TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 1099
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....n the circumstances of the case and in law, the honourable CIT (Appeals)-II, Pune erred in confirming the disallowing of the claim of deduction u/s. 80IB(10) of the I.T. Act of other business income Rs. 1,17,295/- (Scrap Sales of Rs. 1,17,070/- and Interest received on Fixed Deposit Rs. 225/-) without appreciating the fact that the said other income is directly relatable to the eligible housing project constructed by the appellant. The appellant hereby prays that the deduction u/s. 80IB(10) may please be granted on such other business income." 2. The brief facts of the case as emanating from records are: The assessee is a partnership firm and is engaged in the business of construction of building and development of real estate. The assessee filed its return of income for the assessment year 2010-11 on 14-10-2010 declaring total income of Rs. 31,520/-. The case of the assessee was selected for scrutiny and accordingly notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") was issued to the assessee on 30-08-2011. During the course of scrutiny assessment proceedings, the Assessing Officer observed that the assessee has paid interest on the borrowings ....
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.... of scrap. The authorities below have failed to appreciate the fact that the said income is directly relatable to the housing project constructed by the assessee and the assessee is entitled to claim deduction u/s. 80IB(10) on the said project. The ld. AR in support of his submissions placed reliance on the decision of Pune Bench of the Tribunal in the case of Preetam Enterprises Vs. Jt. Commissioner of Income Tax in ITA Nos. 544, 545 and 613/PN/2009 for the assessment years 2004-05, 2005-06 and 2006-07 decided on 29-04-2011. 5. On the other hand Shri Hemant Kumar C. Leuva representing the Department vehemently defended the findings of Commissioner of Income Tax (Appeals) in confirming the disallowance and rejecting the netting off of interest claimed by the assessee. The ld. DR submitted that the details furnished by the assessee before the Tribunal showing disbursal of loan and advancing of same to other concerns were available with the assessee right from the beginning. No reason whatsoever has been given for not furnishing such details in the first instance before the Assessing Officer and thereafter during the first appellate proceedings. The ld. DR prayed for dismissing the ....
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.... 1,09,94,741/- (-) Rs. 38,19,238/-] as income from other sources and did not allow set off from the interest expenditure since according to the AO the assessee could not establish any direct nexus between the borrowed funds, loans given, interest expenditure incurred and interest earned. We find the Ld.CIT(A) on the basis of the various details filed by the assessee allowed the claim of the assessee on the ground that the AO has not examined the entire details furnished by the assessee and has been guided by the heading of the expenses such as Advertisement/Miscellaneous Expenses and concluded that interest expenditure includes number of other expenses whereas interest received includes certain miscellaneous expenses written off as nolonger payable. We find the Ld.CIT(A) has given a finding on the basis of the details filed by the assessee that the assessee has received interest amounting to Rs. 59,20,843/- from Brahma Finance Corporation upto F.Y. 31-03-2002 and from Brahma Builders amounting to Rs. 12,54,660/- for the F.Y. 2002-03. He has given a finding that there is a direct nexus between the loan taken from Rupee Cooperative Bank Ltd and the amount of advance to Brahma Finance....
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.... deduction u/s 80- IA on income from machining and scrap sale is covered by the decision of 'B' Bench of the Tribunal in the case of Ramchandra Enterprises in ITA No. 1066, 1067/PN/2008 and 353/PN/2009 wherein the issue has been decided as under: "5. The ld. CIT(A) has appreciated this submissions therefore he has held that the machining charges received by the assessee did qualify the deduction u/s 80IB after considering the precedents namely Rane (Madras) Ltd., 238 ITR 377, Taj Fire Works Industries 288 ITR 92 (Mad.) and Northern Aromatics Ltd., 196 CTR 479 (Del.) .We find no fallacy in the decision of ld. CIT(A) for allowing the claim in respect of machining charges received by the assessee. However, the question before us as raised from the side of the assessee is in respect of scrap sales. In this regard the submission of the assessee was that the scrap is generated during manufacturing activity hence, the vehement submission was that the generation of scrap was incidental to the manufacturing activity. Hence the argument was that the income earned on sale of scrap was income from business of an eligible industrial undertaking hence entitled for 80IB deduction. A relevant p....