TMI Blog2014 (2) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... d in holding that income from sale of waste oil will be eligible for deduction under S.80-IA of the Act – Decided against Revenue. Netting of excess premium paid against refund of premium – Exclusion from income the differential amount for computing deduction u/s 80- IA of the Act – Held that:- The CIT(A) has allowed the netting off following the order passed by his predecessor in assessee's own case for the assessment year 2002-03 and 2006-07 - The Tribunal in M/s GVK INDUSTRIES LTD Versus ASSTT COMMISSIONER OF INCOME TAX [2012 (6) TMI 573 - ITAT HYDERABAD] has upheld the order of the CIT(A) – the benefit of netting of the excess premium received against the insurance premium amount paid during the year, for taking into account only the differential amount for exclusion from the income eligible for relief under S.80IA of the Act – Decided against Revenue. - ITA No.848/Hyd/13, ITA No.919/Hyd2013 - - - Dated:- 19-2-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Shri V. Siva Kumar For the Respondent : Shri P. Somasekhara Reddy DR ORDER Per Saktijit Dey, Judicial Member : These are cross appeals for the assessment year 2009-10 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer was not convinced with the explanation of the assessee. According to him, when the assessee was following mercantile system of accounting, the incentive income ought to have been offered to tax during the year under appeal on proportionate basis. He accordingly working out the proportionate amount of incentive liable to be taxed in the year under appeal at Rs.3,23,29,356, made an addition in that behalf to the income returned by the assessee. 4. The Assessing Officer also noted that the assessee declared the following incomes under the head 'other sources' (i) Interest on term deposits and others Rs. 27,58,247 (ii) Professional services Rs.137,04,462 (iii) Profit on sale of asset Rs. 40,325 (iv) Credit balance written back Rs. 48,567 (v) Miscellaneous income Rs. 70,60,764 He further noted that while computing the profits and gains from undertaking under S.80IA, the assessee excluded the income from other sources as shown above except miscellaneous income amounting to Rs.70,60,764. As the miscellaneous income considered attributable to the business, the Assessing Officer reworked the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee for earlier years, the CIT(A) observed in the first place with reference to refund received during the year, which was on account of excess premiums paid by the assessee in earlier years, that it was held in those years by the CIT(A) that receipt of this refund has no relevance with the eligible business of generation of power of the assessee, and as such the said decision is of no help to the assessee. He however, held that since power is generated from oil, etc., sale of waste oil pertains to the income derived from the eligible business. Beyond that, it is noted that "lease of fruits", "building rent from BSNL Tower", "Sale of plastic bags" and "Sale of old newspaper" are not incomes which have a dirt nexus to the eligible business of generation of power. Therefore, under these heads, according to the CIT(A) cannot be eligible for deduction under S.80IA. With these observations, he directed the Assessing Officer to recompute the relief under S.80IA of the Act. Though the CIT(A) has dealt with other issues raised before him, but since only issue before us in these cross- appeals relates to allowance/disallowance of deduction under S.80IA on miscellaneous income of Rs.70,54, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, this amount was reversed during the assessment year 2009-10 and considered as miscellaneous income, since the IDBI did not ask the payment so far. In this regard, it was submitted that such expenditure was debited to Profit Loss Account in the financial year 2006-07 relevant to assessment year 2007-08 and that deduction under S.80IA in that assessment year to that extent was claimed less. Hence, the Assessing Officer was not justified in reducing the said amount, while computing the income from business, and thus not granting deduction under S.80IA with reference to that amount. It was also submitted that the credit balance written back constitutes eligible income for purposes of deduction under S.80IA. Reliance in this behalf was placed on the decision of the Hyderabad Bench of the Tribunal in the case of Semantic Space Technologies Ltd., Hyderabad vide order dated 7.3.2012 in ITA NO.824/Hyd/2010 and anr., wherein it was held that the credit balances written back constitutes eligible income for purposes of deduction under S.10A. In the light of the fact that the condition for allowance of deduction under S.80IA and S.10A are that the relevant profits and gains should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. There is no such provision like sub- section (5) of S.80IA in S.10A, which provides for computation of deduction only from profit derived from eligible business. Accordingly, we reject the ground of the assessee on this aspect. 14. In ground No.2(b), the assessee has challenged the denial of deduction u/s. 80IA on the following items:- (i) Income from lease of fruit trees Rs.25,000 (ii) Sale of plastic bags Rs. 420 (iii) Recovery of notice pay from employee Rs. 4,839 (iv) Credit balance of Anagha Exims written back to Profit Loss Account Rs. 20,393 15. In view of our finding in ground No.1 and 2(a), in the preceding Para, we hold that assessee is not entitled to avail deduction under S.80IA on the aforesaid items of income. The ratio laid down by Hon'ble Apex Court in case of ACG Associated Capsules (P)Ltd. V/s.CIT(343 ITR 89) will not apply to the facts of the assessee's case, as it is in the context of explanation (baa) of S.80HHC of the Act. The ground of the assessee on this aspect is also rejected. 16. In the result, assessee's appeal is dismissed. Revenue's Appeal : ITA No.919/Hyd/2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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