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2017 (11) TMI 635 - AT - Income TaxDisallowance of deduction u/s. 80-IAB - whether the action of the assessing officer in disallowing deduction u/s.80IAB for the forfeiture of the security deposit was in accordance with law? - Held that:- By no stretch of imagination a short period of lease rental can be given any different treatment then the longer period of lease rental. We find that the Settlement Agreement was only a means of giving proper exit of the lessee under the premises of the lease agreement. Infact, the assessee has also received arrear lease rental under the Settlement Agreement which has been allowed by the authorities below as qualified for deduction u/s. 80IAB. Hence, it is abundantly clear that the Settlement Agreement is nothing but adjunct to the lease agreement which facilitated exit of assessee in term of lease. Hence, no different treatment can be given to this impugned amount received. Hence, in our considered opinion, the assessee’s contention is very appropriate that 9 month lease rental receipt by way of forfeiture of security deposit cannot be given any different treatment then the lease rental receipt which qualify for deduction u/s. 80IAB. Hence, the distinction brought upon by the Revenue authorities that this amount is not derived from the business of the assessee, is not sustainable. Lease rental for approx 9 months received by the assessee in the shape of forfeiture of security deposit as against the balance lease rental for the lock-in-period which was much larger, is certainly an income derived from the business of the assessee and the same relates to the source of first degree and, hence, the income from this source qualifies for deduction u/. 80IAB. - Decided in favour of assessee. Receipts eligible for deduction u/s. 80IAB - Held that:- The ld. Counsel of the assessee conceded that the following receipts cannot be treated as business income, eligible for deduction u/s. 80IAB. i.e. interest on margin money deposit with State Bank of India, interest on security deposit with MIDC, interest on security deposit with MSEB, Pune and Recovery of damages from vendors. For rest of the receipt like Sale of scrap, Discount received on electricity charges and Cabling and other charges for cell phone towers we note that item have rightly been held by the ld. CIT(A) as not derived from the business of the assessee but may be attributable thereto. Hence, they don’t quality for deduction u/s. 80IAB. We further note that the similar disallowance made earlier was accepted by the assessee. Hence, we confirm the order of the ld. CIT(A) on this issue.
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