L & T Infocity Limited, Hyderabad V. DCIT, Hyderabad

ITA 1349/HYD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3245 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 26-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBHASREE ANANT KRISHNA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.1342/HYD/10 : ASSTT. YEAR 2006-07 DY, COMMISSIONER OF INCOME- TAX, CIRCLE 16(1), HYDERABAD V/S. M/S. L&T INFOCITY LTD., HYDERABAD ( PAN - AAACL 5895 R ) (APPELLANT) (RESPONDENT) AND ITA NO.1349/HYD/10 : AS STT. YEAR 2006-07 M/S. L&T INFOCITY LTD., HYDERABAD ( PAN - AAACL 5895 R ) V/S. DY, COMMISSIONER OF INCOME-TAX, CIRCLE 16(1), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. ANITA SUMANATH/ SHRI ADITYA BAJORIA REVENUE BY : SMT. SUBHASREE ANANT KRISHNA O R D E R PER AKBER BASHA, ACCOUNTANT MEMBER: THESE CROSS-APPEALS ONE BY THE REVENUE AND THE O THER BY THE ASSESSEE- FOR THE ASSESSMENT YEAR 2006-07 ARE DIREC TED AGAINST A COMMON ORDER OF THE CIT(A) DATED 6.8.2010. SINCE COMMON I SSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOSED OFF WITH THIS COMM ON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.1342 & 13 49/HYD/10 M/S. L& T INFOCITY LTD., HYDERABAD 2 2. LET US FIRST TAKE UP FOR CONSIDERATION, THE APP EAL OF THE ASSESSEE, BEING ITA NO.1349/HYD/2010, WHEREIN THE F IRST EFFECTIVE GRIEVANCE OF THE ASSESSEE IS WITH REGARD TO AD-HOC DISALLOWANCE OUT OF INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE, WHICH HAS BEEN CONFIRMED BY THE CIT(A). IT IS ALSO CONTENDED IN THE GROUNDS OF APPEAL IN THE ALTERNATIVE THAT THE CIT(A) ERRED IN NOT CONSIDERING THE ADD-HO C DISALLOWANCE OF INTEREST EXPENDITURE FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER S.80IA OF THE ACT. 3. WE HAVE HEARD BOTH SIDES AND PERUSED THE ORDER S OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. WE FIND THAT THE ISSUE RELATING TO AD-HOC DISALLOWANCE OUT OF INTEREST EXPENDITURE CLA IMED BY THE ASSESSEE, IS COVERED WITH THE COMMON ORDER OF THIS TRIBUNAL DATE D 13.8.2009 IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 AND 2004-05 IN ITA NO.317/HYD/2007 AND 31/HYD/2008 RESPECTIVELY, AND T HE ORDER OF THE TRIBUNAL DATED 17.9.2010 IN ITA NO.804/HYD./2009 FO R ASSESSMENT YEAR 2005-06, WHEREIN THE TRIBUNAL HAS SET ASIDE THIS I SSUE TO THE FILE OF THE ASSESSING OFFICER, WITH A DIRECTION TO RE-EXAMINE T HE SAME IN THE LIGHT OF THE RATIO OF THE DECISION OF THE APEX COURT IN THE CASE OF SA BUILDERS (288 ITR 1), AND AFTER VERIFYING WHETHER THE ASSESSEE WAS HA VING SURPLUS FUNDS AND WHETHER THE INVESTMENTS WERE MADE BY THE ASSESSEE F ROM OUT OF BORROWED FUNDS OR ITS OWN AVAILABLE SURPLUS FUNDS. CONSISTE NT WITH THE VIEW TAKEN FOR THE EARLIER YEARS, WE SET ASIDE THE ORDERS OF THE L OWER AUTHORITIES FOR THE ASSESSMENT YEAR 2006-07 AS WELL, AND RESTORE THE MA TTER TO THE FILE OF THE ASSESSING OFFICER, TO RE-EXAMINE THE MATTER IN