TMI Blog2022 (2) TMI 1135X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO while computing the deduction is allowable u/s. 80-IA - Decided in favour of assessee. - ITA No. 1803/Del/2018 - - - Dated:- 15-2-2022 - Sh. Amit Shukla, Judicial Member And Dr. B. R. R. Kumar, Accountant Member For the Appellant : Ved Jain, Adv. For the Respondents : M.N. Shete, Sr. DR ORDER Dr. B.R.R. Kumar, Accountant Member 1. The present appeal has been filed by the assessee against the orders of the ld. CIT(A), Faridabad dated 13.02.2018. 2. Following core grounds have been raised by the assessee: 2. (i) On the facts and circumstances of the case, the ld. CIT(A) has erred both on facts and in law in confirming the action of the AO in not allowing deduction amounting to ₹ 5,98,71,388/- claimed by the assessee u/s. 80IA of the Income Tax Act, 1961. 3. The assessee filed return of income on 02.10.2014 declaring total income of ₹ 73,19,81,030/-. The assessee is a Government of India Enterprises and was engaged in the business of generation of electricity, construction contracts and consultancy services. 4. The issue involved relates to disallowance of Section 80IA claim on the other income received from contractors at 5 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... URI- I Chamera- II Dhauli- Ganga Rangit Total 1 Rent / Hire Charges from contractors 3 , 545 16 , 500 20 , 045 2 Rent / Hire Charges Employees 340 340 3 Rent / Hire Charges - Others 1 , 477 , 599 64 , 212 149 , 378 1 , 691 , 189 4 Other Income ( Balances, Expenses, Liabilities No longer required written back 13 , 689 , 631 1 , 191 , 081 3 , 917 , 023 1 , 657 , 727 20 , 455 , 462 5 Township recoveries 368 , 347 1 , 205 , 197 963 , 426 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses of ₹ 2,76,03,364 and ₹ 12,12,74,426 (it is stated that the correct figure is ₹ 11,02,56,561) allocated by marketing office and corporate office and interest expenditure of ₹ 71,65,99,045 allocated by the corporate office and on question No. 2 in AAR/533/2001 that expenses of ₹ 2,56,44,186 and of ₹ 12,94,59,292 allocated by corporate office and marketing office and interest expenditure of ₹ 8,49,30,952 allocated by corporate office should be excluded from the debit side of the profit and loss account of the industrial undertaking for the purpose of deduction under section 80-I of the Income-tax Act, 1961; the fact that the allocated interest income from corporate office ₹ 5,22,94,939 and ₹ 3,97,44,811 credited to profit and loss account of Vijaipur unit in the assessment years 1995-96 and 1996-97 is of no consequence as both interest income and interest expenditure are liable to be excluded for the purpose of deduction under section 80-I of the Act. 48. Further, the Hon'ble Delhi High Court in the case of Pr. CIT vs. Bharat Sanchar Nigam Limited reported in 388 ITR 371 explaining the meaning derived from while c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he legal position as far as the interpretation of Section 80IA (2A) is concerned. 13.11 Thus, we find that the legislature being alive to providing tax deductions to business enterprises and undertakings, it wanted to curtail the time line during which deduction can be claimed and also addressing the extent upto which it can be claimed has consciously carved out an exception to specified undertakings/enterprises whose needs and priorities differ has taken care to expand the time line for claiming deductions. It has consciously enabled those undertakings/enterprise 'who fall under sub-section (2A) to claim 100% deduction of profits and gains of eligible business for the first five years and upto 30% for the remaining five years in the ten consecutive assessment years out of the fifteen years starting from the time the enterprise started its operation. The legislature having ousted applicability of sub-section (1) and (2) in the opening sentence brought in for the purposes of time line sub-section (2) into play but made no efforts whatsoever to put the assessee under sub-section (2A) to meet the stringent requirements that the profits so contemplated were to be derived fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oach nor the reasons advanced by the Tribunal deserve acceptance. It is an incorrect proposition to state that interest paid by the debtors for late payment of the sale proceeds would not form part of the eligible income for the purpose of computing relief under s. 80-I of the Act. The reliance on the general meaning of the term interest as well as drawing distinction between the source of sale proceeds and the source of interest is erroneous in law in the case of CIT vs. Govinda Choudhury Sons (supra) the apex Court was called upon to decide as to the nature of interest received by the assessee therein. In the case before the apex Court the assessee who was executing Government contracts found itself involved in disputes with the State Government with regard to the payments due under the contracts and upon reference to arbitrators, the award included the principal sum as well as the interest for delay in payment of the principal sum. The assessee claimed that the interest was of the same nature as other trading receipts, but it was held by the Tribunal that the same was 'Income from other sources'. The apex Court laid down: The assessee is a contractor. His busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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