State Infrastructure & Industrial Development Corporation of Uttarakhand Ltd., Dehradun V. The Assistant Commissioner of Income Tax, Circle-2, Dehradun

CO 01/DDN/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4163 (ITAT-DEHRADUN)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 02-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N C UPPADHAY
• Keywords: Business income
• Section: 80IB; 80IA; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL DEHRADUN CIRCUIT BENCH: DEHRADUN BEFORE, SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.5710/DEL/2016 (ASSESSMENT YEAR 2012-13) ASST. CIT CIRCLE-2, DEHRADUN. VS. STATE INFRASTRUCTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND., I.T.PARK, SAHASTRADHARA ROAD, DEHRADUN. PAN AAHCS 7324R (APPELLANT) (RESPONDENT) C.O. NO.01/DDN/2021 (ARISING OUT OF ITA NO.5710/DEL/2016) (ASSESSMENT YEAR 2012-13) STATE INFRASTRUCTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND., I.T.PARK, SAHASTRADHARA ROAD, DEHRADUN. PAN AAHCS 7324R VS. ASST. CIT CIRCLE-2, DEHRADUN. (APPELLANT) (RESPONDENT) 2 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT APPELLANT BY SH. N.C.UPPADHAY, SR. DR RESPONDENT BY SH. SAURABH GUPTA, FCA DATE OF HEARING 05.03.2021 DATE OF PRONOUNCEMENT 31.05.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS PREFERRED BY THE DEPARTME NT AGAINST ORDER DATED 04.08.2016 PASSED BY THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS), DEHRADUN {CIT(A)} FOR ASSESS MENT YEAR 2012-13. THE CROSS OBJECTION HAS BEEN FILED BY THE ASSESSEE. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A NODAL BODY OF GOVERNMENT OF UTTARAKHAND AND WAS INCO RPORATED IN THE YEAR 2002 WITH AN AIM TO PROMOTE INFRASTRUCTURE AND INDUSTRIAL DEVELOPMENT AND FOR MAINTAINING INDUSTRIAL ESTATES/ PARKS IN THE STATE OF UTTARAKHAND. THE RETURN WAS FILED DECLARING A TOTAL INCOME OF RS.32,51,82,550/- AFTER CLAIMING DEDUCTION U/S 8 0IA OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) AMOUNTING TO RS.1,18,26,500/-. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, 3 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED A DEDUCTION OF RS.11,18,26,500/- U/S 80IA (4)(III) OF THE ACT IN RESPECT OF THE UNITS DEVELOPED AT PANT NAGAR, INDUSTRIAL ES TATE, DISTRICT:- RUDRAPUR, UTTARAKHAND AND BHEL, NEAR RANIPUR, HARID WAR, UTTARAKHAND. 2.1 THE ASSESSING OFFICER OBSERVED THAT THE PROFIT OF THE ASSESSEE CHIEFLY CONSISTED OF INTEREST ON AMOUNTS W HICH WERE DUE FROM PERSONS TO WHOM LAND HAD BEEN ALLOTTED IN THE I NDUSTRIAL ESTATE AND, THEREFORE, THE AMOUNT REPRESENTED INCOM E FROM OTHER SOURCES AND WAS NOT DERIVED FROM THE ELIGIBLE BUSINE SS. THE ASSESSEE WAS REQUIRED TO SHOW CAUSE AS TO WHY DEDUCTIO N U/S 80IA MAY NOT BE DISALLOWED ON THE INTEREST INCOME ON LAN D PREMIUM AT RS.9,77,02,124/-. 