2016 (2) TMI 1309 - AT - Income Tax

Disallowance of deduction claimed u/s 80IA in respect of interest income from deposits - assessee submitted that interest was received from deposits - HELD THAT - This Tribunal in the assessee s own case for assessment year 2008-09 2013 (9) TMI 1256 - ITAT CHENNAI found that the interest income is not eligible for deduction u/s 80IA of the Act. In view of the above this Tribunal do not find any reason to interfere with the order of the lower authority. Moreover the interest income is not from business of the assessee. The source of income is from deposits made by the assessee therefore it is not eligible for deduction u/s 80IA of the Act. Accordingly the order of the CIT(A) is confirmed. Deduction in respect of other income - HELD THAT - Since in assessee s own case for assessment year 2008-09 a co-ordinate Bench of this Tribunal found that other income is not eligible for deduction u/s 80IA of the Act and the CIT(A) has followed the order of this Tribunal we do not find any reason to interfere with the order of the CIT(A). Accordingly the same is confirmed. Exclusion of expenditure in respect of income which does not form part of the eligible profit for deduction u/s 80IA - HELD THAT - What was not excluded in the eligible profit for computation of deduction u/s 80IA is interest received by the assessee from fixed deposits and other income. For earning interest from fixed deposits the assessee need not spend any money or incur any expenditure. The details of other income are not available on record and no material is available on record to indicate that the assessee has incurred any expenditure for earning the other income. In those circumstances this Tribunal is of the considered opinion that exclusion of the so called expenditure does not arise for consideration. Disallowance of gratuity amount paid to LIC - HELD THAT - Creation of the trust is a mandatory pre-condition for payment of contribution by the assessee. In the case before us for the year ended 31.3.2005 the trust was not created. The trust was created on 2.5.2015. Therefore it cannot be said that the fund was paid for the irrevocable trust created exclusively for the benefit of the employees. In the absence of any material to indicate that the assessee has created an irrevocable trust this Tribunal is of the considered opinion that the judgment of M/S TEXTOOL CO. LTD. 2009 (9) TMI 66 - SUPREME COURT may not be applicable to the facts of the case. In view of the above this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly the same is confirmed.

Summary

Issues Involved:
1. Disallowance of deduction claimed under section 80IA of the Act for interest income from deposits.
2. Disallowance of deduction for other income under section 80IA of the Act.
3. Exclusion of expenditure in respect of income not forming part of eligible profit for deduction under section 80IA of the Act.
4. Disallowance of gratuity amount paid to LIC.
5. Deduction under section 80IA of the Act on revenue sharing income from lessees, lease rent, rent from auditorium, rent from modules.

Analysis:

1. Disallowed Deduction for Interest Income from Deposits:
The Tribunal confirmed the disallowance of deduction claimed under section 80IA of the Act for interest income from deposits. It was held that interest income is not eligible for deduction under this section as it is not derived from the business of the assessee but from deposits made. The Tribunal referred to a previous decision in the assessee's case for a different assessment year where a similar conclusion was reached, supporting the disallowance.

2. Disallowed Deduction for Other Income:
Similar to the interest income, the Tribunal upheld the disallowance of deduction for other income under section 80IA of the Act. It was noted that the other income also did not qualify for the deduction based on a previous decision in the assessee's case for a different assessment year. The Tribunal found no reason to interfere with the order of the lower authority in this regard.

3. Exclusion of Expenditure for Non-Eligible Profit:
The Tribunal considered the exclusion of expenditure in respect of income that does not form part of the eligible profit for deduction under section 80IA of the Act. It was argued by the assessee that corresponding expenditure should be excluded if the income was not included for deduction. However, the Tribunal found that for interest income from fixed deposits, no expenditure was incurred by the assessee. Similarly, no details of expenditure for earning other income were available, leading to the conclusion that exclusion of expenditure did not apply in this scenario.

4. Disallowed Gratuity Amount Paid to LIC:
The Tribunal dismissed the claim for the gratuity amount paid to LIC. It was found that the trust deed necessary for the payment was not in existence at the time of payment, rendering the payment invalid. The Tribunal distinguished a previous judgment and highlighted the requirement for the creation of an irrevocable trust for such payments to be allowed. Since no trust was created by the assessee, the claim was rejected.

5. Deduction on Revenue Sharing Income:
Regarding the Revenue's appeal on deduction under section 80IA of the Act for revenue sharing income from various sources, the Tribunal confirmed that except for interest income, the assessee was eligible for deduction. This decision aligned with the order in the assessee's case for a previous assessment year. The Tribunal upheld the CIT(A)'s decision and dismissed the Revenue's appeal.

In conclusion, both the appeals of the assessee and the Revenue were dismissed by the Tribunal, maintaining the decisions of the lower authorities on the various issues raised in the case.