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TMI Blog2021 (6) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... er called 'the Act') amounting to Rs. 1,18,26,500/-. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had claimed a deduction of Rs. 11,18,26,500/- u/s 80IA (4)(iii) of the Act in respect of the units developed at Pant Nagar, Industrial Estate, District:- Rudrapur, Uttarakhand and BHEL, near 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance on the order of the Ld. CIT(A) and submitted that the deduction had rightly been allowed by the Ld. CIT(A). It was also submitted that it was an incorrect allegation that the assessee was working as a financer. It was submitted that the deferred payment scheme was one of the ways in which the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the land premium and collected from the allottees. The land premium is paid to the Government and the interest is retained by the Corporation. The assessee corporation could not present a copy of the scheme whereby it was authorized to retain this money but presented a letter in which the 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re at discounted rate; in that they are bereft of any interest payment and a rebate of 2% is offered. The deferred payments are charged at a rate of 15% per annum. The allotttee has to opt for one and once he does then he is obligated to make payment as per the same or else SIDCUL 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically stated that the allotment of plots and collection for the same is to done by the assessee as part of the management of the Industrial Park and therefore, all the money collected for such allotment has to be considered as being derived from the business of running 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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