ACIT, CIRCLE-2, NOIDA vs. NOIDA SPECIAL ECONOMIC ZONE AUTHORITY, NOIDA

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “F” NEW DELHI
BEFORE SHRIPAWAN SINGH, JUDICIAL MEMBERAND
SHRIBRAJESH KUMAR SINGH, ACCOUNTANT MEMBER
आ.अ.सं/.I.T.A No.6540/Del/2018
िनधाᭅरणवषᭅ/Assessment Year:2010-11
(Physical Hearing)
NOIDA SPECIAL ECONOMIC ZONE AUTHORITY,
Phase-II, Dadri Road, Noida,
Uttar Pradesh.

PAN No.AAALN0639A
बनाम
Vs.
DCIT,
Circle-2,
Aayakar Bhawan, 2D,
A-Block, Sector-24,
Noida, Uttar Pradesh.
अपीलाथᱮ Appellant

ᮧ᭜यथᱮ/Respondent
आ.अ.सं/.I.T.A No.6541/Del/2018
िनधाᭅरणवषᭅ/Assessment Year:2012-13
NOIDA SPECIAL ECONOMIC ZONE AUTHORITY,
Phase-II, Dadri Road, Noida,
Uttar Pradesh.

PAN No.AAALN0639A
बनाम
Vs.
DCIT,Circle-2,
Aayakar Bhawan, 2D,
A-Block, Sector-24,
Noida, Uttar Pradesh.
अपीलाथᱮ Appellant

ᮧ᭜यथᱮ/Respondent
आ.अ.सं/.I.T.A No.6732/Del/2018
िनधाᭅरणवषᭅ/Assessment Year:2012-13
ACIT,
Circle-2,
Aayakar Bhawan, 2D,
A-Block, Sector-24,
Noida, Uttar Pradesh.
बनाम
Vs.
NOIDA SPECIAL ECONOMIC ZONE AUTHORITY,
Phase-II, Dadri Road, Noida,
Uttar Pradesh.

PAN No.AAALN0639A
अपीलाथᱮ Appellant

ᮧ᭜यथᱮ/Respondent

Assessee by Shri Ram Avtar Sharma, CA &
Shri Bhupesh Agarwal, CA
Revenue by Ms. Monika Singh, CIT-DR

सुनवाईकᳱतारीख/ Date of hearing:
26.11.2025
उ᳃ोषणाकᳱतारीख/Pronouncement on 12.12.2025

आदेश /O R D E R
PER PAWAN SINGH, JUDICIAL MEMBER:
1. These three appeals, out of which two cross appeal for Assessment Year
(AY) 2012-13 and appeal by assessee for AY 2011-12 are directed against

ITA Nos. 6540, 6541 & 6732/DEL/2018
NOIDA SPECIAL ECONOMIC ZONE AUTHORITY the separate orders of learned CIT(A). As in all the appeals, certain facts are common thus all the appeals are clubbed, heard together and are decided by common order to avoid the conflicting decisions. In appeal for AY 2011-12, the assessee has raised following grounds of appeal:
Grounds of appeal for AY 2011-12
1. On the facts and circumstances of the case lower authorities have erred in invoking the provisions of section 147/148 without there being existence of any valid reason to believe that the income of appellant has escaped assessment.
2. On the facts and circumstances of the case and in the law the Ld. CIT(A) erred in upholding disallowance of deduction amounting to Rs.13,96,53,930/- claimed by the appellant u/s 80IC the Income Tax Act, 1961 merely on the basis that ITR was filed belatedly u/s 139(4) for the AY 2010-11 of the I.T. Act, 1961 by invoking section 80AC of the Act.

ITA Nos. 6540, 6541 & 6732/DEL/2018
NOIDA SPECIAL ECONOMIC ZONE AUTHORITY

Assessing Officer reopened the case on the basis of direction of ld. PCIT.
Such fact is clearly discernable from the letter dated 21.07.2016. The Assessing Officer recorded reasons on 09.02.2017. The assessee in its objection stated that belief of Assessing Officer is not based on his own examination of facts. Such objection of assessee was disregarded. It is an admitted fact that learned CIT(A) in first round of appeal has allowed such relief to the assessee. If the Assessing Officer has any grievance, the right course of action was to file appeal before tribunal and not to take recourse of reopening. On independent consideration of fact, we find that Assessing Officer instead of filing appeal before tribunal merely acted on the direction of PCIT which is not justified and such action on Assessing
Officer is in defiance of scheme of law. It is settled position under the law that assessment order, if it was subject matter of appeal, the order of Assessing Officer merged with the order of appellate authority. Thus, the Assessing Officer is not empower to revise his assessment order, which has been merged with the order of the appellate authority. The right course of action is only to file appeal before further/superior authority.
On careful perusal of reasons recorded, we do not find any averment that there was any failure on the part of assessee in not disclosing fully and truly all the material necessary for assessment, which is a condition precedent if case is reopened beyond four year from the end of the relevant assessment year, thus reasons recorded are not valid.
7. The Hon’ble Apex Court in CIT vs Ramachandran Hatcheries 305 ITR 117-
SC, held that where revenue did not file appeal against the order granting

