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TMI Blog2014 (1) TMI 1579X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on or after the Ist day of April, 2005 from any business carried on or services rendered by an entrepreneur or a developer in a unit or SEZ - The assessee was eligible for exclusion of income from SEZ business for the purpose of section 115JB - The claim of assessee with respect to SEZ income has not been examined by the Assessing Officer or by ld CIT(A) - The issue has been restored for fresh adjudication. - I.T.A. No.126/Del/2013 & I.T.A. No. 4761/Del/2012 - - - Dated:- 24-1-2014 - Smt. Diva Singh And Shri T. S. Kapoor,JJ. For the Appellant : Dr.Sudha Kumari, CIT-DR. For the Respondent : Shri Pradeep Dinodia Shri RK Kapoor, C.A. ORDER Per Bench; These appeals were earlier heard on 23.8.2013 which were re- fixed for certain clarification and were finally heard on 10.1.2014. These are two appeals filed by the revenue against the two separate orders of Ld CIT(A) which were passed on 26.10.2012 and 4.6.2012 respectively. The revenue has taken two grounds of appeal in assessment year 2008-09 whereas in assessment year 2009-10 the revenue has taken three grounds of appeals. Ground No.1 2 of assessment year 2008-09 and ground No.1 3 in assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of operation and maintenance of SEZ is to be excluded, it has to bring on record all facts and documents in support of such claim. The assessee has not filed Form No.10CCB which is required to be filed for claiming deduction u/s 80IAB. Further the claim of the assessee for claiming deduction u/s 80IAB is yet to be determined and shall remain part of book profit for computing the tax liability u/s 115JB. 3. The third disallowance made by the Assessing Officer in assessment year 2009-10 was on account of calculation of book profit u/s 115JB. The Assessing Officer has added back disallowance u/s 14A for the purpose of calculation of book profit. 4. Dissatisfied with the order of Assessing Officer the assessee filed appeals before Ld CIT(A) and Ld CIT(A) reduced the disallowance u/s 14A by excluding interest expense and further deleted the disallowance made in respect of calculation of book profit and also gave relief to the assessee on account of exclusion of SEZ income from the total income for the purpose of calculation u/s 115JB of the Act. The operative part of Ld CIT(A)'s order for reducing disallowance u/.s 14A for assessment year 2008-09 is reproduced below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons laid down in sec. 80IAB of the Income Tax Act, 1961 provide that the deduction is admissible for 10 consecutive assessment years in a span of 15 years at the option of the assessee. The appellant has not yet exercised its option to claim the deduction admissible to it u/s 80IAB and the same is required if the deduction is claimed under that section. Since the deduction was not claimed, the report as stated by the Assessing Officer was not required to be filed. The appellant claimed that its only source of income is income from operation and maintenance of SEZ projects. The appellant has contended that the operation of sec. 115JB (6) of the Income Tax Act, 1961 is independent of the provisions contained in the section 80IAB of the IT Act. The provisions of sec., 115JB(6) clearly state that the provisions of sec. 115JB shall not apply to the income accrued or arising on or after the Ist day of April, 2005 from any business on or services rendered by an entrepreneur or a developer in a unit or special economic zone as the case may be. In a way the provisions of sub section 15JB are a complete code in itself and are independent of any other sections. Reference was also made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner provided by the Companies Act and the same to be scrutinized and certified by statutory auditors and will have to be approved by the company in its General Meeting and thereafter to be filed before the Registrar of Companies who has a statutory obligation also to examine and satisfy that the accounts of the company are maintained in accordance with the requirements of the Companies Act. In spite of all these procedures contemplated under the provisions of the Companies Act, we find it difficult to accept the argument of the Revenue that it is still open to the assessing officer to re-scrutinize this account and satisfy himself that these accounts have been maintained in accordance with the provisions of the Companies Act. In our opinion reliance placed by the Revenue on Sub-section (1 A) of Section 115-J of the IT Act in support of the above contention is misplaced. Sub- section (1A) of Section 115-J does not empower the assessing officer to embark upon a fresh inquiry in regard to the entries made in the hooks of account of the company. The said sub- section. as a matter of fact mandates the company to maintain its account in accordance with the requirements or the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.3, the Ld DR submitted that these submissions were not submitted to Assessing Officer and in support relied upon para 3 of assessment order and argued that since no complete details were provided, the Assessing Officer was justified in making disallowance of common interest as well as expenses. Arguing second ground of appeal which is also third ground of appeal in assessment year 2009-10 the Ld DR submitted that before Assessing Officer no details were there as to which income was from SEZ and which was not from SEZ. Therefore, the Assessing Officer was justified in excluding the alleged SEZ income from the calculation of profit u/s 115JB. It was further submitted that section 115JB is a complete code in itself and Assessing Officer made the addition for the purpose of section 115JB as the assessee had not claimed deduction u/s 80IAB of the Act. 9. Regarding the second ground of appeal in assessment year 2009-10, the Ld DR submitted that disallowance u/s 14A has to be considered and has to be added back to the profit as per P L Account as it is specifically covered by the clause (f) of Explanation-1 to section 115JB of the Act and in this respect our attention was invited to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvited to para 6 of the said order and in view of the above, it was argued that the matter is duly covered in favour of assessee and therefore, the ground of appeal taken by revenue needs to be dismissed. 12. We have heard the rival submissions of both the parties and have gone through the material available on record. These appeals were earlier head on 23.8.2013. However, while dictating the order, it was observed that ground No.2 in assessment year 2009-10 was not argued therefore the appeals were refixed for clarifications and was finally heard on 10.1.2014. Regarding disallowance u/s 14A we find that assessee had sufficient interest free funds which it had invested in mutual funds and moreover the assessee instead of incurring expenditure in the form of interest has earned income and therefore Ld CIT(A) has rightly deleted the interest component from the disallowance of Rule 8D. The Ld CIT(A) has very elaborately held that assessee had sufficient interest free funds and therefore we do not find any infirmity in the order of Ld CIT(A). Therefore, ground No.1 in both the years is dismissed. 13. Regarding ground No. 2 in assessment year 2009-10 we find that the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Company's Act unless the amount is specified in clauses (a) to (h) of the Explanation. The amount of ₹ 88,290/- has not been established to have nexus with the dividend income. The amount of ₹ 88,290/- has been estimated at 1% of the income. In our view, no disallowance could be made. Accordingly, we direct the Assessing Officer to delete the amount of ₹ 88,290/- from the book profit. Therefore respectfully following the above, we dismiss ground No.3 in assessment year 2009-10. 14. As regards ground No.2 in assessment year 2008-09 and ground No.3in assessment year 2009-10 we find that the Assessing Officer has not considered the claim of assessee because of the fact that assessee had not made claim u/s 80IAB of the Act and further the Assessing Officer had not examined the claim u/s 80IAB. However, we find that assessee is eligible to claim the deduction u/s 80IAB in 10 consecutive assessment years within a period of 15years and we also find that assessee as a co-developer also qualifies to be a developer for the purpose of claiming benefit u/s 115JB of the Act as the definition of developer includes co-developer as contained in clause (g) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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