AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1076
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....CCB duly certified by chartered accountant. He, therefore, asked the assessee to explain as to why the deduction u/s. 80IA should not be recomputed by allocating appropriate expenses of employees cost towards the profit of the Industrial Development Park Unit. He noted that the assessee company has worked out an amount of Rs. 7,85,61,515/- out of other income of Rs. 28,19,27,000/- as the income not qualifying for deduction u/s. 80IA. Further, the expenses to the tune of Rs. 20,33,65,000/- out of the expenses of Rs. 110,18,44,000/- debited to the profit and loss account have been allocated towards the other income to avail the maximum benefit of deduction u/s. 80IA. He, therefore, allocated 10% of the expenses of employees cost of Rs. 1,19,79,000/- i.e. 11,97,900/- out of the expenses to Rs. 20,33,65,000/- allocated towards the other income as allocated towards the income derived from the Industrial park unit. He accordingly recomputed the deduction u/s. 80IA and made addition to Rs. 11,97,900/- to the total income of the assessee. 4. In appeal the Ld. CIT(A) deleted the addition of Rs. 11,97,900/- on account of allocation of 10% employees cost to the Industrial park. He, howe....
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....le. He held that the power of the first appellate authority is wide and cannot be curtailed. It has the power to adjudicate and decide everything necessary to ascertain the true and correct income of the assessee. His powers are coterminous with that of the AO and he can do anything which the AO failed to do. 7. So far as the argument of the assessee that the interest income in the assessee's case is taxable under the head business income is concerned, he also rejected the same. Further argument that in the earlier years and in subsequent year such interest income has been taxed as business income was also rejected by him on the ground that the principle of re-judicata is not applicable to the proceedings under the income tax Act. Further when the previous decision is plainly erroneous there is a duty of the court to review it and not perpetuate the mistake. 8. So far as the argument of the assessee that such interest expenditure is an allowable expenditure u/s. 57 (iii) is concerned he also rejected the same by relying on the decision of Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. reported in 227 ITR 172 and various other decisions....
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....n wholly erroneous, illegal and untenable grounds. 2.1 That the Ld. Assessing Officer has failed to consider and appreciate that such sum has already been debited in the Profit and Loss Account and therefore, the disallowance has resulted into deduction of the same expenditure twice. 3. That the order dated 30.11.2017 passed u/s 250(6) of the Act is bad in law. 4. That the appellant craves leave to add, amend, alter, change, vary, substitute or raise any additional ground of appeal if it becomes necessary to do so in the interest of justice on or before the date of hearing. 10. The Ld. Counsel for the assessee at the outset did not press ground of appeal No. 2 and 2.1 for which the Ld. DR has no objection. Accordingly the same are dismissed. 11. Ground No.3 and 4 being general in nature are dismissed. 12. So far as the ground No. 1.1 to 1.6 are concerned, the Ld. Counsel for the assessee referring to the paper book page no. 21 to 30 drew the attention of the bench to the form No. 10 CCB duly certified by the auditors and submitted that there is no claim of deduction u/s.80IA on such interest income and expenditure. Referring to page No.18 of t....
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....s to why the interest expenditure of Rs. 2030.27 lacs is not an allowable expenditure u/s. 57 (iii) of the IT Act. She accordingly submitted that the order of the CIT(A) be upheld. 16. We have considered the rival arguments made by both the sides, perused the orders of the authorities below and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case has recomputed the deduction claimed by the assessee u/s.80IA and allocated 10% of expenses of the employee cost to the other income and thereby reducing the deduction claimed u/s. 80IA to the extent of Rs. 11,97,900/-. He accordingly made addition of Rs. 11,97,900/- to the total income of the assessee. We find the Ld. CIT(A) deleted the above addition made by the AO but issued an enhancement notice to the assessee on the ground that assessee has claimed interest expenditure of Rs. 2030.27 lacs from the interest income of Rs. 2819 lacs is not in accordance with law. According to the CIT(A) the interest income Rs. 2815.89 lacs is required to be taxed under the head "income from other sources" and the assessee is not entitled to deduction u/s. 57 ....
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....Income Tax Refund 41,925,436 Interest Income on delayed payment 8,840 (under the head other operating Income) 28,15,88,633 Less : Proportionate Interest Expenses (pertaining to loan given to Caraf Builders & Construction Pvt. Ltd. ) out of borrowings 20,30,27,153 Net Interest Income 7,85,61,480 From the above it is clear that there is a direct nexus between the interest income of Rs. 23.96 lakhs and interest expenditure of Rs. 20.30 lakhs. 19. We find the Hon'ble Delhi High Court in the case of Vodafone South limited Vs. CIT (supra), after considering the decision of Hon'ble Supreme Court in the case of Tuticorin Alkai Chemicals and Fertilizers Ltd. (supra) has held that where assessee having availed of loan from HSBC, advanced said amount to its holding company, i.e. SCL and since there was a direct nexus between earning of interest on loan advanced by assessee to SCL and payment of interest to HSBC on loan drawn in terms of sanction letter, assessee's claim for netting off of interest in terms of section 57 (iii) was to be allowed. 20. Similarly the Hon'ble Delhi High Court in the case of PCIT Vs. Jubilant Energy Nelp - V P ....