TMI Blog2021 (6) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... notification issued by the CBDT in respect of deduction u/s 80IA for industrial park and has, thereafter, come to the conclusion that the assessee was eligible for deduction u/s 80IA even on the amount disallowed by the AO. DR has, although, vehemently argued against the finding returned by the CIT(A), he could not controvert the findings of fact as recorded by the Ld. CIT(A) in the impugned order. DR also could not point out any error in law in the impugned order. CIT(A) has also referred and relied on the judgment passed in the case of CIT vs. Govinda Choudhary Sons, [ 1992 (4) TMI 8 - SUPREME COURT] wherein it was held that the interest receipt on delayed payment cannot be separated from the other amounts granted to the assessee under the awards and, hence, cannot be treated as income from other sources. As laid down by the Hon ble Apex Court in this case that amount awarded to the Contractor assessee as interest for delay in payment of his dues took the same character as the receipts for payment of which he was otherwise entitled under the contract and, therefore, the same was taxable as business income and not as income from other sources. We find no error on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear Ranipur, Haridwar, Uttarakhand. 2.1 The Assessing Officer observed that the profit of the assessee chiefly consisted of interest on amounts which were due from persons to whom land had been allotted in the Industrial Estate and, therefore, the amount represented income from other sources and was not derived from the eligible business. The assessee was required to show cause as to why deduction u/s 80IA may not be disallowed on the interest income on land premium at ₹ 9,77,02,124/-. 2.2 It was the submission of the assessee that the interest income was part of the business income of the assessee as the same was an integral part of the legitimate business receipts and was directly related to and originated from the eligible business of the assessee. It was submitted that the interest earned on FDRs had already been shown as income from other sources. However, the Assessing Officer did not agree to the submission of the assessee and proceeded to add an amount of ₹ 9,77,02,124/- to the income of the assessee and completed the assessment at ₹ 42,28,84,665/- on the ground that the interest income was not part of the profit related to the business of developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allottees of the land were allowed to make payment for the land. It was submitted that in the event of down payment, allottees are given a discount and the entire land premium is paid to the Government whereas under the deferred payment scheme, the interest component is added to the land premium and is collected from the allottees and further the land premium is paid to the Government and the interest is retained by the Assessee. It was argued that there was no deduction for interest from deferred payment scheme to be deposited in the Government account and the assessee was entitled to retain the same. It was further submitted that this amount of interest is duly reflected in the audited accounts and was part of sales receipts which was fully deductible u/s 80IA of the Act. 8.0 We have heard the rival submissions and have also perused the material on record. We have also gone through the impugned order wherein the Ld. First Appellate Authority has given very detailed findings in paragraphs 8 and 9. For the purpose of ready reference, the same are reproduced herein under: 8. I have duly considered the facts and circumstances of the case. At the very outset it is important t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government has pointed out that the land has been mutated in the name of the Uttarakhand Government and management rights vested in the Corporation and asking the Managing Director to ensure that upon allotment (to lessees )by SIDCUL, the land premium, lease rent, Reestablishment Levy, Reconstitution levy and transfer levy may be paid to the government treasury from time to time. It has been thus argued that there is no demand for interest from deferred payment scheme to be deposited in Government account and this shows that the assessee was entitled to retain this amount. It has also furnished a copy of the application form in which the details of the scheme of allotment including the payment requirements under deferred payment scheme are outlined .It has also presented a copy of its audited accounts which are signed by its Board, who comprise senior officers of the; Government including the Chief Secretary to show that the Government was fully in the know that such interest was being charged. It has argued that as per the judgment of the Hon Supreme Court in the case of Govinda Chovvdhury (supra) and several other judgments interest on delayed payments was sales receipt a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L has the right to cancel the allotment. Thus contractually he is bound to pay to SIDCUL, the amount demanded by it as per the relevant scheme of payment opted for. With regard to the deferred payment scheme in itself, these kinds of payment schemes are quite common in any real estate project. Deferred payments are taken to encourage allottees to apply for flats lands or houses and pay as they earn. A premium is usually charged in respect of such payments as a compensation for the delayed receipt of payment. This does not convert the builder or the real estate developer into a financier (as alleged by the Assessing Officer) and by no stretch of imagination can it be argued, that the payment received is on account of any finance provided and it does not constitute the cost of the land. The cost of a land can vary depending upon the scheme of payment opted for in much the same way that the cost of a motor car or a household appliance can vary depending on the manner in which the payment is made. Ultimately, the interest is a compensation for delayed payment rand as pointed out by the Hon Supreme Court in the case of Govinda Choudhury (supra) and in the other case laws cited by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of industrial park. It has been noted by the Ld. CIT(A) that the amounts which were specifically due for payment to the Government were shown as liabilities in its account and the balance was taken as receipts for the purposes of computation of eligible income. The Ld. CIT(A) has also referred to the notification issued by the CBDT in respect of deduction u/s 80IA for industrial park and has, thereafter, come to the conclusion that the assessee was eligible for deduction u/s 80IA even on the amount disallowed by the Assessing Officer. The Ld. SR. DR has, although, vehemently argued against the finding returned by the Ld. CIT(A), he could not controvert the findings of fact as recorded by the Ld. CIT(A) in the impugned order. The Ld. Sr. DR also could not point out any error in law in the impugned order. The Ld. CIT(A) has also referred and relied on the judgment passed by the Hon ble Apex Court in the case of CIT vs. Govinda Choudhary Sons, reported in 203 ITR 881 (SC) wherein it was held that the interest receipt on delayed payment cannot be separated from the other amounts granted to the assessee under the awards and, hence, cannot be treated as income from other sources. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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