2.2 IT WAS THE SUBMISSION OF THE ASSESSEE THAT THE INTEREST INCOME WAS PART OF THE BUSINESS INCOME OF THE ASSESS EE AS THE SAME WAS AN INTEGRAL PART OF THE LEGITIMATE BUSINESS RECE IPTS AND WAS DIRECTLY RELATED TO AND ORIGINATED FROM THE ELIGIBL E BUSINESS OF THE 4 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT ASSESSEE. IT WAS SUBMITTED THAT THE INTEREST EARNED ON FDRS HAD ALREADY BEEN SHOWN AS INCOME FROM OTHER SOURCES. HOW EVER, THE ASSESSING OFFICER DID NOT AGREE TO THE SUBMISSION O F THE ASSESSEE AND PROCEEDED TO ADD AN AMOUNT OF RS.9,77,02,124/- TO THE INCOME OF THE ASSESSEE AND COMPLETED THE ASSESSMENT AT RS. 42,28,84,665/- ON THE GROUND THAT THE INTEREST INCOME WAS NOT PART OF THE PROFIT RELATED TO THE BUSINESS OF DEVELOPMENT/OPERATION/MA INTENANCE OF INDUSTRIAL PARKS. 3.0 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. FIRST APPELLATE AUTHORITY CHALLENGING THE DISALLOWANCE. TH E LD. CIT(A) ALLOWED THE ASSESSEES APPEAL BY ACCEPTING THE ASS ESSEES CONTENTION THAT THE IMPUGNED ADDITION WAS UNWARRANTED . 4.0 NOW, THE DEPARTMENT HAS APPROACHED THIS TR IBUNAL AGAINST SUCH DELETION AND HAS RAISED THE FOLLOWING G ROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON F ACTS IN ALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S 80IA (4) (III ) IGNORING THE FACT THAT INTEREST INCOME SHOWN BY THE ASSESSEE WAS THE PART OF 5 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT PROFIT ATTRIBUTABLE TO THE BUSINESS OF THE ASSESSEE AND IT WAS NOT DERIVED FROM THE BUSINESS ACTIVITIES. 2. THE ORDER OF THE LD. CIT(A) BE SET-ASIDE AN D THE ORDER OF THE A.O. BE RESTORED. 5.0 THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTI ONS SUPPORTING THE ORDER OF THE LD. CIT(A) AND HAS RAIS ED THE FOLLOWING GROUNDS: THAT THE LEARNED CIT(APPEAL) HAS ACTED CORRECTLY BOTH IN LAW AND ON FACTS, BY ALLOWING ASSESSEES CLAIM OF DEDUC TION U/S 80- IA(4)(III) CONSIDERING THE FACT THAT INTEREST INCOM E SHOWN BY ASSESSEE IS DERIVED FROM THE ELIGIBLE BUSINESS OF D EVELOPING, OPERATING AND MAINTAINING AN INDUSTRIAL PARK. 6.0 THE LD. SR. DEPARTMENT REPRESENTATIVE (DR) SUB MITTED THAT THE INTEREST INCOME EARNED BY THE ASSESSEE DID NOT ARISE IN THE ORDINARY COURSE OF ELIGIBLE BUSINESS BUT AROSE FROM FINANCING ACTIVITY WHICH WAS COMPLETELY SEPARATE FROM THE INFR ASTRUCTURE DEVELOPMENT ACTIVITIES. IT WAS SUBMITTED THAT THE AS SESSEE HAD PROVIDED OPTION FOR DEFERRED PAYMENT AND THERE WAS A STRUCTURED SCHEME UNDER WHICH THE NORMAL PERIOD OF DISCHARGE