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2022 (5) TMI 1171 - ITAT KOLKATADisallowance of interest on TDS and TCS and penalty of sales tax - HELD THAT:- CIT(A) has rightly allowed the interest on service tax and interest on VAT by respectfully following the ratio laid down by the Hon’ble Supreme Court in the case of Lachmandas Mathuradas [1997 (12) TMI 16 - SUPREME COURT] and in the case of Mahalakshmi Sugar Mills Co [1980 (4) TMI 1 - SUPREME COURT] holding that such interest paid on service tax and VAT are compensatory in nature and not in the nature of penalty and, therefore, disallowance of such interest cannot be made u/s 37(1) of the Act. As far as the remaining amount is concerned, we find that ld. CIT(A) has confirmed the disallowance for interest on TDS and penalty on sales tax - During the course of hearing, ld. Counsel for the assessee requested for not pressing the disallowance of penalty on sales tax and, therefore, the said disallowance is confirmed. Remaining amount is interest on TDS & TCS -. On going through the finding of the ld. CIT(A), we find no reason to interfere into the finding disallowing the claim of interest paid on TDS & TCS - Thus, ground no. 1 raised by the assessee is dismissed. Deduction u/s 80IA(4)(iii) - HELD THAT:- Looking to the fact that since as on date the said industrial park is not eligible for deduction u/s 80IA(4)(iii) of the Act for want of being noticed by CBDT, the ld. CIT(A) has rightly denied the claim, however, presently the matter is subjudice before the Hon’ble Calcutta High Court and whenever the judgment is passed by the Hon’ble Court and if held in favour of the assessee then the assessee shall be eligible to put forth the claim before the Revenue authorities to allow the deduction u/s 80IA(4)(iii) of the Act, else the finding of the ld. CIT(A) will remain confirmed. Thus ground no. 2 of the assessee’s appeal is dismissed. Disallowance u/s 14A of the Act comprises of interest disallowance - Hon’ble High Court of Bombay in the case of Commissioner of Income-tax vs. Reliance Utilities & Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] we are of the view that interest disallowance u/s 14A of the Act at Rs.60,03,465/- is uncalled for. We also find that the requirement of sub-Section (2) of Section 14A of the Act is not fulfilled by the ld. AO as there is no specific finding that why he was not satisfied with the correctness of the claim of the assessee of having not incurred any expenditure for earning exempt income. Thus, under these given facts and the settled judicial precedence, no disallowance u/s 14A of the Act was called for by the ld. AO. Thus, ground no. 1 raised by the Revenue is dismissed. Disallowance of interest paid/debited - Sufficiency of own funds - HELD THAT:- Where the assessee had sufficient interest free funds in the form of share capital and accumulated reserve and surplus to explain the interest free advances given to its subsidiary companies, we do not find any infirmity in the finding of the ld. CIT(A) deleting disallowance of interest expenditure - Hence, ground no. 2 raised by the Revenue is dismissed. Unexplained cash credit u/s 68 - HELD THAT:- As assessee has furnished sufficient documents including the income tax return, audited financial statement, assessment order u/s 143(3) of the Act for AY 2011-12, Bank accounts of the share applicants and the annual report filed with the Registrar of Companies in case of all the alleged cash creditors which in our view were sufficient to prove the identity and creditworthiness of the cash credit companies and the genuineness of the transaction entered between the assessee and the group companies. Ld. D/R could not controvert the fact that the assessee company is showing the net profit of Rs. 66.25 Cr, Rs. 35.64 Cr, Rs. 108.88 Cr and Rs. 48.47 Cr respectively for the financial years ending on 31.03.2008, 31.03.2009, 31.03.2010 & 31.03.2011 which means that the assessee company is worth investing. Similarly, the share applicants being part of the assessee group are also having sufficient funds to invest in the assessee company. Thus find no infirmity in the finding of the ld. CIT(A) deleting the impugned addition made u/s 68 of the Act. Thus, ground no. 3 raised by the Revenue is dismissed. Disallowance of bad debts as balance written off - HELD THAT:- From the above finding and the ratio laid down in Binani Cement Ltd. [2015 (3) TMI 849 - CALCUTTA HIGH COURT] and Britannia Industries Ltd [2015 (6) TMI 39 - CALCUTTA HIGH COURT] we find no infirmity in the finding of the ld. CIT(A) allowing the claim of the assessee writing off the stock being in the nature of business loss. We also find no infirmity in the finding of the ld. CIT(A) allowing the claim of bad debts as these were the sales/rental made in the past offered as revenue but being not realizable has been claimed as bad debts in the regular books of account and this claim has been rightly made in view of the ratio laid down by the Hon’ble Supreme Court in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] - we confirm the finding of the ld. CIT(A) and dismiss the ground no. 5 raised by the Revenue. Deduction u/s 80IB(10) of the Act in respect of projects namely “Salarpuria Serenity” and “Salarpuria Sanctity” - HELD THAT:- We find that deduction u/s 80IB(10) of the Act are given for housing projects in a manner of granting incentive to the developers and builders to take up such projects so as to fulfil the housing needs of the citizen of our country. It includes planning of such housing projects, earmarking of the project land, taking various approvals from the local authority for the construction, arrangement of funds to construct the projects, getting the completion certificate and then finally selling the same. Though all the conditions are very important to be fulfilled for claiming deduction but approval of the project and completion certificate of the project are most essential and as far as the other conditions are concerned if there is a violation akin to the residential units then the deduction should not be denied for the total project but should be restricted only to the profits earned from sale of such units which are in violation of the conditions provided u/s 80IB(10) of the Act. We, therefore, respectfully following the decisions referred herein above find no infirmity in the finding of the ld. CIT(A) in allowing the proportionate deduction u/s 80IB(10) of the Act for the gains from “Salarpuria Sanctity” (except for those two flats which did not comply to the requirement of Clause “e” & “f” of Section 80IB(10) of the Act). Therefore, we confirm the finding of the ld. CIT(A) allowing 100% deduction u/s 80IB(10) of the Act for “Salarpuria Sanctity” (100%) and proportionate deduction u/s 80IB(10) of the Act for “Salarpuria Serenity”
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