TMI Blog2023 (3) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, ground no.1 to 3 of assessee s appeal is allowed. Disallowance u/s 14A - HELD THAT:- It is pertinent to note that disallowance under Section 14A of the Act, the Assessing Officer has given satisfaction but the fact remains that own funds are more than investments and the same was utilised while making investments. From the perusal of records it appears that the alternate argument of the assessee that only those investments which are yielded from sales income during the year should be allowed as per the decision of Delhi Tribunal in case Vireet ( 2017 (6) TMI 1124 - ITAT DELHI] appears to be correct. Therefore, alternate argument of the assessee is allowed and ground no.4 is partly allowed. Disallowance of depreciation on right to use lease hold land - HELD THAT:- It is pertinent to note that the recognition of the right to use lease hold land as intangible asset as per the statement of account and the same was not disputed by the Department at any stage. Thus, the claim of depreciation was correctly made and the same should have been taken into account by the Assessing Officer as well as CIT(A). Thus, ground no.5 and ground no.5.1 are allowed. Amortisation exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for availing of Credit Facility, Performance Guarantees, Bank Guarantees, Bid Bonds etc., exclusively for the purposes of the business eligible u/s.80-IAB of the I.T. Act. In doing so, he has erred in holding that the said interest income cannot be considered to have been derived from business of developing SEZ. 3. Without prejudice to the above, on the facts and in the circumstances of the case, the learned CIT(A) erred in not appreciating that the phraseology of business of development of SEZ is much wider than the phraseology of Profits and gains derived from the undertaking . Consequently interest income on business advances needs to be allowed as deduction u/s.80-IAB of the Act On this ground as well the claim of the appellant may be allowed. 4. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming disallowance of Rs.16,35,12,511/- made by the Assessing Officer u/s.!4A of the I.T. Act. 5. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming disallowance of depreciation of Rs.1,54,11,254/- claimed by the appellant-company on right to use leasehold land , being intangible asset eligible f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The Id. CIT(A) has erred in deleting the disallowance of Rs.10,61,15,265/- being derivatives contracts/swap contracts gain on speculative transactions without appreciating the fact that such income are not derived from the business of developing, operating and maintaining of SEZ and not eligible for deduction u/s 80IAB of the Act. . 5. The Id. CIT(A) has erred in deleting the disallowance of Rs.15,14,60,000/- on account of loss from foreign currency swaps by relying on the decision of Ahmedabad Tribunal in the case of ACIT vs. Heavy Metal Tubes Ltd., despite the fact that the claim of the assessee is in the nature of speculative loss and not allowable as business expenditure. 6. The Id. CIT(A) has erred in directing the AO to re-compute the deduction u/s. 80IAB after increasing the amount of deduction by the amount of disallowance u/s 14A. 7. The Id. CIT(A) has erred in deleting the disallowance with regard to the claim of deduction in respect of donations u/s. 80G of Rs.6,48,791/-. The Id, CIT(A) has failed to appreciate that the assessee has taken the income from business as the income of the undertaking and claimed deduction u/s 80IAB. 8. The Id. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same from deduction under Section 80IAB of the Act as the same is speculative transactions which cannot be said to be an income derived from business and developing, operating and maintaining of SEZ and also the sale of scrap and the interest income received relating to customers. The Assessing Officer further made disallowance under Section 14A of the Act of Rs.16,35,12,511/-. The Assessing Officer made disallowance of Rs.5,16,28,097/- towards amortised value of leasehold land. The Assessing Officer made addition of Rs.39,73,299/- as Long Term Capital Gain which was declared as undisclosed and disallowance of Rs.1,54,11,254/- relating to depreciation claimed on right to use leasehold land. The Assessing Officer also made addition of Rs.15,14,60,000/- in respect of loss on derivative/swab contract, addition of Rs.7,91,25,000/- towards retention money due for contract in progress, addition of Rs.38,23,761 towards depreciation on office equipment restricted to 10% and also disallowance of Rs.1,55,70,975/- related to allocation of donation which are deducted/reduced after giving eligible deduction under Section 80G of the Act. 4. Being aggrieved by the assessment order, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 of 2015 order dated 15.11.2017). Thus, the Ld. DR relied upon the orders of the Assessing Officer as well as CIT(A). 7. We have heard both the parties and perused all the relevant material available on record. In respect of interest income related to FD interest, interest from customer s receipts and interest income from business advances, the said issue has been allowed by the Tribunal in A.Ys. 2008-09, 2009-10 2010-11. The facts are identical in the present assessment year as well. The Ld. DR could not point out any distinguishing facts and the decisions relied upon by the Ld. DR are on different facts altogether. As regards scrap sale income and currency swap income, the same is also identical as referred by the assessee to various decisions before us and no distinguishing facts were pointed out by the Ld. DR. Hence, ground no.1 to 3 of assessee s appeal is allowed. 8. As regards Ground no.4 of the assessee s appeal, Ld. AR submitted that the CIT(A) erred in confirming disallowance under Section 14A of Rs.16.35 Crores, the Ld. AR submitted that the assessee s own funds are more than the investment and the presumption would be that the own funds are used to make inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable. The Ld. AR submitted that the recognition of the right to use leasehold land as intangible asset is as per the requirement of accounting standards. The assessee has to recognise the same and assessee has correctly recognised it. Once an intangible asset is recognised, the same is eligible for depreciation under Section 32 and, therefore, the claim of depreciation is correct. The Ld. AR further submitted that if the said depreciation is not available, the eligible profit for computation of d3eductioan under Section 80IAB should increase. The Ld. AR relied upon the decisions of RFCL Limited, 57 taxmann.com 17 (HP) and Bhushan Steels, 390 ITR 485 (Delhi). 12. The Ld. DR submitted that as regards land, there is no question of depreciation, so question of allowing the same in the capital nature does not survive. 13. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the recognition of the right to use lease hold land as intangible asset as per the statement of account and the same was not disputed by the Department at any stage. Thus, the claim of depreciation was correctly made and the same should have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt material available on record. It is pertinent to note that, retention money from customers if added, the eligible profit for computation of deduction under Section 80IAB should increase, this contention is on the legal principle and it appears to be correct statement. Thus, Ground no.7 is allowed. 20. Thus, appeal filed by the assessee being ITA No. 122/Ahd/2015 is partly allowed. 21. As regards Revenue s appeal related to Ground nos.1, 2 3, the same are in consonance with ground nos.1,2 3 of assessee s appeal and, therefore, no separate findings are required, hence the same are dismissed. 22. As regards ground nos.4, 5 6 of Revenue s appeal, the same are also identical to ground nos.1, 2 3 of assessee s appeal as well as Revenue s appeal and hence the same are dismissed. 23. As regards ground no.7 of Revenue s appeal related to deduction in respect donation under Section 80G of the Act, the CIT(A) has observed that the said donations were related to the business income and hence rightly claimed deduction under Section 80IAB of the Act. The CIT(A) has given detailed finding and there is no need to interfere with the same. Hence, ground no.7 of the Revenue s a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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