TaxTMI 
TaxTMI 
2013 (7) TMI 18
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....y has developed ALPHA CITY Industrial IT Park for IT and ITES service providers at survey No. 65/ IA2, 65/2A2B, 65/2C1B2, 65/1B, 65/2A3, 65/2B3, 65/2C1CPt, Navalur Village, Old Mahabalipuram Road, Kancheepuram, Chennai, Tamil Nadu. The said premises is also registered with Software Technology Park of India vide their letter dtd. 22nd December, 2006. The assessee has also made an application under nonautomatic route to the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry on 8th January, 2007 for approval of Industrial Park under the Industrial Park Policy, 2002, as required under section 80IA of the Income-tax Act, 1961". 4. The assessee had claimed deduction u/s. 80IA of the Act at Rs. 9,90,32,551. According to the assessee company, the assessee has developed Alpha City Industrial IT Park for IT and ITES service provider at Sy. No. 65/IA2, 65/2A, 65/2B, 65/2C1B2, 65/1B, 65/2A3, 65/2B3, 65/2C1CPt, Navalur village, Old Mahabalipuram road, Kancheepuram, Chennai, Tamil Nadu. The said premises is also registered with the Software Technology Parks of India vide their approval letter 22nd December, 2006. The assessee also made an appli....
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....d of Direct Taxes. He noted that the assessee had made its application for such approval on 8.1.2007, i.e. during the period in which the scheme of granting of Industrial Parks by the CBDT was not in existence. Admittedly, the assessee's application had been returned stating that the same could be applied afresh under the new scheme, which came into existence w.e.f. 1.4.2006. It had also been accepted that finally the assessee had submitted its application for approval of the IT Park to the CBDT only on 5.3.2009. The Assessing Officer, therefore, concluded that mere submission of application could not entitle the assessee for deduction u/s. 80IA. Accordingly, the entire claim of deduction of Rs. 9,90,32,561 was disallowed. During the course of appellate proceedings, the representative of the assessee reiterated the contentions raised before the Assessing Officer. The assessee contended that the application made by the assessee was not rejected by the concerned authorities, and the pendency of application was on account of procedural delays of the Government authorities, which was beyond the control of the assessee. Though, initially he requested to keep the issue in abeyance until ....
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....sessee could not be considered under Industrial Policy Scheme 2002 and it was advised to apply to the CBDT under the Industrial Policy Scheme 2008. According to the assessee on 10.1.2007 when the application was made for approval, there was no such scheme and only scheme under which the assessee has to be considered is Industrial Policy 2002. The Ministry of Commerce having acted upon the application it should be granted with the approval under Industrial Policy, 2002. 8. He also brought to our notice that the Ministry of Commerce & Industries has granted approval under the IP Scheme, 1999 and 2002 to one assessee M/s. Haryana State Industrial and Infrastructure Development Corporation Ltd., Panchkula, Park at HSIIDC Ltd., Growth Centre, Bawal, NH-8, Dist. Rewari, Haryana vide their application No. 85/ SIA/IP/2008 dated 10.7.2008 approved on 17.3.2009. As such the assessee 's case has to be approved on similar lines. Further it was brought to our notice that the assessee also made application in response to the advice of Ministry of Commerce & Industries to the CBDT vide their application dated 5.3.2009. Further it was submitted that the assessee also filed a Writ Petition on 14....
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....ormal 0 false false false EN-US X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} Sl. No. Name of the company in which invested Amount invested (Rs.) 1. SSPDL Properties P. Ltd. 16,87,960 2. Alphacity Chennai IT Projects 99,800 3. Andhra Bank 5,06,790 4. SSPDL Infrasructure Developers P. Ltd. 1,63,80,000 5. Northwood Constructions India P. Ltd. 26,000 6. Northwood Properties India P. Ltd. 26,000 7. Northwood India Realty P. Ltd. 26,000 8. Northwood Residential Ventures P. Ltd. 26,000 9. Northwood Township Proj....
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....r concerns. However, there is no finding that any investments in sister concerns have been made in this assessment year out of borrowed funds on which interest is payable by the assessee. Neither the Assessing Officer nor the learned CIT(A) given any finding that actually borrowed funds have been diverted to the sister concerns free of interest. Rule 8D(2)(ii) of Income-tax Rules, 1962 deals with the case where the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular of income or receipt, so that the lower authorities were expected to examine whether the interest paid in the assessment year is or is not directly attributable to any particular of income or receipt. Unless there is a finding that interest is directly related to the diverted funds to the sister concerns, we are not in a position to hold that interest incurred by the assessee is for non-business purposes. In other words, we cannot hold that interest incurred by the assessee is for nonbusiness purposes. Therefore, the provisions contained in Rule 8D(2)(ii) cannot be made applicable. Before disallowance of notional interest incurred for earning....
