TaxTMI 
TaxTMI 
2026 (3) TMI 672
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....ing grounds of appeal: On the facts and circumstances of the case, the Ld. CIT(A) erred in upholding the action of the Ld.AO of not granting the deduction under section 80IA(4)(iii) of the Act in respect of the interest on income tax refund of Rs 38,98,773. The appellant humbly prays before your Honors that deduction under section 80IA(4)(iii) of the Act ought to be granted on the interest on income tax refund of Rs 38,98,773. The Appellant craves to add, alter, amend or omit the grounds of appeal before or during the hearing of the appeal. 3. The brief facts of the case are that the assessee is a company engaged in the business of developing and maintaining industrial and non-industrial parks. The assessee earns revenu....
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....n respect of interest received on income-tax refund amounting to Rs. 38,98,773/-. In this regard, the Ld. AR invited our attention to the assessment order and submitted that the Ld. AO did not assign any finding as to why deduction under section 80IA of the Act was denied on the interest received on income-tax refund. The Ld. AR further referred to para nos. 9 to 11 of the order of the Ld. CIT(A) and submitted that the assessee had relied on the decision of the coordinate bench of ITAT in the case of ITO v. Hiranandani Builders, ITA No.4613/Mum/2013 (order dated 28.10.2015) before the Ld. CIT(A), wherein the Tribunal allowed deduction under section 80IA of the Act on interest received on income-tax refund. On further appeal, against the sai....
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.... Builders (supra) is distinguishable, as according to the Ld. CIT(A), the interest received by the assessee pertains to AY 2012-13, which is not the year of claim of deduction. The Ld. DR further argued that even if deduction under section 80IA of the Act is to be allowed, only the proportionate interest pertaining to the year under consideration should be considered. 7. We have carefully considered the rival submissions and perused the material available on record as well as the judicial precedents relied upon. It is an admitted position that the interest on income-tax refund of Rs. 38,98,773/- was received during the year under appeal. The contention of the Ld. CIT(A) that the interest pertains to AY 2012-13 and hence deduction cannot ....
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.... the business receipt of the Appellant. Had the customers not deducted excess amount of TDS, the Appellant would have received the surplus funds which would be used for the business purpose/ repayment of loans etc. 63. The aforesaid facts shows that the TDS refund received by the Appellant is an integral part connected with the receipt of business income by the Appellant and the same cannot be separated from the business of the Appellant. In these circumstances, in our view, the Appellant is entitled to deduction under Section 80IA of IT Act, on the interest received by it on TDS refunded to it. 64. Having arrived at the aforesaid conclusions, it would be necessary for us to deal with the judgements relied upon by Mr. Shar....
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....s derived directly from the business. On this basis, the Hon'ble Supreme Court held that, analysing the concept of remission of duty drawback and DEPB (Duty Entitlement Passbook Scheme), it was satisfied that the remission of duty was on account of Statutory/policy provisions of the Customs Act/ Scheme (s) framed by the Government of India, and therefore, held that the profits derived by way of such incentives did not fall within the expression "profits derived from industrial undertaking" in Section 80IB. 65.3 In the present case, the interest sought as the deduction is derived directly from the eligible business of the Appellant as held by us hereinabove. As held by the Hon'ble Supreme Court in Meghalaya Steels (supra), t....