ITA Nos. 6540, 6541 & 6732/DEL/2018
NOIDA SPECIAL ECONOMIC ZONE AUTHORITY in relief to the assessee, the assessment cannot be reopened on the same issue. Thus, in view of aforesaid factual and legal discussion, the reopening which was based on direction of PCIT is unjustified, consequently, reassessment order dated 05.12.2017 is set-aside.
8. Even on merit, we find that there are series of decision, wherein it has been held that if return of income is filed within extended time period prescribed under section 139(4), deduction cannot be denied to the assessee. We find that Punjab and Haryana High Court in CIT Vs Jagriti
Housing and Urban Development Authority (supra) also held that where the assessee, State organization, filed return claiming deduction under section 80IB(10) beyond period of limitation as per section 139(1) on account of delay in audit and the assessee has reasonable and bona fide cause for not filing return in time, and tribunal concurrently held that assessee was entitle to claim specifically computed deduction, assessee was not to be burdened with taxes, which it was not otherwise not liable to page and the law. We also find that Delhi Tribunal in Fibrefill Engineers vs ACIT (2017) 83 taxmann.com 34 (Delhi-Trib) also held that deduction under section 80IC cannot be denied only on the basis of filing a belated

ITA Nos. 6540, 6541 & 6732/DEL/2018
NOIDA SPECIAL ECONOMIC ZONE AUTHORITY return of income. It was also held that language of section 139 makes it clear that legislature itself has allowed the assessee to file return belatedly subject to fulfilment of conditions wherein in the said section. Once, those conditions are made, then return filed assessee would for all technical purpose be considered being filed under section 139(1).
9. The ld. CIT-DR for the revenue has relied on certain case law of different
High Courts, wherein, it has been held that deduction under section 80IB could not be allowed when return was filed belatedly in term of section 139(4). Now, we are faced with a situation wherein a different High
Courts has taken a different view on similar issue, thus following the principal of law as settled by Hon’ble Supreme Court in the case of CIT vs
Vegetables Products Ltd. (1973) 88 ITR 192 (SC) wherein it was held that when there are two interpretation, the ratio in favor of assessee should normally be accepted. Thus, in view of aforesaid factual and legal discussion, the assessee also succeeded on merit.
10. In the result, the appeal for AY 2010-11 is allowed.
11. Now, we shall take up Cross Appeals for AY 2012-13. The assessee has raised following grounds of appeal
On the facts and circumstances of the case CIT (A) had erred in law and on facts in confirming the addition of Rs. 58,30,808/- by not allowing deduction u/s 80IAB of I.T. Act, 1961 of the (i) disallowances of Rs. 35,98.500/- for excess depreciation and ii) disallowance of Rs.22,32,038/- for expenditure on which TDS u/s 1941 on lease rent.
12. The Revenue in its cross appeal has raised following grounds of appeal

Rs.22,32,038/- paid to Noida Authority was upheld. Thus, the assessee has challenged the action of ld. CIT(A) in not allowing the additional/higher depreciation of Rs.35,98,500/- and lease rent of Rs.22,32,038/-. Similarly, the Assessing Officer/Revenue has challenged the action in allowing interest and other source of income to assessee under section 80AB.
14. Against the grounds of appeal raised by the Revenue, the ld. AR of the assessee submits that assessee claim 100% deduction under section 80AB on the profit derived from business, which comprise interest income of Rs.2.72
Crore and other income of Rs.5.62 Crore, which relates to activities of assessee authority in SEZ area. The ld. CIT(A) appreciated the fact and passed a reasoned order while allowing relief to the assessee. While supporting the order of learned CIT(A) on allowing interest income as a part of deduction on section 80AB, the learned AR submits that such interest income is a part of profit and gains derived from business of developing SEZ, as they had temporarily parked the fund with the bank for the purpose of earning interest income. The interest earned on such deposits with bank are directly related to the activities of assessee as the assessee has no option except to deposit the funds till its utilization. So far as other income aggregating of Rs.5.62 Crore is concerned, such receipt are also part of profit
& gain derived from the business of developing SEZ, which were explained in the following manner:-

