M/S. ELECTRONICS CORPORATION OF TAMILNADU LTD.,CHENNAI V. ACIT, CC - 2 (1), CHENNAI

MA 63/CHNY/2023

AI Insights

The case involves M/s. Electronics Corporation of Tamilnadu Ltd., which sought deductions under section 80-IAB for the assessment years 2014-15 and 2015-16. The Tribunal had previously dismissed these claims, stating that the assessee's gross total income, which only included interest income and no business profits, did not meet the statutory requirements for such deductions. The assessee filed miscellaneous applications seeking a review of this decision, arguing that the eligible units had earned income from SEZ and reported net profits during the relevant assessment years. However, the Tribunal found no basis to alter its earlier findings, emphasizing that the inclusion of business profits and gains is essential to claim the deduction under section 80-IAB.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472354 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-10-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-04-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 02-03-2023
• Laws Referred To: Special Economic Zones Act, 2005, Section 80-IAB of the Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AROON PRASAD; LD
• Assessee Lawyers: N. ARJUN RAJ LD
• Keywords: Business income
• Section: 80IA

Judgement Text

" आयकर अपीलीय अिधकरण “सी” \u000eा यपीठ चे\u0013ई म\u0016। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, CHENNAI मा ननीय \u0019ी महा वीर िसं ह, उपा \u001f एवं मा ननीय \u0019ी मनोज क ुमा र अ%वा ल ,लेखा सद( क े सम । BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM 1. M.A. No.63/Chny/2023 [In ITA No.828/Chny/2020] (िनधा )रण वष) / Assessment Year: 2014-15) & 2. M.A. No.64/Chny/2023 [In ITA No.829/Chny/2020] (िनधा )रण वष) / Assessment Year: 2015-16) M/s. Electronics Corporation of Tamilnadu Ltd. 692, MHU Complex, Anna Salai, Nandanam, Chennai-600 035. बना म/ Vs. ACIT Corporate Circle-2(1), Chennai. \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACE-1670-K (अपीलाथ\u001c/Appellant) : (\u001f थ\u001c / Respondent) अपीलाथ\u001cकीओरसे/ Appellant by : Shri N. Arjun Raj (Advocate) - Ld.AR \u001f थ\u001cकीओरसे/Respondent by : Shri Aroon Prasad, (Addl. CIT) - Ld. DR सुनवाईकीतारीख/Date of Hearing : 26-07-2024 घोषणाकीतारीख /Date of Pronouncement : 09-10-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. By way of these miscellaneous applications, the assessee seeks our indulgence in Tribunal order passed in captioned appeals on 04-01- 2023. The order is combined order for AYs 2014-15 to 2016-17. The 2 bench, in para-6 of the order, dismissed assessee’s grounds qua deduction u/s 80-IAB on following findings: - 6. After going through assessee’s computation of income as placed on record, the undisputed fact that emerges is that the assessee has incurred business losses during the year which has been set-off by way of inter-head adjustment from ‘income from other sources’ which solely comprise-off of interest income. The, gross total income, thus solely consist of interest income only and do not have any element of business income / profits. In such a case, no further deduction would be available to the assessee in view of clear statutory mandate of Sec.80IAB which provide that: - 80-IAB. (1) Where the gross total income of an assessee, being a Developer, includes any profits and gains derived by an undertaking or an enterprise from any business of developing a Special Economic Zone, notified on or after the 1st day of April, 2005 under the Special Economic Zones Act, 2005, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to one hundred per cent of the profits and gains derived from such business for ten consecutive assessment years: It is amply clear that to claim this deduction, gross total income must include any profits and gains derived from specific activity which is not the case here. The inclusion of business profits and gains is sine qua non to claim this deduction. In the absence thereof, no such deduction could be allowed to the assessee. Accordingly, the impugned order could not be faulted with. The Ld. AR has cited many judicial decisions to support the argument, however, upon study, none is found to be applicable to the facts of the present case and the same do not render any assistance to the case of the assessee. The corresponding grounds thus raised stand dismissed. The bench, upon perusal of assessee’s computation, rendered a finding that the assessee has incurred business losses during the year which has been set-off by way of inter-head adjustment from ‘income from other sources’ which solely comprise-off of interest income. The, gross total income, thus solely consist of interest income only and do not have any element of business income / profits. In such a case, no further deduction would be available to the assessee. The inclusion of business profits and gains is sine qua non to claim this deduction. In the absence 3 thereof, no such deduction could be allowed to the assessee. Accordingly, the corresponding grounds were dismissed. 2. In the present applications, the Ld. AR has submitted that the eligible units have earned income from SEZ and reported net profit of Rs.231.27 Lacs & Rs.283.66 Lacs in AYs 2014-15 and 2015-16 respectively. The Ld. AR has submitted that the provision of sub-section (3) to Sec. 80IAB incorporates sub-section (5) to Sec. 80IA which provide that the quantum of deduction should be computed as if the eligible unit is the only source of income. The Tribunal having understood the scope of quantification process incorporated in Sec.80IA went wrong is upholding the denial of deduction. The Ld. AR supports the same by relying on certain judicial decisions. The Ld. Sr. DR, on the other hand, submitted that the assessee seeks review of the order which is impermissible. 3. Upon perusal of order of Tribunal, we are of the considered opinion that adjudication is based on certain factual findings made by the bench on the computation of income. The same are not shown to be incorrect, in any way. The Ld. AR merely seeks review of the order which is impermissible. The bench has rendered clear finding that the gross total income solely consists of interest income only and the same do not have any element of business income / profits. In such a case, no further deduction would be available to the assessee. Therefore, we see no reason to interfere in the order. 4 4. Both the applications stand dismissed. Order pronounced on 9th October, 2024 Sd/- Sd/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा56 / VICE PRESIDENT लेखा सद8 / ACCOUNTANT MEMBER चे:ई Chennai; िदनांक Dated : 09-10-2024 DS आदेश की Aितिलिप अ%ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u001c/Appellant 2. \u001f थ\u001c/Respondent 3. आयकर आयुB/CIT Chennai. 4. िवभागीय \u001fितिनिध/DR 5. गाडG फाईल/GF "