D ATE WAS 6 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT EXTENDED AND INTEREST WAS CHARGED AS PER THE SCHEME. IT WAS SUBMITTED THAT, THUS, IT WAS A FINANCING ACTIVITY AN D NOT AN ACTIVITY FOR DEVELOPMENT OF INDUSTRIAL PARKS AND, THEREFORE, THE ASSESSING OFFICER HAD RIGHTLY HELD THE SAME TO BE NOT ELIGIBL E FOR DEDUCTION FOR THE PURPOSE OF SECTION 80IA. THE SR. DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 7.0 PER CONTRA, THE LD. AUTHORIZED REPRESENTATIVE (AR) PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A) AND SUBMITT ED THAT THE DEDUCTION HAD RIGHTLY BEEN ALLOWED BY THE LD. CIT( A). IT WAS ALSO SUBMITTED THAT IT WAS AN INCORRECT ALLEGATION THAT T HE ASSESSEE WAS WORKING AS A FINANCER. IT WAS SUBMITTED THAT THE DEF ERRED PAYMENT SCHEME WAS ONE OF THE WAYS IN WHICH THE ALLOTTEES OF THE LAND WERE ALLOWED TO MAKE PAYMENT FOR THE LAND. IT WAS SUBMIT TED THAT IN THE EVENT OF DOWN PAYMENT, ALLOTTEES ARE GIVEN A DISCOUN T AND THE ENTIRE LAND PREMIUM IS PAID TO THE GOVERNMENT WHEREAS UNDER THE DEFERRED PAYMENT SCHEME, THE INTEREST COMPONENT IS ADDED TO THE LAND PREMIUM AND IS COLLECTED FROM THE ALLOTTEES AN D FURTHER THE LAND PREMIUM IS PAID TO THE GOVERNMENT AND THE INTE REST IS 7 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT RETAINED BY THE ASSESSEE. IT WAS ARGUED THAT THERE WAS NO DEDUCTION FOR INTEREST FROM DEFERRED PAYMENT SCHEME TO BE DEPOSITED IN THE GOVERNMENT ACCOUNT AND THE ASSESSE E WAS ENTITLED TO RETAIN THE SAME. IT WAS FURTHER SUBMITTED THAT TH IS AMOUNT OF INTEREST IS DULY REFLECTED IN THE AUDITED ACCOUNTS AND WAS PART OF SALES RECEIPTS WHICH WAS FULLY DEDUCTIBLE U/S 80IA OF THE ACT. 8.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AN D HAVE ALSO PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE T HROUGH THE IMPUGNED ORDER WHEREIN THE LD. FIRST APPELLATE AUTHO RITY HAS GIVEN VERY DETAILED FINDINGS IN PARAGRAPHS 8 AND 9. FOR T HE PURPOSE OF READY REFERENCE, THE SAME ARE REPRODUCED HEREIN UND ER: 8. I HAVE DULY CONSIDERED THE FACTS AND CIRCUM STANCES OF THE CASE. AT THE VERY OUTSET IT IS IMPORTANT TO NOTE TH AT THE ASSESSEE IS A STATE GOVERNMENT UNDERTAKING WHICH HAS BEEN INCORPORATED WITH THE SPECIFIC PURPOSE OF FOSTERING INDUSTRIAL DEVELOPMENT IN THE STATE OF UTTARAKHAND AND IN THE SAID PROCESS IT IS SETTING UP INDUSTRIAL PARKS IN VARIOU S PARTS OF THE STATE. FOR THIS PURPOSE THE GOVERNMENT OF UTTARAKHA ND HAS MADE AVAILABLE LAND TO THE ASSESSEE. THE TITLE OF T HE LAND CONTINUES TO REMAIN IN THE NAME OF THE GOVERNMENT B UT THE 8 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT POSSESSION OF THE SAME IS HANDED OVER TO THE ASSESS