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TMI Blog2021 (11) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... he same was necessary to keep the Park clean tidy which activity is the task of assessee i.e. operation maintenance of the Park, so the income which was generated from the sale of scrap/waste material (non-reusable) and interest from BESCOM have nexus with the maintenance and operation of the industrial parks. The deposits interest from BESCOM which was clarified by the Ld. AR of the assessee that without deposit of money, electric connection and un-interrupted supply of electricity could not be given by the BESCOM, therefore, for smooth operation and maintenance of the parks uninterrupted electricity is the necessity and, therefore, the interest income in this way is having nexus with the maintenance and the operation of the park and have direct nexus with the income (interest) which is a plausible view of Ld. CIT(A), which we do not want to interfere because in earlier years subsequent years, such a disallowance was made by the AO. Therefore, applying the Rule of consistency we uphold the action of Ld. CIT(A) and we dismiss the ground of Revenue. Addition as rental income earned in the three industrial parks - profit derived from Industrial Parks Salarpuria Softzone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly deleted the addition which does not require any interference from our part and, therefore, we confirm the order of the Ld. CIT(A) on this issue. Therefore, this ground of appeal of revenue is dismissed. Addition on account of sundry balances written off debited in the Audited P L Account - assessee has failed to furnish any document in this regard despite providing several opportunities of being heard to the assessee - CIT-A deleted the addition - HELD THAT:- We note that the amount in question includes sundry debtor as well as loans and advances. The loans and advances are not allowable u/s. 36(v)(iii) of the Act. Break-up of the amount in question, which has been written off has not been given. Therefore, the allowability of the loans/advances written off by the assessee have to be examined by the AO. According to the Ld. AR, even if the advances are not allowable u/s. 36(v)(iii) of the Act still it is allowable as business expenditure u/s. 28 of the Act. Be that as it may, on this issue the order of the Ld. CIT(A) is set aside and this issue is remitted back to the file of the AO for examining whether the advances/loans which were written off can be treated as busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions and carefully gone through the facts and circumstances of the case. We note that the AO has observed that the assessee company has filed its return of income for AY 2014-15 on 29.11.2014 declaring a total income of ₹ 41,04,26,777/-. The AO noted that the assessee filed a revised return on 29.03.2016 declaring a total income of ₹ 40,88,96,546/-. The AO took note of the fact that the assessee claimed deduction u/s. 80IA of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for ₹ 16,03,16,963/- and income of ₹ 24,85,79,580/- was offered to tax. Later the case was selected for complete scrutiny through CASS. 2.4. The AO notes that the assessee company had income from maintenance of properties/housing projects/industrial parks and rent and other miscellaneous receipts from such establishments and also from trade of flats of group companies. The AO noted that the assessee company's income included income from operation and maintenance of 'Industrial Park Projects' and per first proviso to section 80-IA(4)(iii) of the Act, the profit from such activity being eligible for 100% deduction under Chapter VIA of the Act. The AO no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT has albeit late had issued notification in accordance to law in respect of M/s. Softzone Tech Park Ltd., therefore, this project is eligible for deduction u/s. 80-IA(4)(iii) of the Act. We also note that the Ld. CIT(A) has given relief to the assessee by taking note of this Tribunal's decision in the case of M/s. Salarpuria Softzone Vs. JCIT in ITA Nos. 665 666/Kol/2013 and cross appeal being ITA Nos. 581 813/Kol/2013 for AYs. 2008-09 2009-10 which was pronounced by this Tribunal B Bench vide order dated 29.02.2016 which has been reproduced by the Ld. CIT(A) from pages 14 to 20 of his order. We also note that the Tribunal has taken note of the decision of the Hon'ble Karnataka High Court in a case of CIT Vs. Ittina properties Pvt. Ltd., ITA No. 556 of 2013 and 105 of 2014 dated 15.07.2014 in similar matter as well as the decision of Hon'ble Bombay High Court in the case of CIT Vs. Akruti City Ltd. (2013) 214 Taxman 398 (Bom) wherein the Hon'ble Bombay High Court has held that once industrial park was approved by Ministry of Commerce Industry, CBDT has to suo moto issue notification and any delay on the part of the CBDT in issuing notification would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirm the action of the Ld. CIT(A) and dismiss this ground of appeal of the revenue. 3. Coming to ground no. 2 of the revenue, which is as under: 2. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition made by the AO of ₹ 7,44,875/- on account of disallowance of deduction claimed u/s. 80IA (4)(iii) of the Act disregarding the fact that such income is not directly related to operating and maintenance of the eligible projects and thus cannot be claimed for computing deduction u/s. 80IA(4)(iii) of the I.T. Act, 1961. 