Aavkar Infrastructure Co., Ahmedabad V. The Income Tax Officer, Ward-9(2), Ahmedabad

ITA 1649/AHD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9615 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER ./ ITA NO. 1649/AHD/2014 / ASSESSMENT YEAR: 2009-10 AAVKAR INFRASTRUCTURE CO., 201-202, AAYNA COMPLEX, OPP. SUVARNAVILL BUNGLOW, THALTEJ, AHMEDABAD .. APPELLANT PAN : AANFM 5448 D VS INCOME TAX OFFICER, WARD-9(2) AHMEDABAD .. RESPONDENT ASSESSEE(S) BY : SHRI M.K. PATEL , AR REVENUE BY : SHRI D ILEEP KUMAR , SR. DR / DATE OF HEARING 15/12/2015 /DATE OF PRONOUNCEMENT 03/02/2016 / O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-X X, AHMEDABAD DATED 20.03.2014 FOR ASSESSMENT YEAR 2009 -10, ON THE FOLLOWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XX , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN UPHOLDIN G THE ADDITION OF RS.4,44,205/- 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XV, AHMEDABAD OUGHT TO HAVE DELETED THE ADDITION OF (SMC) ITA NO. 1649/AHD/2014 AAVKAR INFRASTRUCTURE CO VS. ITO AY 2009-10 2 RS.4,44,205/- IT BEING NOT THE INCOME AS STIPULATED BY ITO. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XX, AHMEDABAD MAY BE SET ASIDE AND THE ADDITIONS UPHELD MAY BE DELETED. 2. IN THIS CASE, THE ASSESSING OFFICER DISALLOWED T HE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB(10) OF T HE ACT ON THE INTEREST INCOME OF RS.4,44,205/- TREATING THE S AME UNDER THE HEAD OF INCOME FROM OTHER SOURCES. THE ASSESSI NG OFFICER OBSERVED THAT THE ASSESSEES CONTENTION THAT THE IN COME EARNED OF FUNDS LYING IDLE WHEN THE PROJECT WAS UNDER PROG RESS WAS INCIDENTAL TO THE BUSINESS WAS NOT FOUND CORRECT. T HE CONTENTION OF THE ASSESSEE IN THIS REGARD WAS ALSO NOT ACCEPTABLE TO THE ASSESSING OFFICER FOR THE REASON THAT THE DEDUCTION U/S 80IB(10) WAS AVAILABLE ON THE INCOME DERIVED ON DEVELOPMENT OF THE HOUSING PROJECTS. ACCORDING TO THE AUTHORITIES BELOW, THE INTEREST INCOME EARNED WAS N OT THE CORE BUSINESS ACTIVITY OF THE ASSESSEE AND THEREFORE, TH E SAME WOULD NOT FALL UNDER THE PURVIEW OF THE DEDUCTION U/S 80I B(10) OF THE ACT. THEREFORE, THE SHORT ISSUE BEFORE US IS WHETHE R THE INCOME EARNED ON FUNDS LYING IDLE WHEN THE PROJECT WAS UND ER PROGRESS IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OR NOT. THE DEPARTMENTAL (SMC) ITA NO. 1649/AHD/2014 AAVKAR INFRASTRUCTURE CO VS. ITO AY 2009-10 3 REPRESENTATIVE HAS RELIED UPON VARIOUS JUDICIAL PRONOUNCEMENTS, AS RELIED UPON BY THE LOWER AUTHORI TIES IN THEIR RESPECTIVE ORDERS, WHEREBY IT HAS BEEN HELD T HAT THE DEDUCTION IN RESPECT OF THE INCOME TO WHICH THE PRO VISIONS ARE MEANT COULD ONLY BE ELIGIBLE FOR DEDUCTION. ON THE CONTRARY, LD. AUTHORIZED REPRESENTATIVE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULE S PVT LTD VS. CIT, REPORTED IN (2012) 343 ITR 0089, WHEREIN T HE HONBLE COURT HAS HELD AS UNDER:- DEDUCTION UNDER SECTION 80HHCPROFITS FROM EXPORT BUSINESSAO AND CIT(A) WHILE COMPUTING DEDUCTION UNDER S. 80HHC, NINETY PER CENT OF THE GROSS INTERE ST FROM THE PROFITS OF THE BUSINESS OF THE ASSESSEETRIBUNA L REMITTED MATTER TO AO TO EXAMINE EXCESS BETWEEN INT EREST PAID AND INTEREST RECEIVED AND HELD THAT THE ASSESS EE WAS ENTITLED TO DEDUCT THE EXPENSES FROM THE INTEREST R ECEIVED AND ONLY NINETY PER CENT OF THE NET AMOUNT OF INTER EST COULD BE EXCLUDED UNDER EXPLANATION (BAA) TO S. 80H HC HIGH COURT AFFIRMED THE FINDINGS OF TRIBUNALHELD, FOLLOWING THE M/S ACG ASSOCIATED CAPSULES PVT. LTD. V. COMMISSIONER OF INCOME TAX IT IS HELD THAT NINETY P ER CENT OF NOT THE GROSS INTEREST BUT ONLY THE NET INTEREST , WHICH HAS BEEN INCLUDED IN THE PROFITS OF THE BUSINESS OF THE ASSESSEE AS COMPUTED UNDER THE HEADS 'PROFITS AND G AINS OF BUSINESS OR PROFESSION' IS TO BE DEDUCTED UNDER CLAUSE (1) OF EXPLANATION (BAA) TO S. 80HHC FOR DETERMININ G THE PROFITS OF THE BUSINESS 2.1 IN VIEW OF THE AFORESAID DECISION OF THE HONBL E SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES PVT LT D VS. CIT (SMC) ITA NO. 1649/AHD/2014 AAVKAR INFRASTRUCTURE CO VS. ITO AY 2009-10 4 (SUPRA), I RESTORE THIS MATTER BACK TO THE FILE OF THE CIT(A) FOR A LIMITED PURPOSE OF NETTING OF INTEREST AFTER PROVID ING DUE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 3RD FEBRUARY, 2016 AT AHMEDABAD. SD/- (SHAILENDRA K. YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 03/02/2016 BIJU T., PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' ' # / CONCERNED CIT 4. ' ' # ( ) / THE CIT(A) 5. &'( ! , ' ! , / DR, ITAT, AHMEDABAD 6. (- . / GUARD FILE. / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) !', / ITAT, AHMEDABAD