EE FOR THE DEVELOPMENT OF INDUSTRIAL PARKS, AND THEIR MANAGEME NT. THE WORK OF ALLOTMENT TO LESSEES IS ALSO BEING DONE BY TIRE ASSESSEE. THIS IS THE BUSINESS ACTIVITY OF THE ASSESSEE AND I N THE COURSE OF THIS IT EARNS CERTAIN BUSINESS RECEIPTS. THESE BUSI NESS RECEIPTS HAVE BEEN CONSIDERED ELIGIBLE FOR DEDUCTION UNDER S ECTION 80IA AS PER THE NOTIFICATIONS ISSUED BY THE C8DT IN RESP ECT OF THESE INDUSTRIAL PARKS. THE QUESTION THEREFORE ARISES AS TO WHETHER ASSESSEE CAN BE DENIED THE BENEFIT OF DEDUCTION IN RESPECT OF RECEIPT OF INTEREST ON DEFERRED PAYMENTS. THE ASSES SING OFFICER HAS HELD THAT THE LAND BELONGS TO THE STATE GOVERNM ENT AND THUS THE LAND PREMIUM BELONGS TO IT. HE ADDS THAT T HERE IS NO CONTRACTUAL AGREEMENT BY WHICH IT HAS BEEN AGREED T HAT THE ASSESSEE WILL HAVE A RIGHT TO RECEIVE INTEREST COMP ONENT OF THE DEFERRED PAYMENT SCHEME. HE HAS FURTHER ARGUED THAT INTEREST ON DEFERRED PAYMENT DOES NOT ARISE BY THE ACTIVITY OF DEVELOPMENT AND MAINTENANCE OF THE INDUSTRIAL PARK BUT AS A RESULT OF FINANCING ACTIVITY DONE BY THE ASSESSEE C OMPANY AND THEREFORE AT BEST IT IS ATTRIBUTABLE TO THE BUSINES S BUT NOT DERIVED FROM THE BUSINESS. THEREFORE AS PER THE JUDGMENT OF THE HON SUPREME COURT IN THE CASE OF LIBERTY INDIA (SUPRA) IT IS NOT A DEDUCTIBLE RECEIPT. THE ASSESSEE HAS; STATED THAT T HE DEFERRED PAYMENT SCHEME IS ONE OF THE WAYS IN WHICH THE ALLO TTEES HAVE BEEN ALLOWED TO MAKE PAYMENT FOR THE LAND. IN THE E VENT OF 9 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT DOWN PAYMENT THEY ARE GIVEN A DISCOUNT AND THE ENTI RE LAND PREMIUM COLLECTED FROM THEM IS PAID TO THE GOVERNME NT. UNDER THE DEFERRED PAYMENT SCHEME THE INTEREST COMPONENT IS ADDED TO THE LAND PREMIUM AND COLLECTED FROM THE ALLOTTEE S. THE LAND PREMIUM IS PAID TO THE GOVERNMENT AND THE INTEREST IS RETAINED BY THE CORPORATION. THE ASSESSEE CORPORATION COULD NOT PRESENT A COPY OF THE SCHEME WHEREBY IT WAS AUTHORIZED TO R ETAIN THIS MONEY BUT PRESENTED A LETTER IN WHICH THE GOVERNMEN T HAS POINTED OUT THAT THE LAND HAS BEEN MUTATED IN THE N AME OF THE UTTARAKHAND GOVERNMENT AND MANAGEMENT RIGHTS VESTED IN THE CORPORATION AND ASKING THE MANAGING DIRECTOR TO ENS URE THAT UPON ALLOTMENT (TO LESSEES )BY SIDCUL, THE LAND PRE MIUM, LEASE RENT, REESTABLISHMENT LEVY, RECONSTITUTION LEVY AND TRANSFER LEVY MAY BE PAID TO THE GOVERNMENT TREASURY FROM TI ME TO TIME. IT HAS BEEN THUS ARGUED THAT THERE IS NO DEMAND FOR INTEREST FROM DEFERRED PAYMENT SCHEME TO BE DEPOSITED IN GOV ERNMENT ACCOUNT AND THIS SHOWS THAT THE ASSESSEE WAS ENTITL ED TO RETAIN THIS AMOUNT. IT HAS ALSO FURNISHED A COPY OF THE AP PLICATION FORM IN