ITA Nos. 6540, 6541 & 6732/DEL/2018
NOIDA SPECIAL ECONOMIC ZONE AUTHORITY

S.
No.
Particulars
Amount (Rs.)
1
Bid Amount received
3,74,75,000
2
Plot Transfer charges
78,87,975
3
Auction Sale
56,25,000
4
Building Permit Fee
22,42,851
5
Penalty Received
8,64,823
6
Building Plan Processing Fees
7,14,716
7
Water Charges
5,95,493
8
Transfer charges receivable
5,10,311
9
Fee for Form-I
1,41,619
10
Sale of Obsolute Goods
1,15,000
11
Other Receipts
1,00,752
12
DG Set Lease Rent
11,900
13
Issue of Form-I charges
1,260
Total
5,62,86,700

ITA Nos. 6540, 6541 & 6732/DEL/2018
NOIDA SPECIAL ECONOMIC ZONE AUTHORITY

The assessee has not proved that all the receipt are first degree income of the assessee.
17. We have considered the submission of both the parties and perused the orders of lower authorities carefully. We find that the assessee is engaged in the development and maintenance of SEZ. The interest income earned from the assessee from surplus deposited with bank. Such interest income has direct nexus being a part of business activities. Further, the other receipt as explained before us during the hearing, which are also recorded by Assessing
Officer in para-5 and 6 of assessment order. The various receipt consisting bid amount, plot transfer charges, auction sale, building permit fees, penalty for different violation and other different kind of receipts are on account of business activities of the assessee. Moreover, from AY 2014-15 onwards, the Department has already issued exemption certificate under section 10(20) of Income Tax Act to the assessee. Thus, we do not find any infirmity in the order of the ld. CIT(A), which may warrant our interference. In the result, grounds of appeal raised by the Revenue are dismissed.
18. In the result, the appeal of the Revenue in ITA No.6732/Del/2018 is dismissed.
19. Now adverting to the appeal of the assessee for AY 2012-13. The ld. AR of the assessee submit that ld. CIT(A) upheld the disallowance of excess depreciation and disallowance of lease rent paid to Noida Authority for the want of TDS. The ld.AR of the assessee submits that the disallowances confirmed by ld. CIT(A) increase profit proportionately. Hence, the deduction under section 80IAB will also increase proportionately. There is no real tax

ITA Nos. 6540, 6541 & 6732/DEL/2018
NOIDA SPECIAL ECONOMIC ZONE AUTHORITY impact. Disallowance is only an academic adjustment, which is not justified in the assessment proceedings. The ld. CIT(A) failed to appreciate that the entire profit & gain derived by SEZ are 100% allowed to be deducted under section 80IAB. The quantum underline depreciation claim and expenses, even if excess will not affect chargeability of tax in case of assessee. The ld.
AR of the assessee by referring CBDT Circular No.37 of 2016 dated
02.11.2016 would submit that CBDT has also accepted such fact. To support his submission, the ld. AR of the assessee relied upon the decision of Hon’ble
241 and in ITO vs Keval Construction [2013] 33 taxmann.com 277 (Gujarat).
20. On the other hand, the ld. CIT-DR for the revenue supported the order of lower authorities.
21. We have considered the submission of both the parties and have gone through the order of the lower authorities carefully. We have also deliberated upon CBDT Circular No.37 of 2016 and other decisions relied by ld. AR of the assessee. We find that Assessing Officer disallowed excess depreciation by taking view that explanation of assessee that there is no prejudice to the interest of the Revenue is not satisfactory and disallow excess depreciation.
Similarly for disallowance of lease rent, the assessee stated that no TDS was deducted by then on the presumption that Noida Authority is a local authority. The ld. CIT(A) upheld both the disallowance. On disallowance of excess depreciation, the ld. CIT(A) held that whether claiming excess depreciation would have impact on taxable income or not would not condone the mis-conduct of assessee. The effect of taxability of income of assessee or ITA Nos. 6540, 6541 & 6732/DEL/2018
NOIDA SPECIAL ECONOMIC ZONE AUTHORITY otherwise is to be considered by Assessing Officer. On the disallowance of lease rent, the ld. CIT(A) held that Hon’ble Apex Court in Civil Number 792-
793 of 2014 in Noida vs CCIT & Ors upheld the stand of the Income Tax
Department. On such observation the action of Assessing Officer in disallowing such deduction is upheld. On independent appreciation of facts, we find merit in the submissions of ld AR of the assessee that ld. CIT(A) failed to appreciate that the entire profit & gain derived by SEZ are 100%
allowed to be deducted under section 80IAB and the quantum underline depreciation claim and expenses, even if excess claim will not affect chargeability of tax in case of assessee as such position is accepted by CBDT
Circular No.37 of 2016. In the result, the assessing officer is directed to allow both the disallowances. In the result, both the grounds of appeal raised by the assessee are allowed.
22. In the result, appeal of the assessee for AY 2012-13 is allowed.
Order pronounced in the open court on 12.12.2025 (BRAJESH KUMAR SINGH)
JUDICIAL MEMBER
Dated: 12.12.2025
Shekhar