2012 (7) TMI 45 - AT - Income Tax

Deduction u/s 80IB - denial on ground that assessee was not the owner of the property and deduction is not available to developer - Held that - For the purpose of claiming deduction u/s 80IB(10) it is not necessary for the assessee to own the land since such condition is not mentioned in the Section, it would not be correct to deny deduction on this ground. Order of CIT(A) allowing deduction upheld. See Faquir Chand Gulati Vs. Uppal Agencies Pvt. Ltd (2008 (7) TMI 159 (SC)) - Decided in favor of assessee. Sundry Balances written off - exclusion for computing deduction u/s 80IB - Held that -In case of supplier payments sometimes the Appellant deducts some amounts and pays the bills. Since the amounts are generated during the course of business the same are eligible for deduction u/s 80IB(10). Interest received on delayed payments from customers - exclusion - Held that - Issue is now directly covered by the decision in case of Nirma Industries Ltd. v. Dy. CIT (2006 (2) TMI 92 (HC)), wherein it was held that Interest received from trade debtors for late payment of sales consideration interest received from trade debtors for late payment of sales consideration is income derived from the business of the industrial undertaking and it cannot be excluded from the profits of the industrial undertaking while computing deduction u/s 80-I - Decided in favor of assessee. Sale of scrap - exclusion - Held that - Deduction u/s 80IB(10) cannot be allowed on income generated from sale of scrap - Decided against the assessee.

Summary

Issues:
1. Disallowance of claim of deduction u/s 80IB(10)
2. Disallowance of deduction u/s 80IB(10) on specific amounts

Issue 1: Disallowance of claim of deduction u/s 80IB(10):
The Revenue appealed against the disallowance of a deduction claimed under section 80IB(10) by the Assessee. The dispute arose as the original land owner had acquired services of the Assessee for development and construction of a project, leading the Assessing Officer (A.O.) to disallow the claim on the grounds that the Assessee was not the owner of the property. However, the Assessee argued that the ownership of the land was not a prerequisite for claiming the deduction under section 80IB(10). The Assessee cited precedents from the Hon'ble ITAT and the Supreme Court to support their claim. The CIT(A) allowed the appeal of the Assessee, directing the A.O. to accept the claim of the Assessee u/s 80IB(10) based on the principles laid down in the cited judgments. The CIT(A) relied on the decisions of the Hon'ble ITAT Ahmedabad and the Hon'ble Supreme Court, upholding the Assessee's entitlement to the deduction u/s 80IB(10).

Issue 2: Disallowance of deduction u/s 80IB(10) on specific amounts:
The second ground of the Revenue's appeal related to the disallowance of deduction u/s 80IB(10) on specific amounts that were deemed ineligible for the deduction. The A.O. disallowed the deduction on amounts such as sales of scrap, interest received from parties on delayed payments, and balance written off, contending that they did not constitute business income eligible for deduction u/s 80IB(10). The Assessee argued that these amounts were directly connected to the business activities and thus should be eligible for the deduction. The CIT(A) considered the submissions of the Assessee and deleted the addition of certain amounts while restricting the deduction on income from the sale of scrap based on past decisions and specific project details. The CIT(A) upheld the Assessee's position on certain amounts and restricted the deduction on specific income based on relevant judgments and project-specific considerations.

In conclusion, the Appellate Tribunal ITAT, Ahmedabad upheld the decisions of the CIT(A) in both issues, dismissing the Revenue's appeal and affirming the Assessee's entitlement to the deductions under section 80IB(10) based on legal precedents and project-specific details presented during the proceedings.