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.... sale consideration payable to owner of the property. The assessee offered income from this transaction as long term capital gain. The Assessing Officer not agreed with the contention of the assessee and treated the same as income from business. On appeal, the CIT(A) confirmed the order of the Assessing Officer. Against this, the assessee is in appeal before us. 15. The learned AR submitted that u/s. 2(14) capital asset means 'property of any kind held by an assessee, whether or not connected with his business or profession, but does not include any stock in trade, personal effects etc'. He averred that the word property' used therein is a word of the widest amplitude and the definition has reemphasized this by using the words "of any kind". Accordingly, he claimed that any 'right' which can be called 'property' gets included in the definition of 'capital asset'. He submitted that a contract for sale of land is capable of specific performance and the same is also assignable. Citing the decision in the case of CIT vs. Tata Services Ltd. (122 ITR 594) (Bom), the AR argued that a right to obtain conveyance of immovable property is clearly a property, as contemplated by sec. 2(14) o....
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.... the case of CIT vs. Associated Industrial Development Co. (P) Ltd. (82 ITR 586), holding that "Whether a particular holding of shares is by way of investments or forms part of the stock in trade is a matter which is within the knowledge of the assessee". Besides, it also refers to the Ruling of the Authority for Advance Ruling as reported in 288 ITR 641 = (2007-TII-03-ARA-INTL) opining that "Where the object of investment in shares of companies is to derive income by way of dividends etc., the transactions of purchase and sale of shares would yield capital gains and not business profits". 20. The AR further submitted that "Capital asset" means of property of any kind held by an assessee whether or not connected with his business or profession, but does not include (1) any stock in trade; consumable stores, or raw materials held for the purpose of business or profession; He submitted that sec. 2(47) describes that "transfer in relation to a capital asset" includes (1) the sale, exchange or relinquishment of the asset or (2) the extinguishment of any rights therein. He further stated that Chapter IV sec. D "Profits and gains of Business or Profession" sec. 28(vii) brings to tax a....
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....ting up of its corporate office and it was not the intention of the assessee to hold the assets as stock-in-trade. Because the assessee is in real estate business that itself does not disentitle the assessee company from investing in properties for its own use. There was no intention or mentioning in any agreement entered by the assessee that M/s. Balaji Fabricators Pvt. Ltd., to hold the property as stock-in-trade. The assessee's sole intention is to hold the property as a capital asset and relinquishment of right over this property is income from capital gain. The learned AR relied on the order of the coordinate Bench in the case of B. Ramakrishnaiah vs. ITO (134 TTJ 600) (Hyd) wherein held that right to obtain conveyance of immovable property is clearly property contemplated by section 2(14) of the Act. Relinquishment or surrender of right in the asset is capital asset. In the case of M.A.C. Khaleeli vs. DCIT (48 ITD 191) the Chennai Bench of this Tribunal granted deduction u/s. 54F to an assessee engaged in the construction business, depositing capital gain from transfer of building in the housing division of assessee's own construction business for the purpose of constructing ....
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.... The DR submitted that from above case laws, it is clear that the intention of the assessee in entering into the MOU with Balaji Fabricators P Ltd., has to be inferred in the light of the ordinary line of business of the assessee, which is indeed development and construction. In this regard he referred to judgement of Hon'ble Delhi High Court dated 22.3.2012, in the case of CIT vs. New Delhi Hotels Ltd., in ITA No. 1258/2010 (2012-TMI-211607- Delhi High Court) have opined that it is well settled that it is the intention of the assessee which would matter in deciding whether the property purchased were intended for carrying on business or to hold it as an investment, coupled with the line of business carried on by the assessee. Considering the fact that the present assessee is engaged in the business of development and construction only, and the fact that even the MOU categorically shows the intention of the acquisition of the impugned land being developed, it cannot be denied that the land acquired by it under the MOU as a business asset only and not as an investment. 28. The DR submitted that Even if it is contented that the assessee intended to develop IT park thereon for the ....
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....ot only the thing which is subject matter of ownership but includes also the dominium or the right to ownership. The expression which is indicative and descriptive of several possible interests which a person can have. It embraces within its purview both corporeal and non-corporeal right. It can also be extended to those well recognised sites of interest which have insignia or characteristics of "proprietary rights". It signifies every possible interest which a person clearly hold or enjoys. The word "property" would comprise of a bundle of rights and interest which a person may conceivably hold and enjoy or such rights which a person exercises to the exclusion of others or which is entitled to use and enjoy as he pleases, provided he does not infringe any law of the State. The expression "property" would take in both tangible and intangible assets. We find the concept of "property" in relation to the definition of capital asset u/s. 2(14) of the IT Act. In our opinion, the assessee having right over the property and the property herein is nothing but a capital asset being the part and parcel of business undertaking of the assessee. 32. We have to see the intention of the assess....
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....sociation of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property." 34. From the above definition it is clear that the word "transfer" is inclusive of definition which inter alia provides 6 situations under which there can be transfer in relation to the capital asset. Relinquishment of any rights in the capital asset is one of the situation enumerated in section 2(47) of the Act. The word "relinquishment" denotes that relinquishment should be only in the case of capital asset with reference to the word "transfer" has been defined. The right of the assessee over the landed property which was part and parcel of the business undertaking of the assessee is a capital asset. The moment assessee losses the right attached to a part of the business undertaking of the assessee there is relinquishment of right over the said property. The relinquishment of assets or extinguishment of any right in it which may not amount to a sale can also be considered as a transfer. Therefore, on this we do not agree with the findings of the CIT(A) that there is no transfer u/s. 45....