High Court partly sets aside ITAT order; directs Revenue to allow deduction u/s 80IA on interest from fixed deposits kept for crane replacement and tariff-dispute monies, and interest on TDS refund for AY 2012–13.
Meetu Kumari | Sep 8, 2025 |
High Court Allows Deduction of Interest u/s 80IA on Fixed Deposits and on TDS Refund
The appellant, a joint venture company operating a container terminal under a licence from JNPT, during AY 2012–13 placed funds in fixed deposits of about Rs. 169 crores. These were created partly to plan for the replacement of cranes and other major equipment as required under the licence, and partly to keep aside tariff-differential monies collected under an interim court order in a tariff dispute. Interest of Rs. 8,67,66,538 accrued on such deposits and was claimed as deductible under Section 80IA.
The Assessing Officer in the order dated 29/02/2016 had accepted the claim. However, the CIT(A), by an enhancement notice and order dated 31/10/2017, rejected the deduction on interest from fixed deposits. The Tribunal, by order dated 28/05/2020, upheld the CIT(A)’s view and also dismissed a Miscellaneous Application on 27/04/2021. Aggrieved, the assessee filed the present appeal and writ petition before the High Court.
Main Issue: Whether interest on fixed deposits created for crane-replacement obligations and tariff-dispute monies, and interest on TDS refund, constitute profits derived from the eligible business so as to qualify for deduction under Section 80IA of the Income Tax Act, 1961.
HC’s Decision: The Court held that the deposits were not idle fund parking but were in close nexus with the infra business. The licence required planning for equipment replacement, and the tariff dispute made it necessary to hold differential tariff balances. That deposits were later utilized for the purchase of cranes reflected their business intent. Hence, interest on such deposits was allowable u/s 80IA.
The Court also held that excess TDS deducted by clients were part of business receipts and interest on its refund also was related to the business. Hence, the Court dismissed the ITAT order dated 28/05/2020, granted the claim of deduction under Section 80IA on both interest on fixed deposits and on refund of TDS, and disposed of the writ petition as infructuous.
To Read Full Judgment, Download PDF Given Below
In case of any Doubt regarding Membership you can mail us at [email protected]
Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"
