submissions of the ld. DR for the revenue that first appellate authority has rightly invoked S. 41 while computing income under the head ‘income from other sources’. Therefore, in our opinion, the amount of remission on account of interest cannot be charged as income under the head ‘income from other sources’ because there is no provision for the same. In any case this is only notional income because no deduction was ever claimed by the assessee and income was reflected just to square up the account of the bank.
As far as taxability of this amount u/s 41 is concerned, it was contended that the assessee has not claimed deduction on account of interest and the same has not been allowed by the Department. However, perusal of the assessment order or appellate order do not show that there is a finding to this effect. Therefore, we remit this issue back to the file of Assessing Officer with the direction to verify whether any deduction on account of interest towards bank was claimed and allowed and then decide the issue in accordance with law.