WHICH THE DETAILS OF THE SCHEME OF ALLOTMENT INC LUDING THE PAYMENT REQUIREMENTS UNDER DEFERRED PAYMENT SCHEME ARE OUTLINED .IT HAS ALSO PRESENTED A COPY OF ITS AUDIT ED ACCOUNTS WHICH ARE SIGNED BY ITS BOARD, WHO COMPRISE SENIOR OFFICERS OF THE; GOVERNMENT INCLUDING THE CHIEF SECRETARY TO SH OW THAT THE GOVERNMENT WAS FULLY IN THE KNOW THAT SUCH INTEREST WAS BEING 10 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT CHARGED. IT HAS ARGUED THAT AS PER THE JUDGMENT OF THE HON SUPREME COURT IN THE CASE OF GOVINDA CHOVVDHURY (SU PRA) AND SEVERAL OTHER JUDGMENTS INTEREST ON DELAYED PAYMENT S WAS SALES RECEIPT AND WAS FULLY DEDUCTIBLE UNDER SECTIO N 80IA. 9. ON CONSIDERATION OF FACTS, IT IS CLEAR TH AT THE DEDUCTION UNDER SECTION 80IA IS AVAILABLE UNDER SUB-SECTION 4 (III) TO ANY UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES O R MAINTAINS AND OPERATES AN INDUSTRIAL PARK OR SEZ NO TIFIED BY THE CENTRAL GOVT. IN ACCORDANCE WITH THE SCHEMA FRA MED AND NOTIFIED BY IT. THERE IS NOTHING IN THE ACT OR IN T HE INDUSTRIAL PARK SCHEMES (OF 2002 OR 2008) THAT MANDATE THAT THE IND USTRIAL PARK DEVELOPER OR OPERATOR MUST BE THE OWNER OF THE LAND. THE ONLY CONDITIONS ARE THAT IT SHOULD DEVELOP, OPERATE S OR MAINTAIN AN INDUSTRIAL PARK. THUS, THE FACT THAT THE ASSESSE E DOES NOT OWN THE LAND DOES NOT DEBAR IT FROM HAVING A RIGHT TO ANY INCOME FROM THE INDUSTRIAL PARK, SUBJECT TO ITS UND ERSTANDING WITH THE OWNER OF THE LAND IN THIS REGARD. THE LETT ER OF THE PRINCIPAL SECRETARY, INDUSTRIAL DEVELOPMENT DATED 1 3 FEB 2013 MAKES IT QUITE CLEAR THAT THE CORPORATION HAS BEEN SET UP BY THE STATE OF UTTARAKHAND (THE LAND OWNER) AND GIVEN MAN AGEMENT RIGHTS TO FOSTER THE INDUSTRIAL DEVELOPMENT IN THE STATE AND LAYS DOWN THE; LEVIES TO BE PASSED ON TO THE STATE GOVER NMENT BY SIDCUL. INTEREST ON DEFERRED PAYMENTS IS NOT ONE OF THE LEVIES 11 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT WHICH IS REQUIRED TO BE PASSED ON. FURTHERMORE, PER USAL OF THE APPLICATION FOR ALLOTMENT INDICATES THAT FOR THE PU RPOSES OF THE ALLOTTEE, THE SINGLE ENTITY WITH WHICH IT HAS TO DE AL FOR THE PROJECT IS THE ASSESSEE CORPORATION. IT IS THE ASSESSEE COR PORATION THAT COLLECTS FEES AND IT THE CORPORATION THAT ALLOTS TH E LAND FOR INDUSTRIAL OPERATIONS. THUS AN ALLOTTEE CAN ONLY BE ALLOTTED LAND AS PER THE SCHEME LAID DOWN IN THE APPLICATION FORM . PRESUMING THAT THERE IS NO SEPARATE GOVERNMENT APPROVAL FOR T HE DEFERRED PAYMENT SCHEME (SINCE THE ASSESSEE COULD NOT PRODUC E ANY DOCUMENT IN SUPPORT OF SUCH) OR THE COLLECTION OF I NTEREST WITH REGARD TO IT, IT HAS TO BE ASSUMED THAT THE; PAYMEN T SCHEMES HAVE BEEN