M/S. EMAS EXPRESSWAY PVT. LTD.,KOLKATA vs. DCIT, CIRCLE - 8(1), KOLKATA, KOLKATA

This appeal filed by the assessee is directed against the order of Ld. CIT(A) – 16, Kolkata dated 03.12.2016 and the solitary issue involved therein relates to the disallowance made by the A.O. and confirmed by the Ld. CIT(A) on account of assessee’s claim for deduction under section 80IA in respect of the interest written back amounting to Rs. 4,94,57,248/-, insurance claim receipts amounting to Rs. 15,46,936/- and other income amounting to Rs. 4,808/-.

The assessee in the present is a company which is engaged in the business of development of construction of highways. The return of income for the year under consideration was originally filed by it on 29.09.2008 declaring a total income of Rs. 8,62,32,582/-. In the said return, the interest liability written back amounting to Rs. Assessment Year: 2008-09 Emas Highway Pvt Ltd 4,94,57,248/- was declared by the assessee company as its income under the head “income from other sources”. Subsequently a revised return was filed by the assessee declaring total income of Rs. 3,67,75,334/- wherein the said amount was treated by the assessee as its income from business entitled for deduction under section 80IA. According to the A.O., the interest liability written back was not the income of the assessee company earned from its business of highway development. He accordingly held that the assessee was not entitled to claim deduction under section 80IA in respect of the said amount. He also held that the insurance claim receipts amounting to Rs. 15,46,936/- and other income of Rs. 4,808/- were chargeable to tax in the hands of the assessee company under the head “income from other sources” and the assessee was not entitled to claim deduction under section 80IA in respect of the same. Accordingly, the total income of the assessee was determined by the A.O. at Rs. 8,62,32,582/- in the assessment completed under section 143(3) vide an order dated 31.12.2010. 3. Against the order passed by the A.O. under section 143(3), an appeal was preferred by the assessee before the Ld. CIT(A) and after considering the submissions made by the assessee as well as the material available on record, the Ld. CIT(A) upheld the action of the A.O. in disallowing the assessee’s claim for deduction under section 80IA in respect of interest liability written back, insurance claim receipts and other income by holding that the same did not constitute the income of the assessee derived from the business of highway development. In support of this conclusion, the Ld. CIT(A) relied on Assessment Year: 2008-09 Emas Highway Pvt Ltd the decisions of Hon’ble Supreme Court in the case of Liberty India vs CIT 317 ITR 218 and Pandian Chemical Ltd. vs CIT 262 ITR 278. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material on record. As agreed by the learned representatives of both the sides, the issue involved in this appeal of the assessee is squarely covered by the decision of the coordinate bench of this tribunal rendered in the case of Mapex Infrastructure Pvt. Ltd., the sister concern of the assesssee vide its order dated 13.12.2017 passed in ITA No. 266/Kol/2016. A copy of the said order is also placed on record before us and perusal of the same shows that a similar issue involved in the case of M/s. Mapex Infrstructure Pvt. Ltd. has been restored by the Tribunal to the file of the A.O. for the following reasons given in paragraph no 4 of his order: “We have heard rival submissions and gone through the facts and circumstances of the case. We note that the AY 2006-07 was the first year wherein the assessee claimed deduction u/s. 80IA of the Act for the projects of NH 2 (Panagarh-Palsit Section). In the original return of income, assessee company had written back interest liability of Rs.3,47,72,165/- and the same was initially shown “as income from other sources” and offered for taxation. However, in the revised return later filed, the assessee has treated the interest income as income from “business” activity and claimed deduction u/s. 80IA of the Act. We note that the assessee had taken loan from M/s. Gamuda WCT(Offshore) Pvt. Ltd. and as per the loan agreement between the parties there was a clause for waiver of interest and since the lender company M/s. Gamuda WCT(Offshore) Pvt. Ltd had waived the interest off, the assessee had written back the amount of interest of Rs. 3,47,72,165/- as interest income but mistakenly in the original assessment it was shown as “Income from Other Sources” whereas according to the assessee, the