Incidental Income in form of Interest Income, eligible for Deduction u/s 10A: Delhi High Court [Read Order]

The Delhi High Court held that incidental income in form of interest income, eligible for deduction under Section 10A of the Income Tax Act, 1961.

The Income Tax Appeal has been filed challenging the order passed by the Income Tax Appellate Tribunal for the Assessment Year 2009-10. The appellant in the appeal is Principal Commissioner of Income Tax (Pr CIT), Bengaluru.

The Counsel for the appellant, submitted that the ITAT has erred in holding that the incidental income of Rs.24,30,64,353/- of the assessee in the form of interest income is eligible for deduction under Section 10A of the Income Tax Act, 1961 without appreciating that as per the provisions of Section 10(A)(1) of the Act, only profits derived from the eligible undertaking will be entitled to deduction under Section 10A of the Act.

The Counsel submitted that the ITAT has erred in following the decision of the Karnataka High Court in Commissioner of Income Tax vs Hewlett Packard Global Soft Ltd without considering that the Revenue has challenged the same before the Supreme Court and the said issue is pending adjudication.

A Division bench consisting of Justice Manmohan and Justice Manmeet Pritam Singh Arora relied on the judgment in Principal Commissioner of Income Tax-1 vs. American Express India Pvt. Ltd, wherein it was held that ““Section 10A/10B of the Act is a complete code providing the mechanism for computing the „profits of the business‟ eligible for deduction u/s 10B of the Act. Once an income forms part of the business of the income of the eligible undertaking of the assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction u/s 10B of the Act.”

Dismissing the appeal, the Court added “In view of the aforesaid mandate of law, this Court is of the view that no substantial question of law arises for consideration in the present appeal.”

To Read the full text of the Order CLICK HERE

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