ACCO RDANCE WITH LAW IN THE LIGHT OF THE DECISION OF THE APEX COURT IN THE CASE OF SA BUILDERS (SUPRA) AND IN ACCORDANCE WITH THE DIRECTIONS CONTAINED IN THE EARLIER ORDERS OF THIS TRIBUNAL DATED 13.8.2009 AND 17.9.2010 NOTED ABOVE. GROUNDS OF APPEAL OF THE ASSESSEE ON THIS ISSUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1342 & 13 49/HYD/10 M/S. L& T INFOCITY LTD., HYDERABAD 3 4. THE NEXT EFFECTIVE GRIEVANCE OF THE ASSESSEE RE LATES TO DISALLOWANCE OF CONSULTANCY INCOME WHILE COMPUTING DEDUCTION UNDER S.80IA OF THE ACT. 5. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSI ONS, WE FIND THAT THIS ISSUE IS ALSO COVERED WITH THE DECISION OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 DATED 13.8.200 9 CITED ABOVE. FOR THE REASONS DISCUSSED IN PARA 13 OF THAT ORDER DATE D 13.8.2009 FOR THOSE YEARS, WE SET ASIDE THE IMPUGNED ORDERS OF THE LOW ER AUTHORITIES FOR THE ASSESSMENT YEAR 2006-07 AS WELL, AND RESTORE THE MA TTER TO THE FILE OF THE ASSESSING OFFICER, WITH A DIRECTION TO DECIDE THIS ISSUE AFRESH, KEEPING IN MIND THE DIRECTIONS OF THIS TRIBUNAL FOR THE EARLIE R YEARS CONTAINED IN PARA 13 OF OUR ORDER DATED 13.8.2009 AND IN ACCORDANCE WITH LAW, AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUNDS OF APPEAL OF THE ASSESSEE ON THIS ISSUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 6. THE NEXT EFFECTIVE GRIEVANCE OF THE ASSESSEE IS THAT THE LOWER AUTHORITIES HAVE ERRED IN NOT GRANTING RELIEF ON AC COUNT OF SHORT GRANT OF TDS CREDIT AMOUNTING TO RS.2,04,678. 7. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AN D PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. WE FIND THAT THIS ISSUE NEEDS VERIFICATION OF THE RECORDS, WHICH ARE NOT AVAILABLE BEFORE US. WE ACCORDINGLY SET ASIDE THIS ISSUE TO THE FIL E OF THE ASSESSING OFFICER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE RECORDS AND EXAMINE THE CONTENTIONS OF THE ASSESSEE WITH REGARD TO SHORT GRANT OF TDS CREDIT, AFTER GIVING REASONABLE OPPORTUNITY OF HEAR ING TO THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS ALSO ALLOWED FOR STATISTI CAL PURPOSES. ITA NO.1342 & 13 49/HYD/10 M/S. L& T INFOCITY LTD., HYDERABAD 4 8. LAST EFFECTIVE GROUND OF THE ASSESSEE RELATES TO CHARGING OF INTEREST UNDER S.234B AND 234D OF THE ACT. THIS GRO UND IS MERELY CONSEQUENTIAL AND HENCE, THE ASSESSING OFFICER MAY DECIDE THE SAME ACCORDINGLY WHILE GIVING EFFECT TO THIS ORDER. 9. IN THE RESULT, APPEAL OF THE ASSESSEE, BEING IT A NO.1349/HYD/2010, IS ALLOWED FOR STATISTICAL PURPO SES. 10. NOW, WE MAY TURN TO THE REVENUES APPEAL, ITA NO.1342/HYD/2010, WHEREIN EFFECTIVE GROUNDS OF THE REVENUE ARE AS FOLLOWS- 1. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN F ACTS AND IN LAW IN IGNORING THE FACT THAT EXTRA WORKS INCOME IS A P URELY OPERATIONAL, THAT IT COULD BE DONE BY THE TENANT THROUGH ANY OTH ER PARTY, THERE WAS NO IMPERATIVE NEXUS BETWEEN THE MAIN BUSINESS A CTIVITY OF THE ASSESSEE AND EXTRA WORKS WHICH EMANATE FROM SPECIFI C REQUIREMENT OF SPECIFIC TENANT AND SPECIFIC TENANT HAVE THE OPT ION OF GETTING THE WORK EXECUTED THROUGH ASSESSEE OR THIRD PARTY. 2. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN FA CTS AND IN LAW IN IGNORING THE FACT THAT TEMPORARY SPACE CHARGES I NCOME IS A PURELY OPTIONAL THAT IT COULD BE DONE BY THE TENANT THROUG H ANY OTHER PARTY, THERE WAS NO IMPERATIVE NEXUS BETWEEN THE MAIN BUSI NESS ACTIVITY OF THE ASSESSEE AND TEMPORARY SPACE CHARGES WHICH EMAN ATE FROM SPECIFIC REQUIREMENT OF SPECIFIC TENANT AND SPECIFI C TENANT HAVE THE OPTION OF GETTING THE WORK DONE TROUGH ASSESSEE OR THIRD PARTY. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN FA CTS AND IN LAW IN IGNORING THAT EXTRA WORKS INCOME AND TEMPORAR Y SPACE INCOME ARE NOT COVERED BY THE DECISION OF HONBLE ITAT IN ITA NO.1241/HYD/01 (SIC.) DATED 31.10.2008 IN THE CASE OF ASSESSEE ASSESSMENT YEAR 2001-02. 11. WE HAVE HEARD BOTH SIDES AND PERUSED THE ORDER S OF THE LOWER AUTHORITIES. ON CAREFUL CONSIDERATION OF THE MATTE R, WE FIND THAT FOR ANY INCOME TO QUALIFY FOR DEDUCTION UNDER S.80IA OF THE ACT, THERE HAS TO BE A DIRECT NEXUS BETWEEN THE ELIGIBLE BUSINESS AND THE INCOME OR RECEIPT IN QUESTION. THIS PRINCIPLE HAS BEEN APPLIED WHILE DIS POSING OFF THE EARLIER ITA NO.1342 & 13 49/HYD/10 M/S. L& T INFOCITY LTD., HYDERABAD 5 YEARS APPEAL ON THE ISSUE OF CONSULTANCY CHARGES. SIMILARLY, THE EXTRA WORKS INCOME AMOUNTING TO RS.36,60,625 AND TEMPORAR Y SPACE CHARGES AMOUNTING TO RS.66,01,391 PERTAIN TO LEASE RENTALS RECOVERED FROM VARIOUS CUSTOMERS, VIZ. APOLLO HOSPITALS, ETC. AND THESE IN COMES HAVE A DIRECT NEXUS WITH THE MAIN BUSINESS OF THE ASSESSEE COMPANY. THE REFORE, THE CIT(A) IS RIGHT IN HOLDING THAT THESE INCOMES ARE TO BE HELD TO BE DERIVED FROM THE MAINTENANCE OF INFRASTRUCTURE FACILITY, ELIGIBLE FO R DEDUCTION UNDER S.80IA OF THE ACT. IN THE CIRCUMSTANCES, WE DO NOT SEE ANY I NFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE AND ACCORDINGLY HIS ORDER IN THIS BEHALF IS CONFIRMED. CONSEQUENTLY, GROUNDS OF REVENUE IN THIS APPEAL ARE REJECTED. 12. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 13. TO SUM UP, WHILE THE REVENUES APPEAL, ITA NO .1342/HYD/200 IS DISMISSED, ASSESSEES APPEAL, ITA NO.1349/HYD/2010 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 24 TH JUNE, 2011 SD/- (G.C.GUPTA) (AKBER BASHA) VICE PRESIDENT ACCOUNTANT MEMBER DT/- 24 TH JUNE, 2011 COPY FORWARDED TO: 1. M/S. L&T INFOCITY LTD., 1Q4-A1,1 ST FLOOR, CYBER TOWERS, HITECH CITY, MADHAPUR, HYDERABAD 500 082 ITA NO.1342 & 13 49/HYD/10 M/S. L& T INFOCITY LTD., HYDERABAD 6 2. DY. COMMISSIONER OF INCOME - TAX , CIRCLE 16(1) , HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS), V , HYDERABAD. 4. COMMISSIONER OF INCOME-TAX IV, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.