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2013 (7) TMI 18 - AT - Income TaxDeduction u/s. 80IA - non granting of deduction stating that the approval from Ministry of Commerce & Industry under the Industrial Park Scheme and subsequent notification in this regard by CBDT has not been received by the assessee - Held that:- As at the time of making initial application by the assessee to DIPP there was no scheme under Industrial Policy Scheme, 2002. A new scheme was framed and gazetted only on 8th January 2008 and this scheme has been implemented with effect from 1st April 2006. Being so, it cannot be held that the 2002 scheme continued to be in operation till 8th January, 2008. Being so, the assessee cannot take advantage or benefit u/s. 80IA(4)(iii). A new scheme was framed on 8th January 2008 and made applicable with effect from 1st April, 2006. Thus the assessee is not duly approved by the competent authority for availing benefit of deduction u/s. 80IA(4) which is mandatory in nature. Mere moving an application to the Central Government for being notified under clause (iii) of section 80IA(4) on 8th January, 2007 to the Secretary, DIP & P, Ministry of Commerce & Industry, New Delhi cannot confer the benefit when the 2002 scheme was not in operation and not applicable. The benefit u/s. 80IA(4)(iii) could be availed by the assessee only after the approval by the DIPP under the scheme. Accordingly, the assessee cannot claim deduction u/s. 80IA(4). Against assessee. Disallowance towards interest expenditure u/s 14A - Held that:- There is no necessity for using the borrowed funds for investment in sister concerns. However, there is no finding that any investments in sister concerns have been made in this assessment year out of borrowed funds on which interest is payable by the assessee. Unless there is a finding that interest is directly related to the diverted funds to the sister concerns, we are not in a position to hold that interest incurred by the assessee is for non-business purposes. Thus it cannot be held that interest incurred by the assessee is for nonbusiness purposes. Therefore, the provisions contained in Rule 8D(2)(ii) cannot be made applicable. If the assessee diverted any interest bearing funds to the sister concern then it is business taken by the assessee to make such an investment and even if it is resulted no income to the interest, notional interest cannot be disallowed on the reason that the assessee should have used its non-interest bearing funds for the purpose of its own business purposes instead of using borrowed funds for its business. The Assessing Officer cannot sit in the armchair of businessman and decide what the assessee has to do to maximise his profits. In favour of assessee. Treatment of income from relinquishment of right in the property - business income v/s capital gain - Held that:- The word "transfer" is inclusive of definition which inter alia provides 6 situations under which there can be transfer in relation to the capital asset. Relinquishment of any rights in the capital asset is one of the situation enumerated in section 2(47). The word "relinquishment" denotes that relinquishment should be only in the case of capital asset with reference to the word "transfer" has been defined. The right of the assessee over the landed property which was part and parcel of the business undertaking of the assessee is a capital asset. The moment assessee losses the right attached to a part of the business undertaking of the assessee there is relinquishment of right over the said property. The relinquishment of assets or extinguishment of any right in it which may not amount to a sale can also be considered as a transfer. Therefore, do not agree with the findings of the CIT(A) that there is no transfer u/s. 45 and the assessee has done only business transaction. Thus the income accrued to the assessee out of relinquishment of right over the property is to be chargeable u/s. 45 and computation of capital gain has to be done in accordance with section 48. In favour of assessee.
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