Interest from Margin Money earned on Deposits made for availing Credit facility from Bank eligible for S.10B Deduction: ITAT [Read Order]

In M/s. Tea Promoters (India) (P) Ltd. vs. A.C.I.T, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) held that interest income derived from margin money earned on deposits made for availing credit facility from the bank was purely for assessee’s business purposes and hence section 10B deduction is applicable.

The Tribunal was considering the assessee’s appeal against the Commissioner of Income Tax (Appeals) (CIT(A)) order that confirmed Assessing Officer’s action inter-alia disallowing its deduction claim u/s 10B of the Act on account of foreign exchange fluctuation, profits derived from sale of import license and interest income to the tune of Rs.20.95 Lacs, Rs.7.34 Lacs and Rs.23.13 Lacs respectively, in proceedings u/s 143(3) of the Income Tax Act, 1961.

The Counsel for the assessee claimed that the interest income of Rs.23.13 Lacs derived from the eligible export-oriented unit was disallowed in assessment illegally.

The Bench comprising of Judicial Member S.S. Godara & Accountant Member Balaganesh, allowing the appeal observed “There is no dispute between the parties that the impugned interest income has been derived from margin money earned on deposits made for availing credit facility from the bank purely for assessee’s business purposes. Both parties take us to the coordinate bench’s order in assessee’s case itself (supra) in A.Y.2002-03 to 2004-05 holding identical income liable to be treated under the head business income consequently eligible for section 10B deduction. We thus adopt judicial consistency to delete this disallowance as well.”