TaxTMI 
TaxTMI 
2021 (11) TMI 966
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....s noted by the AO is that the assessee Company had claimed deduction u/s. 80-IA(4)(iii) for Rs. 16,07,99,016 for the four projects. The AO noted that assessee had filed the Audited accounts of the assessee Company as well as Form 10CCB and separate accounts of each declared eligible project. According to AO, the authorized representative could not furnish the Notification of the CBDT in accordance with the Industrial Park Scheme 2002, as notified in the Gazette of India, which is mandatory for claim of deduction u/s. 80-IA(4)(iii) in respect of the project of 'Salarpuria Touchstone' and 'Salarpuria Softzone', in spite of calling or the same through notices issued u/s. 142(1) dated 8/8/2016 & 29/8/2016, till the passing of assessment. Therefore, the deduction u/s. 80-IA(4)(iii) in respect of the project of 'Salarpuria Touchstone' and 'Salarpuria Softzone' was disallowed and the sum of Rs. 6,32,25,256 is added back to the total income of the assessee. 2.2. Aggrieved by the aforesaid action of the AO, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to delete the same in respect of Salarpuria Softzone. Aggrieved by the action of....
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.... given relief to the assessee in respect of the project named "Salarpuria Softzone" by allowing deduction of Rs. 4,47,35,486/- and upheld the action of the AO in respect of the other project "Salarpuria touchstone" and confirmed the disallowance of Rs. 1,84,89,770/-. The revenue is in appeal in respect of the relief granted to the deduction in respect of the project "Salarpuria Softzone" to the tune of Rs. 4,47,35,486/- and the assessee is not in appeal against the action of the Ld. CIT(A) confirming the action of the AO in respect of "Salarpuria Touchstone" (which issue according to the Ld. AR is subjudice in the Hon'ble Karnataka High court). 2.7. It is noted that the AO has disallowed the claim in respect of the project named "Salarpuria Softzone" since the assessee was unable to furnish a copy of the relevant CBDT notification. However, it is noted that the approval for the project has been granted by Ministry of Commerce & Industry on 25.07.2006 and the Ld. AR drew our attention to the later development which has taken place wherein the CBDT vide notification dated 08.09.2020 has notified the "Salarpuria Soft Zone" as under: 2.8. From a perusal of the above, we note ....
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....the benefit of Section 80IA(4)(iii). " 10. Similarly, Hon'ble Gujarat High Court in the case of Creative Infocity Ltd. Vs. Under Secretary [2012] 19 Taxmann.com 270 (Guj.) also held that, once Industrial Park was approved by Ministry of Commerce & Industry, CBDT has to suo motto issue notification and if there is delay on the part of the CBDT in Issuing notification, it would not warrant assessee being denied benefit of deduction u/s. 80IA(4)(iii) of the Act. Hon'ble High Court finally held as under; 2.9. Taking note of the ratio of these decisions the Tribunal has given relief to that assessee (Salarpuria Soft Zone) for claiming deduction u/s. 80-IA(4)(iii) of the Act and following the same, the Ld. CIT(A) has given the benefit of the claim of deduction of Rs. 4,47,35,486/- u/s. 80-IA(4)(iii) of the Act at 100% of the business profit derived from the industrial park Salarpuria Softzone. We find that the CBDT notification (supra) and the tribunal's decision (supra) in the case of M/s. Salarpuria Softzone (supra), so we are of the opinion that the Ld. CIT(A) has correctly allowed the deduction and no infirmity could be pointed out by the Ld. CIT, DR, therefor....
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....uction he disallowed. On appeal, the Ld. CIT(A) noted that the miscellaneous income of Rs. 7,44,875/- is aggregate of miscellaneous income earned from three (3) Industrial parks viz. M/s. Salarpuria G.R. Tech Park (Rs. 96,670/-), M/s. Salarpuria Hallmark (Rs. 31,590/-) and M/s. Salarpuria Infozone (Rs. 7,44,875/-). It was taken note by the Ld. CIT(A) that this amount was earned on account of sale of waste materials leftover by the occupants and also on account of some interest earned on electric deposit made with BESCON for electric connection for consumption in park; and for the maintenance of the three (3) industrial park named as M/s. Salarpuria G.R. Tech Park, M/s. Salarpuria Hallmark and M/s. Salarpuria Infozone. It was taken note by the Ld. CIT(A) that the waste materials accumulated and piled up in the respective parks were finally disposed of at nominal prices which was necessary, since the materials which is none re-usable were getting accumulated/piling up which needed to be removed. Therefore, the removal of waste material is to keep the three parks clean and tidy which is part and parcel of the maintenance activity of the assessee company. Therefore, according to the as....
