Cyber Pearl Information Technology Park Pvt. Ltd., CHENNAI V. DCIT, CHENNAI

ITA 2795/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8124 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 27-09-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Keywords: Business income
• Section: 143(3); 80IB; 10

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER I.T.A. NO S . 2793, 2794 & 2795 /MDS/2016 ASSESSMENT YEAR S : 20 1 0 - 1 1, 2011 - 12 & 2012 - 13 M/S. CYBER PEARL INFORMATION TECHNOLOGY PARK PVT. LTD., (FORMERLY ASCENDAS IT SEZ (CHENNAI) PVT. LTD., NO.9, 1 ST FLOOR, INTERNATIONAL TECHPARK, TARAMANI ROAD, TARAMANI, CHENNAI 600 113. [PAN: A AFCA5329L ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX , COMPANY CIRCLE I(1), AAYAKAR BHAVAN, 121, MAHATMA GANDHI ROAD, NUNGAMBAKKAM, CHENNAI 600 034. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI LALITH KUMAR, C.A. / RESPONDENT BY : S HRI S UPRIYO PAL, J CIT / DATE OF HEARING : 28 . 1 2 .201 6 / DATE OF P RONOUNCEMENT : 06 . 01 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH E S E THREE APPEAL S FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDER S OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) 1 , C HENNAI ALL DATED 04 . 07 .201 6 RELEVANT TO THE ASSESSMENT YEAR S 20 1 0 - 1 1, 2011 - 12 AND 2012 - 13 . THE ONLY EFFECTIVE COMMON GROUND RAISED IN ALL THE APPEALS OF ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF I.T.A. NO S . 2793 - 2795 / M/ 1 6 2 INTEREST INCOME CLAIMED BY THE ASSESSEE UNDER SECTION 80IB OF THE INCOME TAX ACT , 1961 [ ACT IN SHORT]. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT SPECIAL ECONOMIC ZONES (SEZ) AND LEASING THEM TO INFORMATION TECHNOLOGY (IT) PARKS. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS SERVED ON THE ASSESSEE. AFTER EXAMINING ALL THE DETAILS FILED AND CONSIDERING TH E EXPLANATION OFFERED BY THE ASSESSEE, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AFTER MAKING DISALLOWANCE OF THE CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT ON THE INTEREST INCOME EARNED BY THE ASSESSEE ON THE GROUND THAT THE INTER EST INCOME IS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT AS BUSINESS INCOME. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) FOR ALL ASSESSMENT YEARS. BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CAS E FOR THE ASSESSMENT YEAR 2009 - 10 IN I.T.A. NO. 1193/MDS/2015 DATED 29.04.2016, THE LD. CIT(A) DISMISSED THE APPEALS OF THE ASSESSEE. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL FOR ALL THE ASSESSMENT YEARS. BEFORE US, BOTH THE PARTIES HAVE AGREED THAT THE I.T.A. NO S . 2793 - 2795 / M/ 1 6 3 ISSUE INVOLVED IN THESE APPEALS ARE SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR EARLIER ASSESSMENT YEARS. 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. SIMILAR ISSUE ON IDENTICAL FACTS HAS BEEN RAISED BEFORE THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10 IN I.T.A. NO. 1193/MDS/2015 DATED 29.04.2016, WHEREIN, THE TRIBUNAL HAS OBSERVED AND H ELD AS UNDER: 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND JUDICIAL DECISIONS CITED. THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE BASIC CONTENTION BEING ASSESSEE COMPANY IS IN THE BUSINESS OF DEVELOPING SOFTWARE PARKS AND LEASIN G TO SOFTWARE COMPANIES. THESE COMPANIES PROVIDE SECURITY DEPOSITS TO THE ASSESSEE COMPANY WHICH ARE RETURNABLE ON TERMINATION OF LEASE. SUCH REFUND MAY BE FOR A PERIOD OF FIVE YEARS OR MORE AND THE ASSESSEE COMPANY FOR LIQUIDITY PURPOSE DEPOSIT THE AM OUNT IN FIXED DEPOSITS IN BANK AND INTEREST IS RECEIVABLE AND OFFERED IN FINANCIAL STATEMENTS AND WHETHER INTEREST TAKES THE CHARACTERISTIC PROFIT FROM BUSINESS UNDERTAKING WHICH IS DISPUTED. ON