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TMI Blog2024 (7) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 80IB(7A) of the Act has not been made in AY 2007-08 in scrutiny assessment because the appellant/assessee has shown income on sale/transfer of the shop under the head Capital Gains in AY 2007-08. Hence, there is no precedent of consistency of assessing the income accrued/received on sale/transfer of the shop under the head Business income . Therefore, the case law relied upon in this regard by the Ld. AR is of no relevance. Decided against assessee. - Shri Vikas Awas Thy, Judicial Member And Shri Avdhesh Kumar Mishra, Accountant Member For the Appellant : Shri Rohit Agarwal, CA For the Respondent : Sh. Vivek Vardh an, Sr. DR ORDER PER AVDHESH KUMAR MISHRA, AM The appeal for the Assessment Year (In Short, the AY ) 2008-09 filed by the assessee is directed against the order dated 03.10.2018 passed by the Commissioner of Income Tax (Appeals), Meerut [In Short, the CIT(A) ]. 2. Following grounds have been raised by the appellant/assessee:- 1. That the Id. CIT(A) has erred in law as well as on the facts of the case by confirming the disallowance of claimed 50% deduction u/s 80IB-(7A) with reference to the interest income of Rs. 24,970/- on bank FDR and with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80IB(7A) of the Act on interest income and income on sale of the shop was completed under section 263/154/143(3) of the Act on 18.03.2014. 3.2 On appeal directed against the order dated 18.04.2014 passed under section 263/154/143(3) of the Act, the Ld. CIT(A) dismissed the appeal stating that he was not competent to decide the case which had already been decided by the CIT being co-terminus to the CIT(A). This appeal order was challenged, by the appellant/assessee, before the Tribunal, who vide its order dated 25.04.2018 in ITA No. 3214/Del/2016, restored the mater back to the Ld. CIT(A) directing him to decide the case on merit. Later, the CIT(A), vide impugned order decided the appeal on merit. Before the CIT(A), there were two issues; namely, (i) the disallowance of interest expenses under section 36(1)(vi) and (ii) the disallowance of deduction of Rs. 4,62,485/- claimed under section 80IB(7A) of the Act. The CIT(A) deleted the disallowance of interest expenses under section 36(1)(vi) of the Act and confirmed the disallowance of deduction of Rs. 4,62,485/- under section 80IB(7A) of the Act relatable to the interest income and income on sale of the shop on the reasoning that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of section 80HH the assessee had to establish that the profits and gains were derived from its industrial undertaking and it was just not sufficient that a commercial connection was established between the profits earned and the industrial undertaking. The industrial undertaking itself had to be the source of the profit. The business of the industrial undertaking had directly to yield that profit. The industrial undertaking had the direct source of that profit and not a means to earn any other profit. It was submitted that the source of profit, in the present case was sale of the shop being part of the multiplex complex. Hence, the income derived from such sale was business income from multiplex complex and not incidental to the business. 4.1 The Ld. AR also emphasised that similar disallowance of deduction under section 80IB(7A) of the Act was not done in past though the appellant/assessee had sold shops in the past also. Hence, in view of the rule of consistency, the deduction under section 80IB(7A) of the Act in the relevant year should also be allowed as it was done in AY 2007-08 in the scrutiny assessment. In support of this contention, the Ld. AR placed reliance on the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a new business of any building or of any machinery or of plant previously used for any purpose; (iii) the assessee furnishes along with the return of income, the report of an audit in such form and containing such particulars, as may be prescribed and duly signed and verified by an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed. [Emphasis supplied by us] 8. The legal definition of owning of the property means having the title to a property in the owner name. This title grants him the right to possess, use, and transfer the property as deem fit. The legal owner of the property has control over its management, development and potential sale. The word Operating is an adjective, which means (i) engaged in active business and (ii) arising out of or relating to the current daily operations of a concern as distinct from its financial transactions and permanent improvements. 9. Here, in this case, the appellant/assessee loses both ownership and operating power over the shop as integral part of the multiplex theatre at the time of earning income from sale/transfer of the shop. Hence, we find force i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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