DEVISED BY THE MANAGEMENT OF SIDCUL TO GE T AS MUCH PAYMENT UPFRONT AS POSSIBLE AND ALSO TO ENCOUR AGE THOSE WHO ARE NOT ABLE TO PAY UPFRONT TO ALSO SEEK ALLOTM ENT. THE UPFRONT PAYMENTS ARE AT DISCOUNTED RATE; IN THAT TH EY ARE BEREFT OF ANY INTEREST PAYMENT AND A REBATE OF 2% IS OFFER ED. THE DEFERRED PAYMENTS ARE CHARGED AT A RATE OF 15% PER ANNUM. THE ALLOTTTEE HAS TO OPT FOR ONE AND ONCE HE DOES T HEN HE IS OBLIGATED TO MAKE PAYMENT AS PER THE SAME OR ELSE S IDCUL HAS THE RIGHT TO CANCEL THE ALLOTMENT. THUS CONTRACTUAL LY HE IS BOUND TO PAY TO SIDCUL, THE AMOUNT DEMANDED BY IT AS PER THE RELEVANT SCHEME OF PAYMENT OPTED FOR. WITH REGARD T O THE DEFERRED PAYMENT SCHEME IN ITSELF, THESE KINDS OF P AYMENT SCHEMES ARE QUITE COMMON IN ANY REAL ESTATE PROJECT . DEFERRED 12 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT PAYMENTS ARE TAKEN TO ENCOURAGE ALLOTTEES TO APPLY FOR FLATS LANDS OR HOUSES AND PAY AS THEY EARN. A PREMIUM IS USUALLY CHARGED IN RESPECT OF SUCH PAYMENTS AS A COMPENSATI ON FOR THE DELAYED RECEIPT OF PAYMENT. THIS DOES NOT CONVERT T HE BUILDER OR THE REAL ESTATE DEVELOPER INTO A FINANCIER (AS ALLE GED BY THE ASSESSING OFFICER) AND BY NO STRETCH OF IMAGINATION CAN IT BE ARGUED, THAT THE PAYMENT RECEIVED IS ON ACCOUNT OF ANY FINANCE PROVIDED AND IT DOES NOT CONSTITUTE THE COST OF THE LAND. THE COST OF A LAND CAN VARY DEPENDING UPON THE SCHEME OF PAY MENT OPTED FOR IN MUCH THE SAME WAY THAT THE COST OF A M OTOR CAR OR A HOUSEHOLD APPLIANCE CAN VARY DEPENDING ON THE MANNE R IN WHICH THE PAYMENT IS MADE. ULTIMATELY, THE INTEREST IS A COMPENSATION FOR DELAYED PAYMENT RAND AS POINTED OU T BY THE HON SUPREME COURT IN THE CASE OF GOVINDA CHOUDHURY (SUPRA) AND IN THE OTHER CASE LAWS CITED BY THE ASSESSEE, I NTEREST ON DELAYED PAYMENT IS NOTHING MORE THAN THE PROCEEDS O F SALE AND THEREFORE THE RECEIPTS FROM THE ELIGIBLE BUSINESS T HEREFORE ONE IS UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSING OF FICER THAT THE INTEREST RECEIVED BY THE ASSESSEE IS NOT FROM THE D EVELOPMENT .OPERATION AND MAINTENANCE OF THE INDUSTRIAL PARK B ECAUSE AS IT EMERGES IN THE LETTER OF THE PRINCIPAL SECRETARY IN DUSTRIAL DEVELOPMENT DATED 13 FEB 2013, THE ALLOTMENT OF PLO TS AND COLLECTION FOR THE SAME IS DONE BY THE SIDCUL AS PA RT OF THE MANAGEMENT, OF THE INDUSTRIAL PARKS AND THEREFORE A LL MONEY 13 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT COLLECTED FOR SUCH ALLOTMENT HAS TO BE CONSIDERED A S BEING DERIVED FROM THE BUSINESS OR RUNNING AN INDUSTRIAL PARK. THEREAFTER SUCH SUMS OF MONEY WHICH ARE SPECIFICAL LY PAYABLE TO THE GOVERNMENT ARE SHOWN AS LIABILITIES IN ITS A