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....e was made by the AO. Therefore, applying the Rule of consistency we uphold the action of Ld. CIT(A) and we dismiss the ground of Revenue. 4. Ground No. 3 of revenue appeal reads as under: "3. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 43,00,997/- as rental income earned in the three industrial parks ignoring the fact that profit derived from Industrial Parks Salarpuria Softzone was treated as non-eligible income to qualify for deduction u/s. 80IA(4)(iii)? 4.1. Brief facts of the case as noted by the AO is that the assessee has shown he Revenue from operations of Salarpuria GR Tech Park, Salarpuria Hallmark and Salarpuria Infozone included Rs. 43,00,997/- as income from 'rent'. This rent income was claimed by the assessee to be from letting out spaces in the Industrial Parks to the occupants. According to AO, the authorized representative gave no further explanations. The AO noted that the assessee company was not the owner of the eligible projects, it had entered into agreement with the developers of the Projects to operate and maintain the Parks built by the developers and e....
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....ears and subsequent years the lease rent income from letting off of kiosks/stalls of Rs. 43,00,997/- to be treated as business income and since in earlier years and subsequent years this claim was not disallowed and for the first time this disallowance is made, so by applying the Rule of consistency, the disallowance was not warranted since there is no change in facts or law. Therefore, the action of Ld. CIT(A) is confirmed. Therefore, we confirm the order of the Ld. CIT(A) and dismiss this ground of revenue's appeal. 5. Ground no. 4 of revenue's appeal reads as under: 4. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 13,20,80,813/- being the undisclosed 26AS receipt, without considering the fact that the reconciliation statement furnished by the assessee is not backed by credible evidence? 5.1. The facts of the case as noted by the AO as per 26AS data relating to the assessee, the total receipt for the year was Rs. 90,92,17,176/-, which while as per the final accounts and the ITR, total revenue from operation was shown as Rs. 75,62,42,439/-. The AO noted that the Revenue declaration....
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....80,813/- was not warranted, since he found there was a difference between the maintenance charge received (a) as appearing in 26AS data Rs. 57,17,66,220/- and (b) that disclosed and credited in the audited accounts Rs. 43,96,85,407/- thus the difference of Rs. 13,20,80,813/-. According to the AO, it was the undisclosed income since the assessee was not able to explain the difference by filing reconciliation statement. However as we noted no opportunity was give by AO to reconcile the difference, so question of assessee filing the reconciliation statement does not arise anyway the assessee had filed the same before the Ld. CIT(A) and Remand report has been obtained in this regard. The assessee contended before the Ld. CIT(A) that the difference of Rs. 13,20,80,813/- was made by the AO terming it as undisclosed income ignoring the fact that such difference was on account of rental receipt of Rs. 70,09,943/- and reimbursement of electricity charges and generator charges for which net income (receipt less expenditure) of Rs. 1,49,07,169/- and Rs. 2,02,26,996/- was already offered to tax and such an addition would amount to double deduction and, therefore, the AO had erred in making the....
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....tricity and generator maintenance charges come to Rs. 99,15,97,622/- when deducted by the expenses on account of electricity and generator maintenance charges, the net receipt is only to the tune of Rs. 3,51,34,164/- which tallies with the P&L Account, so there is no difference and it was reconciled. The Ld. CIT(A) after going through the reconciliation and submissions made by the Ld. AR held as under: "3. I have carefully considered the submissions of the Ld. A.O in the Remand Report as well as the submissions of the appellant countering the findings of the Ld. A.O, as made out in the said report. I note that the addition of Rs. 13,20,80,813/- is on account of alleged difference in amount of income so reported in the 26AS data and that disclosed by the appellant in its Profit & Loss Account for the year. The Ld. AO in his order has concluded that since, such difference has not been considered and accounted for in the relevant year under consideration, the addition was duly warranted. In the Remand Report, I observe that the Ld. AO has reiterated the earlier findings, without responding to the factual contentions as made out by the appellant, duly supported by necessary do....
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.... of income the same cannot be made chargeable to tax and cannot be converted to income only because payer of the sum deducts tax under some misconception of law. 5. In the case of appellant as well simply because the payer have deducted tax u/s. 194C on the reimbursement so made by them, the same cannot be treated as income merely on the basis of Form 26AS data. That observed, I note that the appellant has successfully explained that the difference in reimbursement has been offered to tax i.e. net income earned on account of reimbursement has also been offered' to tax and hence the appellant itself has taken the net earning of such amount for the A.Y 2014-15, and hence no separate addition in such respect can be called for. In such respect, I also draw strength from the following judgments: a. Administrator of Estate of Ld. Edulji Framroze Dinshaw (EFD) 103 Taxmann.com 452 (Mumbai ITAT) b. DCIT v. Lyod Insulation India Ltd. (ITA No. 2400/Del/2011 dt. 9.8.2012) - for the proposition that "income of tax prayer is not regularly to be computed merely with reference to the TDS certificate but assessment of income is altogether an independent excise". ....
