TMI Blog2010 (3) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... HAI for early completion of projects of ₹ 4,65,20,000/- and (b) Compensation in lieu of bonus received from M/s Punj Llyods Ltd. of ₹ 6,20,00,000/- ignoring that these incomes fail the test of income derived from the business and thus do not qualify as eligible business receipt for the computation of deduction u/s 80IA 3. Brief facts of the case are that the assessee company has entered into a concession agreement dated 30th October, 2001 with National Highway Authority of India (NHAI) for the construction, operation and maintenance of Dharamvaram Tuni Toll Road, Annuity Project, a 47 km. Stretch of road in Andhra Pradesh on NH-5 owned by Govt. of India to build, operate and transfer (BOT basis. In the present year, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NHAI, the assessee is entitled to receive bonus if the project is completed in advance and the assessee will have to pay penalty if the project is delayed. Regarding compensation in lieu of bonus received from PLL, it was submitted that in order to execute the project of construction, the assessee has entered into another agreement with PLL termed as EPC contract. As per clause No.7.5 of EPC contract between the assessee company and PLL, bonus or liquidated damages at the rate of ₹ 1.550 million per day was payable or receivable for early completion/delayed completion of the project as the case may be. It was pointed out before the Assessing Officer that PLL was supposed to complete the project on 20th September, 2004 as per the agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts will be required to be excluded from business profit but at the same time, the depreciation claim of the assessee will go down because of reduction in cost of project for the reason that these two receipts are to be reduced from the cost of project and hence whatever will be the resultant income of the assessee, the same will be eligible for deduction u/s 80IA because there is no other dispute for which deduction u/s 80IAcan be refused to the assessee if there is any positive income after making these adjustments. Both the sides submitted that the matter may be decided as per law although they reiterated their arguments i.e. Ld DR of the revenue relied upon the assessment order whereas Ld AR of the assessee relied upon the order of Ld CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges for extra time is at a higher rate and hence we have no hesitation in coming to the conclusion that when the assessee tried to complete the work early, it had to incur extra expenditure which were capitalized as cost of project. Since, the bonus is received by the assessee from NHAI only for early completion of work,, we are of the considered opinion that such bonus should be reduced from the cost of project to off set the extra cost incurred by the assessee which is included in the cost of project. Similarly, when the assessee asked PLL to complete the work at early date, it must have agreed for paying extra charges to PLL for early completion of work and compensation received by the assessee from PLL is nothing but refund of such ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer and there is no dispute before us also regarding the correctness of book profit of ₹ 1307.34 lakhs and hence the same should be assessable at book profit as was declared by the assessee in the return of income u/s 115 JB of the Act. The judgment of Hon'ble Apex Court rendered in the case of Appollo Tyres Ltd. v. CIT reported in 255 ITR 273 supports this view that book profit as declared in audited P L A/c shall be adjusted by the adjustments allowable as per explanation to section 115J only. Hence, in the present case, there is no need for any adjustment on account of book profit u/s 115JB and there was no claim also on this account. With these observations, we restore the matter back to the file of the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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