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2016 (2) TMI 1293 - AT - Income TaxDenial of claim of deduction u/s. 80IA(4)(iii) - new industrial undertaking with development of industrial park - controversy regarding the date on which the project was completed - According to AO, the assessee is not eligible for deduction u/s.80IA(4)(iii) on the income earned from software park as completion certificate of the building of Bangalore Development Authority was not furnished and the appellant has constructed 15 units instead of 3 units approved by the Ministry of Commerce when the appellant himself has admitted in IPSII before the appropriate authority as on 1st July, 2007 - HELD THAT:- The infrastructure for the electrical connection in the industrial park was ready on 20.03.2007. The date of occupation certificate issued by the Bangalore Development Authority on 23.06.2007 for which the assessee had Bangalore Development Authority on 29.12.2006 with a provisional Completion Certificate issued by the Architect. It is not within the control of the assessee company to obtain completion certificate from Bangalore Development Authority and the contention of the assessing authority is not correct. The contention of the AO that the fresh approval was required under the non-automatic route for more than the minimum number of units required to be established in the industrial park is not correct because the approval was for minimum number of units and there was no restriction imposed for increasing the number of units and hence no fresh approval is required under the current scenario. Further, assessee sent all the details to CBDT for notification on the basis of the first approval as well as after receipt of the renewed approval. The new notification and the Industrial policy 2008 has come subsequently. Assessee has given a representation to the Chairman of Empowered Committee & the Director of CBDT for giving an opportunity to assessee. The Empowered Committee has still not withdrawn the approval granted and hence its validity cannot be disputed. As regards the approval issued by the DIPP, Ministry of Commerce and Industry, we are of the view that the said approval was for non-automatic route and the said approval so granted by the Ministry of Commerce and Industry has not been cancelled till date. Such change has been duly intimated vide IPS- II dt. 01.01.2008 and on consideration of the same the approval dated16.03.2009 has been granted and further the said approval remains in force till date and has not been withdrawn. We find that in similar facts and circumstances in the case of CIT Vs. Ittina Properties (P) Ltd. [2014 (8) TMI 388 - KARNATAKA HIGH COURT] held in respect to controversy regarding the date on which the project was completed to be eligible for the benefit of section 80IB that Tribunal has recorded a finding that the building was completed within the stipulated period and therefore de hors this certificate issued by the Panchayat after the building is completed, the assessee is entitled to the said benefit. In that view of the matter, we do not see any merit in these appeals. Accordingly the appeals are dismissed. Similarly, Hon’ble Gujarat High Court in the case of Creative Infocity Ltd. Vs. Under Secretary [2012 (4) TMI 117 - GUJARAT HIGH COURT] 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) - Decided in favour of assessee. Disallowance of interest on interest free advances - enhancement u/s. 251(1) of disallowance of interest - HELD THAT:- Assessee has advanced for acquisition of real estate properties, loans to sister concerns and share application money in associate concerns, which were in same business as that of the assessee i.e. real estate business and hence, the said sum advanced are only in the nature of business of the assessee and are out of commercial expediency. Further, there is no nexus established between interest bearing funds borrowed and interest free funds advanced to sister concerns, no disallowance can be attributed to the assessee on account of interest bearing borrowed funds. Accordingly, this issue is decided in favour of assessee and against revenue. Disallowance of depreciation - assets used in the business - HELD THAT:- AO has not responded to CIT(A) and accordingly, CIT(A) directed the AO to allow depreciation on assets used in the business but after verification of facts and figures claimed now vis-à-vis the relevant rate of depreciation as applicable. We find that the assessee’s issue is covered as per explanation 5 to sec. 32 of the Act which makes it very clear that the allowance of depreciation is mandatory and has to be considered whether or not the assessee makes a claim in this respect or not. Even otherwise, the CIT(A) after admitting additional issue has remitted the matter back to the file of the AO for verification of facts and figure and applicable rates for claim of depreciation and also verification on assets used in the business only. We find no infirmity in the order of CIT(A) and hence, the same is confirmed. This issue in both the years, of revenue’s appeal is dismissed. Addition on account of difference in the statement of accounts declared by assessee - AO has made addition on account of difference on the disclosure made by assessee as per the actual receipt and as per the rent received as per TDS certificate - HELD THAT:- Petitioner has received a total of ₹ 57,43,973/- and this rent of ₹ 5,91,292/- was received only in next year. Similar is the explanation in the case of M/s. Carrier Net Technologies Pvt. Ltd. amounting to ₹ 18,62,059/-. It was explained to the AO that the assessee was entitled to receive rent w.e.f. 19.03.2007 @ ₹ 11,76,100/-, which amounts to ₹ 1,40,95,533/- for whole of the year but the AO computed the rent in view of the TDS Certificate at ₹ 1,58,57,591/-. Hence, difference. Similar is the position in respect to Arivana Networks India Pvt. Ltd. being the difference of ₹ 17,93,381/-. It was explained that a sum of ₹ 1,63,02,907/- was shown in the TDS certificate included service tax @ 12.36% on actual rent of ₹ 1,45,09,600/- and this difference was on account of service tax at ₹ 17,93,387/-. Hence the entire difference of ₹ 56,66,732/- was explained. The CIT(A) accepted the explanation of the assessee. Now before us Ld. CIT, DR fairly conceded the position. Accordingly, we feel that factually the assessee has not received excess rent of ₹ 56,66,732/- added by the AO. We find that the CIT(A) has rightly deleted the addition in the given facts and circumstances of the case and we confirm the same. This issue of revenue’s appeal is dismissed. Correct head of income - treating the receipt from the occupants of Industrial Parks and income from house property instead of the same as assessable as income from business - HELD THAT:- Assessee was not letting out bare structure but was providing whole lot of services/amenities for software and allied industries as eligible for use of such Industrial Park. In such circumstances, the assessee claimed the rental receipts from the occupants of the Industrial park as business income. We find that this issue is covered by the decision of Hon’ble Supreme Court in the case of Chennai Properties & Investments Ltd.[2015 (5) TMI 46 - SUPREME COURT] - In this case, letting of the properties is in fact is the business of the assessee. The assessee, therefore, rightly disclosed the income under the head "Income from business". It cannot be treated as "Income from the house property". Appeal of assessee allowed.
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