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....d. CIT(A), who was pleased to delete the same. Aggrieved, the revenue is before us. 6.3. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the Ld. CIT(A) has given relief to the assessee by holding as under: "7. Having carefully perused the facts of the case, I find that the contention of the appellant is correct on facts, that the Ld. A.O r did not include the proposed addition of Rs. 2,02,30,945/- that the assessee company had debited in Audited P/L a/c sum of Rs. 2,02,30,945/- on account of sundry balances written off under the head "other expenses" in Schedule - 27 of the Audited Accounts. I also observe that the Ld. A.O did not give any show-cause in the matter, and saddled the appellant with this addition. That observed, I note that on facts the impugned amount of Rs. 2,02,30,945/- had been actually written off in the P&L a/c. and had been credited to the sundry debtors account, by the assessee company there is no gainsaying that after 1st day of April, 1989, for/. allowance of bad debt/business loss it is adequate/enough if the debt is written off as "irrecoverable" in the accounts, as has also been decided by ....
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....on'ble Supreme Court in the case of TRF Ltd. Vs CIT 323 ITR 397 placed at paper book 39 of compilation of judgements. Ld. A.R. further relied upon the case law of Auto Meters Ltd. 292 ITR 345 decided by Hon'ble Delhi High Court placed a paper book pages 42-43. Inviting our attention to A.O.'s objection in disallowing the write off of bad debts, Ld. A.R. submitted that the A.O. had disallowed the claim holding that loan given by assessee has not fully become irrecoverable as the loanee was not declared BIFR Company and the case was pending with BIFR. Ld. A.R. submitted that the A.O. had held that till the final conclusion was pending before BIFR there was chance that assessee could get a part of amount and therefore, loan cannot be said to have become irrecoverable. In this respect, Ld. A.R. submitted that Hon'ble Supreme Court in the case law of TRF Ltd. has clearly held that the bad debt claim is available to an assessee when he writes off in its books of accounts therefore, as the assessee had written off the claim in its books of account, the claim of deduction is in accordance with law. Ld. D.R. on the other hand submitted that the A.O. has passed a det....
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....facts of writing off of debt was not examined by A.O. However, in the present case, the debt has actually been written off therefore, relying upon the ratio of judgement of Hon'ble Supreme Court, we hold that the claim of assessee in respect of bad debt written off is allowable and in view of the same, we allow ground No. 3 of appeal. In view of the factual and legal matrix being similar for the case at hand, I am unable to sustain the action of the Ld. AO in disallowing the impugned sum of Rs. 2,02,30,94/- disallowed as "bad debts". The disallowance therefore stands deleted and the ground of appeal no. 8 is adjudicated in favour of the appellant company." 6.4. We note that the amount in question i.e. Rs. 2,02,30,945/- includes sundry debtor as well as loans and advances. The loans and advances are not allowable u/s. 36(v)(iii) of the Act. Break-up of the amount in question, which has been written off has not been given. Therefore, the allowability of the loans/advances written off by the assessee have to be examined by the AO. According to the Ld. AR, even if the advances are not allowable u/s. 36(v)(iii) of the Act still it is allowable as business expenditure u/s....
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....od beginning on the 1 day of April, 1997 and ending on the 31" day of March, 2006; And whereas M/s Softzone Tech Park Ltd. situated at Survey No.80/1, 81/1, 81/2, Bellandur village, Varthur Hobli, Bangalore-560037 is developing an Industrial Park at Survey No.80/1, 81/1, 81/2, Bellandur village, Varthur Hobli, Bangalore-560037; Document 3 F. No. 279/Misc./140/2015/IT) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, 25th April, 2017 SUBJECT: Lease rent from letting out buildings/developed space along with other amenities in an Industrial Park/SEZ- to be treated as business income. The issue whether income arising from letting out of premises /developed space along with other amenities in an Industrial Park/SEZ is to be charged under head 'Profits and Gains of Business' or under the head 'Income from House Property has been subject manner of litigation in recent years. Assessees claim the letting out as business activity, the income arising from which to be charged to tax under the head 'Profits and Gains of Business', whereas the Assessing Officers hold it to be chargeable und....