PERUSAL OF THE ASSESSMENT ORDER, THE ASSESSEE HAS CLAIMED D EDUCTION U/S.80IAB OF THE ACT ON THE INTEREST PORTION ALSO BUT AT THE TIME OF ASSESSMENT BASED ON THE AUDITOR CERTIFICATE FORM 10CCB CLAIMED DEDUCTION ONLY TO THE EXTENT OF 1,68,54,543/ - AND ACCEPTED THE DEDUCTION TO THAT EXTENT AND LD. ASSESSING OFFICER TREATED BALANCE OF 2,52,04,544/ - AS INCOME FROM OTHER SOURCES. THE LD. AUTHORISED REPRESENTATIVE BEFORE COMMISSIONER OF INCOME TAX (APPEALS) HAS CONTESTED AND FILED ADDITI ONAL GROUNDS TO TREAT INTEREST INCOME AS BUSINESS PROFITS OF UNDERTAKING ELIGIBLE FOR DEDUCTION U/S.80IAB OF THE ACT. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERING THE FACTS, PROVISIONS OF LAW HAS ELABORATELY DISCUSSED AT PARA 5.2 OF THE ORDER WERE ASSESSEE AGREED THE ADDITION AND CLAIMED RELIEF AS PER FORM 10CCB AND UPHELD THE ORDER OF THE ASSESSING OFFICER. NOW QUESTION ARISES WHETHER AFTER AGREEING THE ADDITION ON TECHNICAL GROUNDS, CAN ASSESSEE CAN CLAIM FURTHER DEDUCTION, ON LEGAL ASPEC T INTEREST ON FDR AS INCOME DERIVED FROM INDUSTRIAL UNDERTAKING, THE LD. AUTHORISED I.T.A. NO S . 2793 - 2795 / M/ 1 6 4 REPRESENTATIVE RELIED ON JUDICIAL DECISIONS AND TRIBUNAL DECISION TO SUPPORT THE CASE. ON PERUSAL OF THE FINANCIAL STATEMENTS OF THE ASSESSEE COMPANY AT PAGE 35 OF THE PAPER BOOK THE MAIN SOURCE OF INCOME BEING LEASE INCOME AND ASSESSEE OFFERED INTEREST INCOME REFERRED AT SCHEDULE 10 OF PAGE 41 OF PAPER BOOK. FURTHER, SIMILAR INTEREST INCOME FOR THE ASSESSMENT YEAR 2007 - 2008 WAS OBTAINED. THE LD. AUTHORISED REPRESENT ATIVE COULD NOT SUPPORT WITH EXPLANATION WHETHER ASSESSEE HAS CLAIMED DEDUCTION U/S.80IAB OF THE ACT FOR THE ASSESSMENT YEAR 2008 - 09 ON INTEREST INCOME. WE FOUND THE ASSESSEE COULD NOT SUBSTANTIATE THE DIRECT NEXUS WITH THE INDUSTRIAL UNDERTAKING AND WE R ELY ON DECISION OF SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS LTD VS. CIT 262 ITR 278 WERE IT WAS HELD AS UNDER: - THE WORDS DERIVED FROM IN SECTION 80HH OF THE INCOME TAX ACT, 1961, MUST BE UNDERSTOOD AS SOMETHING WHICH HAS A DIRECT OR IMMEDIATE NEXUS WITH THE ASSESSEE S INDUSTRIAL UNDERTAKING. ALTHOUGH ELECTRICITY MAY BE REQUIRED FOR THE PURPOSES OF THE INDUSTRIAL UNDERTAKING, THE DEPOSIT REQUIRED FOR ITS SUPPLY IS A STEP REMOVED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING. HELD ACCORDINGL Y, THAT INTEREST DERIVED BY THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE ON DEPOSITS MADE WITH THE ELECTRICITY BOARD FOR THE SUPPLY OF ELECTRICITY FOR RUNNING THE INDUSTRIAL UNDERTAKING COULD NOT BE SAID TO FLOW DIRECTLY FROM THE INDUSTRIAL UNDERTAKING ITSE LF AND WAS NOT PROFITS OR GAINS DERIVED BY THE UNDERTAKING FOR THE PURPOSE OF THE SPECIAL DEDUCTION UNDER SECTION 80HH . ON APPLICATION OF RATIO OF ABOVE CASE, WE ARE NOT INCLINED TO INTERFERE WITH ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THI S GROUND AND UPHELD THE SAME AND DISMISS THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. 6. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, THE LD. CIT(A) HAS RIGHTLY DISMISSED THE APPEAL, WHEREIN THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS LTD. V. CIT HAS BEEN FOLLOWED. IN VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE I.T.A. NO S . 2793 - 2795 / M/ 1 6 5 LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY, WE DISMISS THE APPEALS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2010 - 11, 2011 - 12 AND 2012 - 13. 7 . IN THE RESULT, ALL THE APPEAL S FILED BY THE ASSESSEE ARE DISMISSED . ORDER PRONOUNCED ON THE 06 TH JANUARY , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVU RU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 06 . 0 1 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / G F.