3.1. Brief fats of this issue as noted by the AO that the assessee in its profits of eligible projects of 'Salarpuria G R Tech Park', 'Salarpuria Hallmark' and 'Salarpuria Infozone' had included other income ₹ 7,44,875/-. The AO notes that in order to operate and maintain the industrial parks had collected definite maintenance charges from the occupants of the Industrial Parks from which maintenance expenditures were met and profit was derived. According to AO, during the assessment hearings the issue of earning of 'other income' from the eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, according to the assessee, the income generated from such sale of waste materials and the interest earned in the process are part of the assessee's business activity of operating and maintenance of industrial parks and cited various judicial decisions before the Ld. CIT(A) to buttress its claim. It was brought to our notice that this kind of disallowance was made by the AO for the first time and in the previous years and subsequent years there has been no such disallowance on similar/identical income which the assessee had received from sale of waste/scrap materials which was necessary for maintaining the parks. Therefore, citing the rule of consistency the Ld. AR supported the order of the Ld. CIT(A). We note that the Ld. CIT(A) has given a finding of fact that all the items claimed under the head 'Miscellaneous Income' have a direct nexus with the business of the assessee namely operation and maintenance of the three (3) eligible industrial parks. The Ld. CIT(A) has noted that in the facts of the case the profits and gains from sale of scrap and the interest income constitutes income from business and citing the decision of the Hon'ble Apex Court in S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Parks built by the developers and enjoyed the deduction under Chapter VIA as per first provision to Section 80IA(4)(iii). According to AO, letting out spaces on the premises of any eligible project is not an activity, which can be related to 'operate and maintain' the projects. The AO therefore, disallowed deduction u/s. 80IA(4)(iii) to the extent of ₹ 43,00,997/- derived from letting out eligible projects space, and add back the sum to the income of the assessee. 4.2. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to allow the appeal of the assessee. Aggrieved, the revenue is before us. 4.3. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the AO did not allow the benefit of deduction of rental income of ₹ 43,00,997/- earned from three (3) industrial parks u/s. 80IA(4)(iii) of the Act. On appeal, the Ld. CIT(A) examined as to whether this receipt had direct nexus with the business of operating and maintenance of the eligible business (3 industrial parks). The Ld. CIT(A) after considering the facts noted that the rental income was earned by the assessee by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was shown as ₹ 75,62,42,439/-. The AO noted that the Revenue declaration was lesser by ₹ 15,29,74,737/-. Therefore, the AO asked the Authorized representative was asked to reconcile the difference in response and he acknowledges that assessee pursuant to the same had filed reconciliation statement. The AO noted that the reconciliation statement filed by the assessee affirmed that the 'maintenance charges' as per 26AS was ₹ 57,17,66,220/- but as per accounts the 'maintenance charges' was ₹ 43,96,85,407/-. According to AO, no explanation was offered for the difference of ₹ 13,20,80,813/-. Therefore, AO was of the opinion that ₹ 13,20,80,813/- was not offered to tax and thus the sum of ₹ 13,20,80,813/- was added to the total income of the assessee as undisclosed income. 5.2. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) and the Ld. CIT(A) deleted the addition of ₹ 13,20,80,813/-. Aggrieved, the revenue is before us. 5.3. We have heard rival submissions and gone through the facts and circumstances of the case. At the outset, it was brought to our notice by the Ld. AR that before passing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 169/- and ₹ 2,02,26,996/- was already offered to tax and such an addition would amount to double deduction and, therefore, the AO had erred in making the addition. The assessee had filed the reconciliation which is found placed at page 163 of the paper book which is as under: 5.4. The Ld. AR drew our attention to page 211 of the paper book relevant portion of which is as under: Note 20 Revenue from Operations For the year ended 31.03.2014 For the year ended 31.03.2013 Income from Sale of Flats (Traded) 5,71,41,601.00 Income from Services Maintenance Charges 43,96,85,407.06 39,07,52,381.47 Electricity Charges 1,49,07,168.57 1,44,20,281.00 Generator Maintenance 2,02,26,996.93 94,52,858.40 Other Misc. Charges 9,07,989.00 Other op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and generator maintenance of ₹ 2,02,26,996/-. According to the Ld. AR, in respect of ₹ 12,01,38,071/- the customers had deducted TDS which was generator/electricity charges reimbursement. It was pointed out that the electricity and generator maintenance income where no TDS was deducted was to the tune of ₹ 87,14,59,551/-. Thus, the electricity and generator maintenance charges come to ₹ 99,15,97,622/- when deducted by the expenses on account of electricity and generator maintenance charges, the net receipt is only to the tune of ₹ 3,51,34,164/- which