2014 (12) TMI 968 - AT - Income Tax

Claim of deduction u/s 80IB - Income derived from operations and maintenance of SEZ - Deletion of adjustment in book profits calculation u/s 115JB Held that - CIT(A) rightly of the view that the adjustment not provided in explanation contained in section 115JB which provide for certain additions and subtractions from the profit shown in the profit & loss account - the income is from SEZ operations and it is not required to be included for working of book profit u/s 115JB also in DCIT, Circle-10 (1), New Delhi Versus DLF Assets Pvt. Ltd. 2014 (1) TMI 1579 - ITAT DELHI it has been held that the provisions of clause (g) to section 115JB refers to the amount of expenditure incurred for earning exempt income which has to be added back to the profit as per P&L A/c for the purpose of calculation of book profits u/s 115JB the order of the FAA is upheld Decided against revenue. Disallowance on deduction u/s 80IAB deleted income from sale of business treated as capital gain Held that - As decided in assessee s own case it has been held that deduction u/s 80IA of the Act cannot be denied after having been granted in the first year of claim, as the restraint of Section 80 IA(3) cannot be re-adjudicated in the subsequent AYs without withdrawing or disturbing the claim which was allowed in the initial AY Decided against revenue.

Summary

Issues:
1. Deletion of adjustment in the books profit calculation under section 115JB of the Income Tax Act on account of income from SEZ operations.
2. Disallowance of deduction under section 80IAB of the Income Tax Act and treatment of income from the sale of assets as business income.

Issue 1: Deletion of adjustment in the books profit calculation under section 115JB of the Income Tax Act on account of income from SEZ operations.
The appeal by the Revenue was directed against the Ld.CIT(A)'s order pertaining to the AY 2010-11. The Revenue challenged the deletion of an adjustment of a significant sum in the books profit calculation under section 115JB of the Act concerning income derived from SEZ operations. The Ld.CIT(A) held that the income from the development and maintenance of SEZ projects should not be included in the calculation of book profits under section 115JB, as it is not required to be included. The Tribunal, in a previous case, had adjudicated a similar issue in favor of the assessee, establishing a precedent. The Tribunal upheld the order of the First Appellate Authority and dismissed the appeal by the Revenue, providing relief to the assessee in the form of the deleted amount.

Issue 2: Disallowance of deduction under section 80IAB of the Income Tax Act and treatment of income from the sale of assets as business income.
In the second appeal by the Revenue, the issue involved the disallowance of a deduction claimed under section 80IAB of the Act and the treatment of income from the sale of assets as business income instead of capital gain. The Ld.CIT(A) concluded that the assessee was entitled to the deduction under section 80IB of the Act. The Tribunal referred to a previous decision in the assessee's case for the AY 2008-09, where the issue was adjudicated in favor of the assessee, leading to the allowance of the claim. The Tribunal highlighted that once a deduction is granted in the initial assessment year, it cannot be denied in subsequent years without withdrawing or disturbing the claim. Consistent with previous decisions, the Tribunal dismissed the appeal by the Revenue, providing relief to the assessee.

In conclusion, both appeals by the Revenue were dismissed, with the Tribunal upholding the decisions of the First Appellate Authority in favor of the assessee based on established legal principles and precedents.