TaxTMI 
TaxTMI 
2015 (6) TMI 385
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....inst the allowing of deduction u/s 80IA on the amount of `Excess provision written back' and `Late payment charges'. 4. Briefly stated, the facts of the case are that the assessee is a joint venture company of the Government of India and the Government of Uttar Pradesh. It is engaged in the business of generation of hydroelectricity. Apart from the income from the direct generation of power, the assessee also earned income classified as 'Other incomes' detailed as under :- Income from bank deposit Rs. 14465893.10 Interest from employees Rs. 23555964.00 From others Rs. 2824.17 Machine hire charges Rs. 1298369.00 Rent receipts Rs. 2626552.96 Sundry receipts Rs. 6418412.34 Excess provision written back....
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....fy for deduction u/s 80-IA. At this juncture, it is relevant to set out sub-section (1) of section 80IA which provides that : `Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years'. A perusal of the mandate of sub-section (1) manifestly divulges that the deduction is available at the r....
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....ing the question in favour of the Revenue, the Hon'ble Summit Court held that : `The words 'derived from' in s. 80HH must be understood as something which has direct or immediate nexus with the appellant's industrial undertaking. Although electricity may be required for the purposes of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking. The derivation of profits on the deposit made with Electricity Board cannot be said to flow directly from the industrial undertaking itself. Where the words are unequivocal, there is no scope for importing any rule of interpretation as submitted by the appellant'. It is discernible from a survey of the above and severa....
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....higher amount of deduction and the actual expenditure turned out to be less with the result that the excess provision gets written back in the instant year, it cannot be characterized as anything other than part and parcel of profit derived from eligible enterprise. In reality, the excess provision written back is not an income in itself, but, a reduced amount of eligible deduction in the computation of profits derived from eligible enterprise. We, therefore, approve the view taken by the ld. CIT(A) on this issue. II. Late payment charges: 9. The ld. CIT(A) has recorded that this receipt represented extra payment received by the assessee from its customers on account of late payment of their dues. The character of this receipt has not....
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....tion and construction of the power generation facility. We fail to appreciate as to how such machine hire charges can be considered as derived from eligible undertaking. These do not have any direct nexus with the eligible undertaking. The source of such income is hiring of machines, which is step away from the eligible undertaking. The view taken by the ld. CIT(A) on this score is upheld. III. Rent Receipt: 13. The assessee received rent from its employees' quarters as well as temporary sheds given to contractors at project sites. Even though such income may be considered as attributable to the eligible undertaking, but, it can by no stretch of imagination, be described as `derived from' the eligible undertaking. We, therefore, appro....