TRANSWORLD TERMINALS DADRI PRIVATE LIMITED (FORMERLY ALBATROS INLAND PORTS PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 14(1)(1), MUMBAI
What did the Tribunal hold?
The Tribunal, following its co-ordinate bench's decision in the assessee's own case for earlier years, held that most of the 'other incomes' were derived from the eligible industrial undertaking and thus eligible for deduction under Section 80IA. The initiation of penalty proceedings was deemed premature.
What were the facts?
The assessee claimed deduction under Section 80IA for certain 'other incomes' which included rent, interest, and balances written back. The Assessing Officer disallowed these incomes from the eligible profit for deduction, and the CIT(A) upheld this. The assessee appealed to the ITAT.
What were the issues?
Whether 'other incomes' such as rent, interest, and balances written back are eligible for deduction under Section 80IA. Whether initiation of penalty proceedings is premature.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI PAVAN KUMAR GADALE, JM
These are three appeals filed by the assessee Transworld Terminals Dadri Private Limited formerly known as Albatross Inland Ports Private Limited for A.Y. 2012-13,
We first take up for A.Y. 2012-13, where the assessee has raised the solitary ground of appeal stating that a sum of ₹18,97,000/- reported under the head ‘other income’ was held to be not eligible for deduction under Section 80IA of the Income-tax Act, 1961 (the Act).
The brief fact shows that assessee is a company engaged in the business of operating a Container Freight Station (CFS). It filed its return of income on 26th September, 2012 at a total income of ₹9,31,26,170/-. Assessee is eligible for deduction under Section 80IA of the Act. Assessee has shown ‘other incomes’ of rent received, interest on fixed deposits, interest on IT refund, balances written back and miscellaneous income totaling to ₹18,97,000/-. These are the income pertains to the Dadri Unit, which is eligible for deduction under Section 80IA of the Act. Assessee did not exclude the above income from the eligible profit derived from the industrial undertaking of Dadri unit while computing deduction under Section 80IA of the Act. The learned Assessing Officer raised a query on the above issue and ultimately held that above income is not derived from industrial undertaking and
Aggrieved by the assessment order assessee preferred an appeal before the National Faceless Appeal Centre, wherein the appeal of the assessee was dismissed. Therefore, the assessee is in appeal before us.
The learned Authorized Representative submitted that identical issue arose in case of the assessee for A.Y. 2009- 10, wherein co-ordinate Bench in passed an order on 01st October, 2018 holding that a. The rent received by the assessee is directly related to the main business of the assessee, as assessee being a CFS providing space to facilitate customers and other associated on rent. Accordingly, rent was held to be income derived from eligible undertaking eligible for deduction under Section 80IA of the Act.
b. interest on fixed deposit, it was submitted that the fixed deposits are pledged with custom authorities for obtaining guarantee therefore, so earned by the assessee was also held to be eligible for deduction under Section 80IA of the Act. d. With respect to the interest on income tax refund, it was submitted that same should also be net off against interest expenditure for the purpose of computing the profits.
Such decision of the co-ordinate Bench is also based on the decision of co-ordinate Bench in case of ITO vs. Hiranandani Builders. Accordingly, it was submitted that all the items of ‘other income’ are already decided by the co-ordinate Bench in assessee’s own case in its favour for earlier years. Therefore, the issue is covered in favour of the assessee.
The learned Departmental Representative supported the orders of the lower authorities.
We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also carefully considered the order of the co-ordinate Bench in assessee’s own case for A.Y. 2009-10 to 2010-11 dated 1st October, 2018. During the year, the assessee has received rent of ₹11,23,000/-, interest on fixed deposits receipt of ₹6,01,000/-, interest on income tax refund of ₹25,000/- balances written back of ₹63,000/- and further miscellaneous income of ₹85,000/-. All these income have been considered by the co-ordinate Bench in assessee’s own case as income eligible for deduction u/s 80 IA of The
Ground no.2, is against the initiation of penalty proceedings, which is premature and therefore, same is dismissed. Accordingly, for A.Y. 2012-13 is partly allowed.
A.Y. 2014-15 involving similar ground of appeal.
10. Ground no.1, is with respect to the other income of ₹39,53,831/- not considered as eligible for deduction under Section 80IA of the Act by the lower authorities. The issue is decided in the appeal of the assessee for A.Y. 2012-13. With a similar direction ground no.1 of the appeal is partly allowed.
11. Ground no.2 is against the initiation of penalty proceedings, which is premature in nature and therefore, same is dismissed.
Accordingly, A.Y. 2014-15 is partly allowed.
Ground no.2 of the appeal is against the initiation of penalty proceedings. It is premature and hence, same is dismissed.
Accordingly, all the three appeals filed by the assessee are partly allowed.
Order pronounced in the open court on 29.12.2022.
More judgments on Section 80IA
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