9911796707
TMI Blog2022 (6) TMI 1516X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the CIT (A) on facts that the scope of work relating to these two projects was identical to the other nine projects which were held to be eligible for the deduction u/s. 80IA by the ITAT, the order of the ld. CIT (A) allowing assessee s claim of deduction vis a vis the remaining two project also is upheld. The order of the ld. CIT (A) therefore allowing assessee s claim of deduction u/s. 80IA is upheld. Treating interest income as income from other sources and not as the profit derived from the projects eligible u/s. 80IA - HELD THAT:- We have gone through the decision of Shah Alloys [ 2016 (8) TMI 1191 - GUJARAT HIGH COURT] and we find that, while dealing with the claim of deduction u/s 80-IA of the Act on interest earned on Margin Money kept with Banks, it was categorically held that the same being incidental to the business activities of the assessee and assessable as Income from Business and Profession, it was eligible to deduction u/s 80-IA of the Act. The Hon ble Court held the issue to be covered by its earlier decision of Nirma Industries Ltd. [ 2006 (2) TMI 92 - GUJARAT HIGH COURT] . The facts in the present case before us are on identical lines wherein the FD s earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has included goodwill for the purpose of calculating the FMV even if it is not included in the books of accounts of the assessee, the assessee is well within its right to consider the value of the same for determining the fair market value of shares. The Revenue authorities clearly have failed to examine the issue correctly in the light of the prevailing position of law. We consider it fit therefore to restore the issue back to the A.O. to examine afresh the issue of determination of FMV of shares issued during the year as prescribed in law u/s 56(2)(vii)b) of the Act. Needless to add the assessee be given due opportunity of hearing in this regard. - Ms. Annapurna Gupta, Accountant Member And Shri Mahavir Prasad, Judicial Member For the Appellant : Smt. Urvashi Shodhan, A.R. For the Respondent : Shri Alpesh Parmar, Sr. D.R. ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- The present appeals relate to the same assessee and are cross appeals filed by the Revenue and Assessee for Assessment Year (A.Ys) 2013-14 and appeal of the assessee for A.Y 2014-15, against order passed by the Commissioner of Income Tax (Appeals)-1 5, Ahmedabad, (in short referred to as CIT(A)) dated 29- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infrastructure Development project - Karauli (RUDIP) 23-10-2012 2013-14 Development of Water Treatment Plant (WTP) 7. The same was denied by the A.O. holding that the assessee was not a developer of the projects but had carried out the project only as a work contractor. The ld. CIT (A) deleted the disallowance made by the A.O. finding that out of the 11 projects, those at Serial no. 1 to 9 had come up for consideration for claim of deduction u/s. 80IA in the preceding years, which had been allowed in first appeal. While with respect to the remaining projects, the ld. CIT (A) held that the nature of work carried out was similar to that in the other 9 projects on which u/s. 80IA had been allowed earlier and accordingly he held that the assessee was eligible to deduction u/s. 80IA(4) on account of the remaining two projects also. The relevant findings of the ld. CIT (A) in this regard at para 3.4 of his order is as under: 3.4. In the year under consideration for AY 2013-14, the Appellant has claimed deduction on 11 projects, out of which, in respect of 9 projects viz. (i) MPAKVN (II) AMC Jaspur (Hi) AMC Kotarpur (iv) VMC WTP (v) VMC STP (vi) GUDC Tarsadi (vii) KNSS WTP Khambhat (viii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is evident that the Appellant Company has been awarded the DEVELOPMENT OF SANAND WTP by Ahmedabad Municipal Corporation and the development of said infrastructure facility includes: Designing of the infrastructure facility Construction of the Infrastructure facility Testing and carrying out trial run of the Infrastructure facility Commissioning of the Infrastructure facility Operation and Maintenance of the Infrastructure facility 10. Thereafter our attention was drawn to page 29 of the order wherein the scope of work of the other project listed at S.No.11, i.e. Rajasthan Urban Sector Development Investment Programme and Karauli (RUSDIP) was elaborated by the assessee pointing out from relevant documents that the work involved related to as under: From the facts, it is evident that the Appellant Company has been awarded the DEVELOPMENT OF RUSDIP KARAULI STP project by RAJASTHAN URBAN SECTOR DEVELOPMENT INVESTMENT PROGRAMME and the development of said infrastructure facility includes: Designing of the infrastructure facility Construction of the Infrastructure facility Testing and carrying out trial run of the Infrastructure facility Commissioning of the Infrastructure facility O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposits placed with banks against bank guarantees and performance guarantees given by the banks in favour of the assessee as per the terms of tenders awarded to the assessee for carrying on development of infrastructure facilities. The contention of the assessee is that since it would not have been permitted to carry on the development work without the bank guarantee and performance guarantee, the fixed deposits placed with the banks in lieu the issuance of the said guarantees was wholly and exclusively for the purpose of the business of the assessee and therefore the interest income earned thereon was derived from the business of the assessee only.. Reliance in this regard was placed on the decision of the Jurisdictional High Court in the case of CIT-4, Shah Alloys Ltd. (2017) 84 taxmann.com 256 (Guj.). 