The assessee, Barclays Shared Services Private Limited is engaged in the business of providing Information Technology Enabled services. It filed its return declaring total income at Nil under regular provisions and at Rs.45,85,14,327 under section 115JB of the Act.
In the computation of income under the regular provisions, the assessee claimed deduction under section 10A and 10AA of the Act. The AO, during the course of assessment proceedings, observed that the assessee claimed deduction, inter alia, on five items totalling Rs.1,20,86,914/- which were clubbed under the main head of ‘Other income’ namely Interest on Short Term Fixed Deposits; Recovery/Reimbursement of expenses from group companies; Gain on sale of Fixed Assets; Sale of Scrap; and Other income.
On being called upon to explain as to how the assessee was eligible for deduction under section 10A and 10AA on the interest income, the assessee submitted that it placed its unutilized funds in short term fixed deposits with banks in order to effectively manage the working capital requirements of its business.
The coram headed by the Vice President, R.S.Syal said that the amount of income which qualifies for deduction is the profits of the business of the undertaking and not any income earned by the assessee de hors the business of the undertaking.
The ITAT held that if the relevant items of income are held to be falling under the head `Income from other sources’, the same will not qualify for deduction.Subscribe Taxscan AdFree to view the Judgment