TaxTMI 
TaxTMI 
2023 (3) TMI 1350
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....ncome derived by the appellant from business advances cannot be considered to be inextricably linked to the carrying on of the business eligible u/s.80- IAB of the I.T. Act. 2. On the facts and in the circumstances of the case, the learned CIT(A] erred in confirming disallowance of Rs.30,23,15,000/-, made by the Assessing Officer while computing profits and gains eligible for deduction u/s.80-IAB of the I.T. Act, being interest income derived on Fixed Deposits placed by the appellant-company for availing of Credit Facility, Performance Guarantees, Bank Guarantees, Bid Bonds etc., exclusively for the purposes of the business eligible u/s.80-IAB of the I.T. Act. In doing so, he has erred in holding that the said interest income cannot be considered to have been derived from business of developing SEZ. 3. Without prejudice to the above, on the facts and in the circumstances of the case, the learned CIT(A) erred in not appreciating that the phraseology of "business of development of SEZ" is much wider than the phraseology of "Profits and gains derived from the undertaking". Consequently interest income on business advances needs to be allowed as deduction u/s.80-IAB o....
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.... for business. 2. The Id. CIT(A) has erred in deleting the disallowance of interest income on delayed payment from customers of Rs.56,76,000/- without appreciating the fact that such compensation received cannot be treated to have been derived from SEZ activities and not eligible for deduction u/s 80IAB of the Act. 3. The Id. CIT(A) has erred in deleting the disallowance of Rs.1,51,24,000/- earned from sale of scrap as deduction u/s. 80IAB of the Act without appreciating the fact that the assessee is engaged in SEZ activities. 4. The Id. CIT(A) has erred in deleting the disallowance of Rs.10,61,15,265/- being derivatives contracts/swap contracts gain on speculative transactions without appreciating the fact that such income are not derived from the business of developing, operating and maintaining of SEZ and not eligible for deduction u/s 80IAB of the Act. . 5. The Id. CIT(A) has erred in deleting the disallowance of Rs.15,14,60,000/- on account of loss from foreign currency swaps by relying on the decision of Ahmedabad Tribunal in the case of ACIT vs. Heavy Metal & Tubes Ltd., despite the fact that the claim of the assessee is in the nature of s....
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.... of income computed as per computation sheet filed by the assessee and includes all other income except profit on sale of investments of Rs.20,29,000/-, profit on sale of fixed assets of Rs.32,90,98,000/-, dividend of Rs.6,20,88,000/-. Apart from that income derived from DTA i.e. rental income from JUB of Rs.24.40 Crores and income from dredging activities at Hazira of Rs.6.18 Crores was also reduced while computing the profit derived by the undertaking from eligible business of the assessee. The Assessing Officer made disallowance of Rs.62,12,77,265/- and directed to reduce the same from deduction under Section 80IAB of the Act as the same is speculative transactions which cannot be said to be an income derived from business and developing, operating and maintaining of SEZ and also the sale of scrap and the interest income received relating to customers. The Assessing Officer further made disallowance under Section 14A of the Act of Rs.16,35,12,511/-. The Assessing Officer made disallowance of Rs.5,16,28,097/- towards amortised value of leasehold land. The Assessing Officer made addition of Rs.39,73,299/- as Long Term Capital Gain which was declared as undisclosed and disallowance....
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....gards Ground nos.1 to 3 of assessee's appeal, the Ld. DR submitted that the issue is related to the netting of interest and the same is covered in respect of Hon'ble Supreme Court decision in Pandian Chemicals Ltd. vs Commissioner Of Income-Tax 262 ITR 278 SC. The Ld. DR further submitted that the netting of interest falling under the income derived from business is a incidental income and, therefore, the CIT(A) and Assessing Officer has rightly disallowed the same. The Ld. DR relied upon the decision of Hon'ble Uttarakhand High Court in case of Conventional Fastner (ITA No. 24 of 2015 order dated 15.11.2017). Thus, the Ld. DR relied upon the orders of the Assessing Officer as well as CIT(A). 7. We have heard both the parties and perused all the relevant material available on record. In respect of interest income related to FD interest, interest from customer's receipts and interest income from business advances, the said issue has been allowed by the Tribunal in A.Ys. 2008-09, 2009-10 & 2010-11. The facts are identical in the present assessment year as well. The Ld. DR could not point out any distinguishing facts and the decisions relied upon by the Ld. DR are on different fact....
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....om sales income during the year should be allowed as per the decision of Delhi Tribunal in case Vireet (supra) appears to be correct. Therefore, alternate argument of the assessee is allowed and ground no.4 is partly allowed. 11. As regards Ground nos. 5 & 5.1 of the assessee's appeal, the Ld. AR submitted that the CIT(A) erred in confirming the disallowance of depreciation on right to use lease hold land of Rs.1.54 Crores. If the disallowance is to be confirmed, the same to increase the eligible business profits for deduction under Section 80IAB of the Act are not justifiable. The Ld. AR submitted that the recognition of the right to use leasehold land as intangible asset is as per the requirement of accounting standards. The assessee has to recognise the same and assessee has correctly recognised it. Once an intangible asset is recognised, the same is eligible for depreciation under Section 32 and, therefore, the claim of depreciation is correct. The Ld. AR further submitted that if the said depreciation is not available, the eligible profit for computation of d3eductioan under Section 80IAB should increase. The Ld. AR relied upon the decisions of RFCL Limited, 57 taxmann.com ....
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....eligible profit for computation of deduction under Section 80IAB should increase. The Ld. AR submitted that in order giving effect to CIT(A)'s order the Assessing officer has given the relief on this ground on merits. Therefore, the argument is not on merit but on legal principle. The Ld. AR submitted that if said addition is to be made, the eligible profit for computation of deduction under Section 80IAB of the Act should increase. 18. The Ld. DR relied upon the assessment order and the order of the CIT(A). 19. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that, retention money from customers if added, the eligible profit for computation of deduction under Section 80IAB should increase, this contention is on the legal principle and it appears to be correct statement. Thus, Ground no.7 is allowed. 20. Thus, appeal filed by the assessee being ITA No. 122/Ahd/2015 is partly allowed. 21. As regards Revenue's appeal related to Ground nos.1, 2 & 3, the same are in consonance with ground nos.1,2 & 3 of assessee's appeal and, therefore, no separate findings are required, hence the same are dismissed. 22. As....