18. Ld.DR however contended that the issue was squarely covered against the assessee by the decision of the Hon ble Uttaranchal High Court in the case of Conventional Fasteners vs Commissioner of Income Tax, Dehradun in Income Tax Appeal No. 24 of 2015 21 of 2017 dated 15-11-2017. Copy of the order was placed before us. 19. We have heard both the parties. We have also gone through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed A.R. are that the overall expenditure, was allocated scientifically project-wise; general expenses were allocated on the basis of the contract receipts and that this practice is followed consistently. Having considered the issue, I hold that the allocation of over-all expenditure by the appellant does not call for interference, 4.4 As regards the interest and other income received, by appellant's own admission Rs. 2,05,558/~ was included in the deduction claimed u/s. 80IA (out of the total interest and other income of Rs. 54,32,913/-). As held in the cases of Liberty India v/s. CIT (317 ITR 218) and Nahar Exports Ltd. Vs. CIT (288 ITR 494), interest and other income cannot be said to have been 'derived from' the business and is not entitled to deduction u/s. 80IA. A. O. is directed to recompute the deduction allowable u/s. 80IA by excluding the said-amount of interest and other income included by the appellant in the deduction claimed u/s. SQIA. This ground of appeal is partly allowed. 2.7 Following the above mentioned order, AO's action of excluding the interest income while computing the deduction u/s. 80IA is upheld in principle. However, the AR contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the jurisdictional High Court. And following the same, we hold that the assessee is eligible to claim deduction u/s 80-IA on the interest income of Rs. 13,18,599/-. 22. Ground of appeal No. 1 is allowed. 23. Ground no. 2 is as under: 2. The Id. CIT (A) has grossly erred in law and on facts in confirming, the disallowance of Rs. 24,960/-, being the employees' contribution to PF, u/s. 2(24)(x) r.w.s. 36(i)(va) in total disregard of the facts brought on record and settled law. 24. This ground relates to disallowance of deduction being employees contribution to PF is also the same being delayed as per the provisions of Section 2(22)(x) r.w.s. 36(1)(va) of the Act. 25. Ld. Counsel for the assessee fairly admitted that the issue stood covered against the assessee by the decision of the Hon ble Jurisdictional High Court in the case of GSRTC Ltd. reported in 366 ITR 170 (Guj.). 26. In view of the above, ground no. 2 is dismissed. 27. Ground no 3 reads as under: 3. The Id. CIT (A) has grossly erred on facts in confirming the disallowance u/s. 40(a)(ia) of Rs. 49.028/- which is related to reversal of expenses of Rs. 1,74,4287- and thereby outside the scope of section 40(a)(ia). 28. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing manner, namely: the fair market value of unquoted equity shares = Where, (A) book_value of the assets in the balance-sheet as reduced by any amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Income-tax Act and any amount shown in the balance-sheet as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset; 406883718 260599301 Block Assets 17027041 CWIP 0 Current Investment 26642011 Inventories 89442112 Non current investment 10000 Long Term Loans Advance 32239689 Trade Receivable 183190817 Cash Bank Balance 1807116 Short Term Loan Advances 40264932 Other Loans Advances 0 Total 406883718 (L) book value of liabilities shown in the balance sheet but not including the following amounts, namely:- 26059930 Other current liabilities 25103477 Trade payable 132161202 Short Term Borrowing 86801611 Long Term Borrowing 4695075 Short Term provision 10194273 Long term provision 0 Share application Money 0 Deferred liabilities 1643663 Total 260599301 PE Total amount of paid up equity share capita as 11801000 Shown in the balance-sheet: PV the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the two methods prescribed in the Act and any one method cannot be forced on the assessee. (i) India Today Online Pvt. Ltd. reported in 104 taxmann.com 385 (Delhi Tribunal) (ii) Minda S.M. Technocast Pvt. Ltd. 170 ITD 12 (Del. Trib.) (iii) Unnati Inorganics Pvt. Ltd. ITA No. 2474/Ahd/2017 39. Referring to the decision of the ITAT in the case of Unnati Inorganics Pvt. Ltd. (supra), copy of which was placed before us at paper book page no. 52 to 66, it was pointed out from Para 8.2 of the order that the ITAT recognized the determination of FMV of shares by two methods and also that as per the Second method, the FMV of all the assets whether recorded or not in the books were to be considered: 8.2 A perusal of Section 56(2)(viib) of the Act quoted above seeks to enable the determination of FMV by two methods: (i) prescribed method as purportedly embedded in Rule 11UA of Income Tax Rules and (ii) FMV based on the intrinsic value of the assets both tangible and intangible on the date of issue of shares. Thus, the FMV of all the assets (tangibles, intangibles, human resources, right of management or control or other rights whatsoever in or in relation to Indian company) whether re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity of hearing in this regard. 43. Ground no.5 is allowed for statistical purposes. 44. In effect appeal of the assessee is partly allowed for statistical purposes. 45. ITA No. 950/Ahd/2018 (Assessee s appeal) for A.Y. 2014-15 46. Ground no. 1 reads as under: 1. The Id. Commissioner of Income Tax (Appeals): 1, Ahmedabad (CIT(A) for short) has grievously erred in law and on facts in treating interest income of Rs. 15,75,426/- as income from other sources and not as the profit derived from the projects eligible u/s. 80IA/business income. 47. This ground has already been decided by us in ITA No. 448/Ahd/2018 for A.Y. 2013-14 in Ground no. 1 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 48. Ground of Appeal no. 1 is allowed. 49. Ground no. 2 reads as under: 2. The Id. CIT (A) has grossly erred in law and on facts in confirming, the disallowance of Rs. 31.200/-, being the employees' contribution to PF, u/s. 2(24)(x) r.w.s. 36(i)(va) in total disregard of the facts brought on record and settled law. 50. This ground has already been decided by us in ITA No. 448/Ahd/2018 for A.Y. 2013-14 in Ground no. 2 therein. In the absence of any c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
