2017 (1) TMI 507 - AT - Income Tax

Allowance of deduction under section 80IB(10) - Interest received - treated as Income from Other sources OR business receipts - Held that - The issue of assessability of interest income is decided against the assessee by the Tribunal in assessee s own case in the appeals relating to assessment years 2008-09 and 2009-10 wherein it has been held that the assessee was unable to demonstrate that the receipt of income was derived from and was part of business receipts in order to enable it to claim deduction under section 80IB(10) of the Act. Following the same parity of reasoning and in view of the concession of the learned Authorized Representative for the assessee, we decide this issue against the assessee.

Summary

Issues Involved:
1. Assessability of interest income as 'Income from other sources' or 'Business income'.
2. Allowance of deduction under section 80IB(10) of the Income Tax Act in respect of different projects.

Analysis:

Issue 1: Assessability of Interest Income
The cross appeals were filed against the CIT(A)'s order related to the assessment year 2010-11 under section 143(3) of the Income Tax Act. The assessee contested the addition of interest received as 'Income from Other sources' instead of business receipts. The Revenue challenged the deduction allowed under section 80IB(10) for the project 'Brahma Majestic'. The Assessing Officer found that some units exceeded the built-up area limit and there was commercial space exceeding the permissible limit, rendering the assessee ineligible for the deduction. Additionally, interest income of ?68,13,244 was not offered as business income. The CIT(A) upheld the treatment of interest income as not eligible for deduction under section 80IB(10).

Issue 2: Allowance of Deduction under Section 80IB(10)
The Revenue contested the allowance of deduction under section 80IB(10) for various projects like 'Brahma Suncity' and 'Brahma Avenue'. The CIT(A) allowed the deduction for these projects, but the Revenue argued against it. The Tribunal referred to earlier years' decisions and directed the Assessing Officer to allow prorata deduction under section 80IB(10) for each project. The Revenue's appeal was dismissed based on the Tribunal's directions from earlier years.

In conclusion, the Tribunal dismissed both the appeals, upholding the treatment of interest income and allowing the deduction under section 80IB(10) for the projects as per earlier decisions. The Tribunal emphasized consistency with previous rulings and rejected the appeals from both the assessee and the Revenue.

This comprehensive analysis covers the issues of interest income assessability and deduction under section 80IB(10) as per the judgment delivered by the Appellate Tribunal ITAT Pune in 2017.