2016 (2) TMI 1308 - AT - Income Tax

Disallowance of deduction u/s 80IA in respect of interest income - assessee has received interest on fixed deposits made with banks - deposits were made from the advance received from the tenants for occupying the commercial space - HELD THAT - Deduction u/s 80IA is to be allowed on the profit derived by an undertaking from the business of developing or operating and maintaining infrastructure facilities. In this case, admittedly, the interest income was not derived from the industrial undertaking but from the deposits made by the assessee from the banks. Therefore, the interest income has to be necessarily classified as income from other sources and hence, it cannot be construed as derived from industrial undertaking. Therefore, the assessee is not eligible to claim deduction u/s 80IA in respect of interest income. Deduction u/s 80IA in respect of other income other than interest income - HELD THAT - For earning interest income from bank, the assessee is not expected to incur any expenditure. Therefore, the assessee cannot claim any expenditure for earning interest income from fixed deposits. In respect of other income other than the interest income from fixed deposits, this Tribunal is of the considered opinion that the assessee is eligible for exemption u/s 80IA, therefore, the alternative claim made by the assessee does not survive in respect of the income from other sources other than the interest income. Therefore, the alternative ground raised by the assessee is dismissed. Disallowance u/s 43B being provision of 80% of cenvat credit amount relating to service tax - Raising a specific ground as Ground No.29 before the CIT(A) - HELD THAT - It is an admitted fact that the assessee has contested disallowance u/s 43B of the Act being provision of 80% of cenvat credit amount relating to service tax. Admittedly, this ground raised by the assessee as Ground No.29 was not disposed of by the CIT(A). Therefore, this Tribunal is of the considered opinion that the CIT(A) has to dispose of this specific ground raised by the assessee as Ground No.29. Accordingly, this ground raised by the assessee with regard to disallowance u/s 43B is remitted back to the file of the CIT(A). The CIT(A) shall consider and decide the issue in accordance with law after giving a reasonable opportunity to the assessee.

Summary

Issues:
1. Disallowance of deduction u/s 80IA in respect of interest income.
2. Eligibility for deduction u/s 80IA in respect of other income.
3. Reopening of assessment u/s 147 of the Act.
4. Disallowance u/s 43B of the Act.
5. Computation of eligible profit for deduction u/s 80IA.

Issue 1: The Tribunal considered the disallowance of deduction u/s 80IA for interest income received from fixed deposits. It was ruled that interest income from bank deposits cannot be classified as income derived from an industrial undertaking, hence not eligible for the deduction u/s 80IA. However, rental income from infrastructure facilities was deemed eligible for exemption u/s 80IA.

Issue 2: The Tribunal deliberated on the eligibility for deduction u/s 80IA concerning other income apart from interest income. It was noted that income like lease rent and rent from auditorium, derived from infrastructure created by the assessee, was eligible for exemption u/s 80IA. The Tribunal upheld the exemption for rental income, following its previous decision in the same case.

Issue 3: Regarding the reopening of assessment u/s 147, the Tribunal analyzed the grounds for reopening based on disallowance of deduction u/s 80IA. The Tribunal upheld the reopening of the assessment, emphasizing that interest income was not eligible for deduction u/s 80IA, while rental income qualified for the exemption.

Issue 4: The Tribunal addressed the disallowance u/s 43B related to service tax credit. It was found that the CIT(A) did not dispose of the specific ground raised by the assessee, leading to the remittance of the matter back to the CIT(A) for consideration.

Issue 5: The computation of eligible profit for deduction u/s 80IA was discussed concerning lease rent, revenue sharing income, rent from auditorium, and rent from modules lessees. The Tribunal reaffirmed that these incomes were eligible for deduction u/s 80IA, despite an appeal filed by the Department, emphasizing the previous decision in the same case.

In conclusion, the Tribunal partially allowed the assessee's appeals related to disallowance of deduction u/s 80IA for interest income, reopening of assessment, and disallowance u/s 43B. The Revenue's appeals were dismissed concerning the computation of eligible profit for deduction u/s 80IA.