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2014 (8) TMI 162 - AT - Income TaxReopening of assessment u/s 147 - Deduction of waiver of interest Interest granted by Board Whether the deduction now being claimed by the assessee in appellate proceedings is connected with this escaped income or not - Held that:- Reopening was made only for the escapement of income on account of income accrued on the advance made because the assessee was following mercantile system of accounting and this income on advance was not offered for tax - there is no co-relation between the escaped income and this extra claim being made by the assessee in course of reassessment proceedings relying upon Commissioner of Income-tax Vs Sun Engineering Works P. Ltd. [1992 (9) TMI 1 - SUPREME Court] - the matter not agitated in the concluded original assessment proceedings, cannot be permitted to be agitated in the reassessment proceedings unless relatable to the item sought to be taxed as escaped income - the deduction now being claimed by the assessee is not in relation to the escaped income sought to be taxed by the AO in reassessment proceedings and the assessee cannot be allowed to claim deduction of the amount in reassessment proceedings Decided against assessee. Reopening of assessment u/s 147 r.w section 148 Held that:- In the absence of copy of letter submitted by the assessee before the AO requesting the AO to consider the return already filed by the assessee on 02/05/2005 as the return filed in compliance to this notice - the assessee has submitted chronology of relevant dates and events and the original return of income was filed on 02/05/2005 but the same was treated as non-est - even the original return filed by the assessee on 02/05/2005 was treated as non-est and non est return cannot be considered as a valid return at any point of time the return of income filed by the assessee in compliance to notice issued by the AO u/s 148 has to be treated as not in conformity with law and non est and the AO was not required to issue notice u/s 143(2) of the Act Decided against Assessee. Contribution made to LIC under Group Gratuity Insurance Scheme Scheme not approved by CIT Held that:- There is specific provision for deemed approval u/s 12AA(2) that the order in respect of the application for registration u/s 12AA should be passed before the expiry of six months from the end of the month in which the application was received u/s 12A (1) of the Act - the payment is not to an approved gratuity fund - the provision of section 37(1) is in respect of those expenditure, which are not covered by section 30 to 36 of the Act - The payment in respect of gratuity is duly covered by section 36(1)(v) of the Act and it cannot be covered u/s 37(1) of the Act - none of the contentions raised by the assessee is acceptable and there was no reason to interfere in the order of the CIT(A) Decided against Assessee. Applicability of section 14A r.w. Rule 8D Held that:- Own interest free funds were more than the investment, no disallowance is justified out of interest expenditure but still some disallowance is justified out of administrative expenses - Out of administrative expenses, the disallowance was made by the AO as per Rule 8D but CIT(A) has confirmed the disallowance of ₹ 1 lac and it is in respect of administrative expenditure in respect of managing the income accrued from the shared held as investment - the disallowance of ₹ 1 lac is not excessive and the order of the CIT(A) is upheld Decided against Assessee. Claim u/s 80IA Income income with relation to Tronica city project Held that:- CIT(A) has held that these receipts have direct nexus with the assessee's business - CIT(A) has noted down the amount of receipts in respect of only one project i.e. Greater Noida Export Promotion Industrial Park and he has not noted the receipts of similar nature in respect of other project i.e. Tronica City, Industrial Model Town, Loni - Since the receipts of both the projects are of similar nature, it could not held that as to how the receipts of one project is allowable for deduction and similar receipts of other projects is not allowable the AO is directed to exclude the receipts of both the projects in the business profit for the purpose of computing deduction allowable to the assessee u/s 80IA of the Act Decided in favour of Assessee. Deduction u/s 80 IA(4) - Receipts under "interest" form part of eligible profit or not Held that:- Earning of interest on installments granted may be said to have some link with business but such receipts cannot be said to be income derived from such eligible business since it has no first degree nexus with the eligible business - The eligible business of the assessee is infrastructure development by way of development of industrial area or plot for providing the same to entrepreneurs for setting up of industrial unit for the industrial development of the city - earning of interest income is not an eligible business of the assessee company. The assessee company has mixed its both the activities by way of granting installments in respect of premium, such interest income cannot be considered as income of eligible business for the purpose of computing deduction allowable to the assessee u/s 80IA of the Act - interest income is not an income derived from the eligible business and the provisions of sub section 1 of section 80IA - only profit derived from developing and operating and maintaining industrial park is eligible for deduction and interest income cannot be said to be an income on account of development or operation or maintenance of industrial park/ Special Economic Zone - Interest income is in respect of making available the finance and the assessee company is engaged in the business of financing also and the assessee has mixed its both the activities and thereby claiming deduction u/s 80IA in respect of interest income of financing activity which is not eligible for such deduction Decided against Assessee.
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