CCOUNTS AND THE REST ARE TAKEN AS RECEIPTS FOR THE PURPOSES OF COMPUTATION OF ITS ELIGIBLE INCOME. THAT PART OF THE RECEIPTS THAT GO TO THE GOVERNMENT ARE IN THE CASE EXEMPT FROM TAX AS PER T HE PROVISIONS OF ARTICLE 289 OF THE CONSTITUTION, WHIL E THE INCOME DERIVED BY THE ASSESSEE CORPORATION FROM SUCH OPERA TIONS IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA AS NOTIFI ED BY THE CBDT. THE GOVERNMENT OBVIOUSLY DOES NOT HAVE ANY IS SUE WITH THE ASSESSEE COLLECTING AND KEEPING A PORTION OF TH E LAND COST SO DETERMINED AND COLLECTED IN THE FORM OF INTEREST, O THERWISE A DEMAND WOULD HAVE BEEN MADE FOR THE SAME FROM THE ASSESSEE. THUS IN VIEW OF THE FACT THAT IT IS AUTHO RIZED TO DEVELOP OPERATE AND MAINTAIN THE INDUSTRIAL PARKS, AUTHORIZED TO ALLOT TO LESSEES AND COLLECT PAYMENTS ON ALLOTME NT FROM LESSEES AND ONLY PAY SPECIFIED LEVIES TO THE GOVERN MENT IN THIS REGARD, IT HAS TO BE HELD THAT THE ASSESSEE HAS A T ITLE TO RETAIN WHAT IS NOT SPECIFICALLY DEMANDED BY THE GOVERNMENT . 8.1 THUS, IT IS CLEAR FROM A PERUSAL OF THE ABOVE SAID ORDER THAT THE LD. CIT(A) HAS RETURNED A CATEGORICAL FINDING A FTER DULY 14 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT CONSIDERING ALL THE FACTS OF THE CASE. THE LD. CIT( A) HAS REFERRED TO A LETTER DATED 13 TH FEBRUARY, 2013 EMANATING FROM THE OFFICE OF PRINCIPAL SECRETARY, INDUSTRIAL DEVELOPMENT, WHEREIN IT HAS BEEN SPECIFICALLY STATED THAT THE ALLOTMENT OF PLOTS AND COLLECTION FOR THE SAME IS TO DONE BY THE ASSESSEE AS PART OF THE MANA GEMENT OF THE INDUSTRIAL PARK AND THEREFORE, ALL THE MONEY COLLEC TED FOR SUCH ALLOTMENT HAS TO BE CONSIDERED AS BEING DERIVED FRO M THE BUSINESS OF RUNNING OF INDUSTRIAL PARK. IT HAS BEEN NOTED BY THE LD. CIT(A) THAT THE AMOUNTS WHICH WERE SPECIFICALLY DUE FOR PAY MENT TO THE GOVERNMENT WERE SHOWN AS LIABILITIES IN ITS ACCOUNT AND THE BALANCE WAS TAKEN AS RECEIPTS FOR THE PURPOSES OF COMPUTATIO N OF ELIGIBLE INCOME. THE LD. CIT(A) HAS ALSO REFERRED TO THE NOT IFICATION ISSUED BY THE CBDT IN RESPECT OF DEDUCTION U/S 80IA FOR I NDUSTRIAL PARK AND HAS, THEREAFTER, COME TO THE CONCLUSION THAT TH E ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80IA EVEN ON THE AMOUNT DISALLOWED BY THE ASSESSING OFFICER. THE LD. SR. DR HAS, ALTHOUG H, VEHEMENTLY ARGUED AGAINST THE FINDING RETURNED BY THE LD. CIT( A), HE COULD NOT CONTROVERT THE FINDINGS OF FACT AS RECORDED BY THE LD. CIT(A) IN THE 15 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT IMPUGNED ORDER. THE LD. SR. DR ALSO COULD NOT POINT OUT ANY ERROR IN LAW IN THE IMPUGNED ORDER. THE LD. CIT(A) HAS ALS O REFERRED AND RELIED ON THE JUDGMENT PASSED BY