tallies with the P L Account, so there is no difference and it was reconciled. The Ld. CIT(A) after going through the reconciliation and submissions made by the Ld. AR held as under: 3. I have carefully considered the submissions of the Ld. A.O in the Remand Report as well as the submissions of the appellant countering the findings of the Ld. A.O, as made out in the said report. I note that the addition of ₹ 13,20,80,813/- is on account of alleged difference in amount of income so reported in the 26AS data and that disclosed by the appellant in its Profit Loss Account for the year. The Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther observed that the appellant has duty explained the so called difference between the two dates, and there does not arise any occasion on the part of the Ld. AO to make such addition merely on the basis of such difference in the 26AS data and amount reflected in the P L Account. Further, it is also observed that an amount cannot be an income just because TDS has been deducted since the liability to pay tax depends on the changeability of such income which defined in sec. 4 of the Act. In my carefully considered view on such issues, under the provision of sec. 4 of the Act, if an amount does not bear the character of income the same cannot be made chargeable to tax and cannot be converted to income only because payer of the sum deducts tax under some misconception of law. 5. In the case of appellant as well simply because the payer have deducted tax u/s. 194C on the reimbursement so made by them, the same cannot be treated as income merely on the basis of Form 26AS data. That observed, I note that the appellant has successfully explained that the difference in reimbursement has been offered to tax i.e. net income earned on account of reimbursement has also been offered&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng heard to the assessee? 6.1. Brief facts of the case as noted by the AO is that the assessee in the profit and loss account had debited a sum of ₹ 2,02,30,945/- as sundry balance written off. Therefore, the AO asked the assessee to furnish the details of sundry balances written off with reference to opening debtors and closing debtors and the year of accounting to revenue of such balances. According to AO, the assessee could not furnish any such details. Therefore, the sum of ₹ 2,02,30,945/- was added back to the total income of the assessee. 6.2. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to delete the same. Aggrieved, the revenue is before us. 6.3. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the Ld. CIT(A) has given relief to the assessee by holding as under: 7. Having carefully perused the facts of the case, I find that the contention of the appellant is correct on facts, that the Ld. A.O r did not include the proposed addition of ₹ 2,02,30,945/- that the assessee company had debited in Audited P/L a/c sum of ₹ 2,02,30,945/- on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CIT(A) Vs Asahi India Safety Glass Ltd. 203 Taxman 277 relied upon by Ld. A.R. the Hon'ble Court has held that expenditure incurred on application software is a revenue expenditure. In the present case as noted by A.O. the expenditure was incurred on application software. Therefore, respectfully following the Hon'ble Delhi High Court, we hold the expenditure incurred on application software to be revenue in nature and therefore, we allow Ground No. 2. ii) Bad Debts: Ld. A.R. submitted that bad debts had been written off by assessee in its books of accounts and, therefore, its case was squarely covered by the order of Hon'ble Supreme Court in the case of TRF Ltd. Vs CIT 323 ITR 397 placed at paper book 39 of compilation of judgements. Ld. A.R. further relied upon the case law of Auto Meters Ltd. 292 ITR 345 decided by Hon'ble Delhi High Court placed a paper book pages 42-43. Inviting our attention to A.O.'s objection in disallowing the write off of bad debts, Ld. A.R. submitted that the A.O. had disallowed the claim holding that loan given by assessee has not fully become irrecoverable as the loanee was not declared BIFR Company and the case was pending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Apex Court has held that for a claim of bad debt, the assessee has to only establish that debt has been written off and it was not necessary to establish that debt has become irrecoverable. Admittedly, the debt has been written off as noted in the assessment order itself and the loan was given in ordinary course of regular business activities of the assessee. Therefore, as per the Hon'ble Supreme Court decision, the action of writing off of debt was sufficient to claim the loss. In the judgements relied upon by Ld. A.R., the Hon'ble Supreme Court had remitted back the claim of bad debt to A.O. as in that case, the facts of writing off of debt was not examined by A.O. However, in the present case, the debt has actually been written off therefore, relying upon the ratio of judgement of Hon'ble Supreme Court, we hold that the claim of assessee in respect of bad debt written off is allowable and in view of the same, we allow ground No. 3 of appeal. In view of the factual and legal matrix being similar for the case at hand, I am unable to sustain the action of the Ld. AO in disallowing the impugned sum of ₹ 2,02,30,94/- disallowed as bad debts . The di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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