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2023 (3) TMI 1350 - AT - Income TaxDeduction u/s 80IB - disallowance of interest income derived from assessee s business advances and derived on fixed deposits placed by the assessee for availing credit facility, performance guarantees, bank guarantees, bid bonds etc. exclusively for the purpose of business in computing eligible profit and gains - HELD THAT - 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. 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. 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 expenditure claimed in relation to leasehold land - HELD THAT - It is pertinent to note that the amortisation expenses are not available to the assessee as it was part of lease rent payment and, therefore, the plea of the assessee that eligible profit for computation of deduction under Section 80IAB should increase is acceptable. Hence, ground nos.6 and ground no.6.1 are allowed. Addition in respect of retention money from customers - HELD THAT - 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. Deduction in respect donation u/s 80G - CIT(A) has observed that the said donations were related to the business income and hence rightly claimed deduction under Section 80IAB - CIT(A) has given detailed finding and there is no need to interfere with the same. Hence, ground no.7 of the Revenue s appeal is dismissed.
Issues Involved:
1. Disallowance of interest income for deduction under Section 80-IAB. 2. Disallowance under Section 14A. 3. Disallowance of depreciation on "right to use leasehold land". 4. Disallowance of amortization of leasehold land development. 5. Addition in respect of retention money from customers. 6. Disallowance of interest income on delayed payment from customers. 7. Disallowance of income from sale of scrap. 8. Disallowance of gain on derivatives contracts/swap contracts. 9. Disallowance of loss from foreign currency swaps. 10. Re-computation of deduction under Section 80-IAB after increasing deduction by disallowance under Section 14A. 11. Disallowance of deduction in respect of donations under Section 80G. 12. Disallowance of depreciation on office equipment. Summary: Issue 1: Disallowance of Interest Income for Deduction under Section 80-IAB The Tribunal allowed the inclusion of interest income derived from business advances and fixed deposits for availing credit facilities as eligible for deduction under Section 80-IAB, consistent with prior years' decisions and relevant case laws. The Revenue's arguments were not found to have distinguishing facts. Issue 2: Disallowance under Section 14A The Tribunal partly allowed the assessee's appeal, noting that own funds exceeded investments and should be considered for making investments. Only investments yielding exempt income during the year should be considered for disallowance under Section 14A, following the decision in Vireet Investments (P) Ltd. Issue 3: Disallowance of Depreciation on "Right to Use Leasehold Land" The Tribunal allowed the claim of depreciation on the right to use leasehold land as an intangible asset, recognizing it as per accounting standards and prior decisions. Issue 4: Disallowance of Amortization of Leasehold Land Development The Tribunal accepted the assessee's argument that amortization expenses should increase the eligible profit for deduction under Section 80-IAB, as these expenses are part of lease rent payment. Issue 5: Addition in Respect of Retention Money from Customers The Tribunal agreed that if retention money is added, it should increase the eligible profit for deduction under Section 80-IAB, supporting the assessee's legal principle argument. Issue 6: Disallowance of Interest Income on Delayed Payment from Customers The Tribunal dismissed the Revenue's appeal, aligning with the assessee's grounds and prior decisions allowing such income as eligible for deduction under Section 80-IAB. Issue 7: Disallowance of Income from Sale of Scrap The Tribunal dismissed the Revenue's appeal, consistent with the assessee's grounds and prior decisions recognizing scrap sales as eligible for deduction under Section 80-IAB. Issue 8: Disallowance of Gain on Derivatives Contracts/Swap Contracts The Tribunal dismissed the Revenue's appeal, supporting the assessee's grounds and prior decisions treating such gains as eligible for deduction under Section 80-IAB. Issue 9: Disallowance of Loss from Foreign Currency Swaps The Tribunal dismissed the Revenue's appeal, consistent with prior decisions allowing such losses as business expenditure. Issue 10: Re-computation of Deduction under Section 80-IAB after Increasing Deduction by Disallowance under Section 14A The Tribunal dismissed the Revenue's appeal, aligning with the assessee's grounds and prior decisions. Issue 11: Disallowance of Deduction in Respect of Donations under Section 80G The Tribunal upheld the CIT(A)'s decision that donations related to business income were rightly claimed under Section 80-IAB, dismissing the Revenue's appeal. Issue 12: Disallowance of Depreciation on Office Equipment The Tribunal upheld the CIT(A)'s decision to allow depreciation at the qualified rate, dismissing the Revenue's appeal. Conclusion: The appeal of the assessee was partly allowed, and the appeal of the Revenue was dismissed.
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