THE HONBLE APEX C OURT IN THE CASE OF CIT VS. GOVINDA CHOUDHARY & SONS, REPORTED IN 203 I TR 881 (SC) WHEREIN IT WAS HELD THAT THE INTEREST RECEIPT ON DELA YED PAYMENT CANNOT BE SEPARATED FROM THE OTHER AMOUNTS GRANTED TO THE ASSESSEE UNDER THE AWARDS AND, HENCE, CANNOT BE TREATED AS INCOME FROM OTHER SOURCES. IT WAS LAID DOWN BY THE HO NBLE APEX COURT IN THIS CASE THAT AMOUNT AWARDED TO THE CONTRA CTOR ASSESSEE AS INTEREST FOR DELAY IN PAYMENT OF HIS DUES TOOK T HE SAME CHARACTER AS THE RECEIPTS FOR PAYMENT OF WHICH HE WAS OTHERWISE ENTITLED UNDER THE CONTRACT AND, THEREFORE, THE SAME WAS TAX ABLE AS BUSINESS INCOME AND NOT AS INCOME FROM OTHER SOURCE S. WE FIND NO ERROR ON SUCH RELIANCE BY THE LD. CIT(A). 8.2 SIMILARLY, ITAT CHANDIGARH BENCH IN THE CASE OF ACIT VS. JAIPARKASH HYDRO POWER LTD. REPORTED IN [2013] 36 C CH 305 (CHD. TRIB.) HAS HELD THAT WHEN INTEREST IS RECEIVED ON ACCOUNT OF DELAYED PAYMENT FROM CUSTOMERS, IT WOULD DEFINITELY CONSTIT UTE INCOME FROM 16 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT ELIGIBLE BUSINESS INCOME BECAUSE SUCH INTEREST HAD DIRECT NEXUS WITH RECEIPT FROM ELIGIBLE BUSINESS AND, THEREFORE, DEDUCTION U/S 80IA OF THE ACT WOULD BE ADMISSIBLE. 8.3 SIMILARLY, THE HONBLE HIGH COURT OF G UJRAT IN THE CASE OF CIT VS. SUZLON ENERGY LTD. REPORTED IN [2013] 354 I TR 630 (GUJRAT) , WHILE CONSIDERING THE ALLOWABILITY OF DEDUCTION U/S 8 0 IB OF THE ACT, HELD THAT INTEREST INCOME ON LATE RECOVERY OF SALE PROCEEDS FROM DEBTORS WAS ELIGIBLE FOR DEDUCTION U/S 80IB OF THE A CT. 8.4 THUS, AS PER THE SETTLED JUDICIAL PRECED ENTS, INTEREST RECEIPT ON DELAYED PAYMENTS HAS BEEN HELD TO BE BUS INESS INCOME. THEREFORE, IT IS OUR CONSIDERED OPINION THAT THE LD . CIT(A) HAS RIGHTLY ALLOWED THE ASSESSEES CLAIM OF DEDUCTION U/ S 80IA AND WE HAVE NO REASON TO INTERFERE WITH THE SAME. WE UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DISMISS THE APPEAL FILED BY T HE DEPARTMENT. 9.0 IN THE RESULT, ITA NO.5710/DEL/2016 STAN DS DISMISSED. 17 ITA NO.5710/DEL/2016 C.O.NO.01/DEL/2021 ACIT VS. STATE INFRASTRU CTURE & INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARAKHAND LTD. V S. ACIT 10.0 SINCE, THE CROSS OBJECTIONS FILED BY THE ASSESSEE ONLY SUPPORT OF THE ORDER LD. CIT(A), THE SAME STANDS AL LOWED IN VIEW OF OUR DISMISSAL OF THE DEPARTMENTS APPEAL. 11. IN THE FINAL RESULT, THE APPEAL OF THE DEPARTMENT STANDS DISMISSED WHEREAS THE CROSS OBJECTIONS OF THE ASSESS EE STANDS ALLOWED. ORDER PRONOUNCED ON 31/05/2021. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31/05/2021 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI (DEHRADUN CIRCUIT BENCH, DEHRADUN)