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TMI Blog2016 (9) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of “income drawn” therefore the assesse is an eligible under Section 80IB of the Act. In our view, the forfeiture of the amount was an income flowing under the first degree of nexus with the eligible business. The forfeiture of the amount is result of the failure on the part of the customer to cancel the booking, which in our view, is an income directly drawn from the business of the assessee. However, we are remanding the matter to the file of the A.O. for the purposes of verification of the forfeiture amount and calculation of the interest charged from the customers on account of delayed payment. Miscellaneous income - The assessee has shown the income of ₹ 2,99,948/- on account of the room rental charges retained by it from the charges payable to its labourers to the work contract labourers. The assessee has shown the income being incidental to the business of the assessee. In our view, the assessee for the purposes of smooth functioning and early completion of project was duty bound to provide housing facility, electricity and water connection at a place near to the work site of the assessee to its employees and if the assessee do not provided such facilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e/developers/managers. It filed return of income for the year under consideration on 27/09/2010 declaring Nil income after claiming deduction U/s 80IB(10) for ₹ 2,03,37,343/-. The case was selected for scrutiny. The appellant firm has shown credit amount to the P L account totaling to ₹ 12,62,856/-. The details of which is as under:- i) FDR Interest-HDFC - ₹ 4,35,592 ii) FDR Interest- SBH - ₹ 48,578 iii) Interest received from customers ₹ 3,45,000 iv) Interest on NSC - ₹ 8,750 v) Forfeit account - ₹ 1,25,000 v) Miscellaneous income - Rs.2,99,348 vi) Sundry balances written off - ₹ 588 Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collateral security for OD. This security could have been any other investment. Therefore, the treatment of holding the interest earned on such FDR as Income from other sources by the Assessing Officer is held to be correct. (ii) Forfeited amount: The amount was received by the appellant on cancellation of bookings and is in the nature of windfall. It cannot be said to have a first degree of nexus with the eligible business and can only be considered to be incidental to the conduct of business by the appellant. The Assessing Officer was correct in not considering the same as part of profits for computation of deduction U/s 80IB(10) of the Act. (iii) Interest received from customers: This amount is received from buyers for delayed payments of installments. It carries the nomenclature of being part of sale proceeds. Just like discount given on sales forms part of the sale consideration as a negative sale consideration, interest received on delayed payments is a positive sale consideration. The Assessing officer is directed to include this amount in the Gross Total Income for computation of deduction U/s 80IB(10) of the Act. (iv) Miscellaneous Income:- The room ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against profits attributable to industrial undertaking Respectfully following the judgment of the Hon ble Supreme Curt, we hold that the FDR interest at ₹ 4,35,592 , ₹ 48,578 and ₹ 8,750/- were rightly sustained by the authorities below and the assessee was not entitled for exemption U/s 80IB of the Act on such income. Forfeited amount and interest from customers:- The amount was received by the appellant on cancellation booking in accordance with the clause 6.1 of the charges. It was contended that the said amount was accrued to the assessee on account of the failure of the customers to honor their commitment in terms of the agreement. Similarly the interest was received by the assessee on account of delayed payment of installment. In our view, for the purposes of claiming of forfeiture of the amount amd charging of interest has by the assessee from the customer has a direct nexus of first degree with the business of the assessee there it comes with the definition of income drawn therefore the assesse is an eligible under Section 80IB of the Act. In our view, the forfeiture of the amount was an income flowing under the first degree of nexus with the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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