WEST BENGAL INDUSTRIAL INFRASTRUCTURE DEVELOPMENT CORPORATION,KOLKATA vs. DCIT, CIR-10, KOLKATA, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “A”, BENCH KOLKATA BEFORE SHRI N.V.VASUDEVAN, JM & DR. A.L.SAINI, AM आयकर अपील सं./ITA No.1467/Kol/2014 (�नधा�रण वष� /Assessment Year:2010-2011) West Bengal Industrial Vs. DCIT, Circle-10, Kolkata, Infrastructure Development Aayakar Bhawan, P-7, Corporation, Chowringhee Square, 5, Council House Street (3rd Kolkata-700069 Floor), Kolkata-700001 �थायी लेखा सं./जीआइआर सं./PAN/GIR No.: AAACW 3073 C .. (अपीलाथ� /Appellant) (��यथ� / Respondent) Assessee by : Shri Sanjay Bhattacharya, FCA Revenue by : None सुनवाई क� तार�ख / Date of Hearing : 02/03/2017 घोषणा क� तार�ख/Date of Pronouncement 05/04/2017 आदेश / O R D E R Per Dr. Arjun Lal Saini, AM The captioned appeal filed by the Assessee, pertaining to the Assessment Year 2010-2011, is directed against the order passed by ld. Commissioner of Income Tax (Appeals)-XII, Kolkata, in Appeal No.140/XII/Cir-10/13-14, dated 14.02.2014, which in turn arises out of an order passed by the Assessing Officer (AO) Under Section 143(3) of the Income Tax Act 1961, (hereinafter referred to as the ‘Act’), dated 21.03.2013. 2. Brief facts of the case qua the assessee are that assessee filed its return of income for the assessment year 2010-2011 on 13.10.2010 disclosing total income of Rs.6,59,11,015/-. Subsequently the assessee filed revised return of income for assessment year 2010-2011 on 31.3.2012 disclosing total income of Rs.6,49,27,168/-. Assessee’s case was processed u/s.143(1) on 24.05.2011 accepting the return of income.

2 ITA No.1467/14 West Bengal Industrial Infrastructure Dev.Corp Later on assessee’s case was selected for scrutiny u/s.143(3) of the Act

and the AO completed the assessment by making various additions.

before the ld. CIT(A), who has partly allowed the appeal of assessee

observing the followings :-

“5.2.3 Decision: I have carefully considered the submission put forth on behalf the appellant along with the supporting documents furnished and the judgements of the cases relied upon, perused the facts of the case- including the findings of .the AO in the assessment order and other materials brought on record. As already discussed, the Assessing Officer has found that the appellant has claimed deduction on the following receipt which are not generated due to the activity of eligible business:

a) Interest Income from Banks 113020369.33 b) Recovery of fine from contractors 247059.00 c) other source 284365.00 d) Hire Charges for Tools and Plants 138120.00

According to the Assessing Officer, Interest income generated just because assessee made some fixed deposit so it is not derived due to any development activity and thus not eligible for deduction u/s 80-lA of the IT Act. Similarly charging any fine or hiring the plants is not business of assessee so receipt due to these activity no way qualify the eligibility for 80-lA deduction. In this regard, he has placed reliance on the decision of the Hon' ble Apex Court in the case of- Pandian Chemicals Ltd. Vs CIT (262 ITR 278) wherein it has held that interest income earned on deposit with Electricity Board, not being income derived from industrial undertaking, could not be considered for deduction u/s 80HH. Reliance has also been placed on the decision of the Hon'ble Madras High Court in the case of ClT vs Tribalogy India Ltd. (335 ITR 12), wherein it is held that the income earned by way of interest on FDRs was not entitled to special deduction since it was not derived from industrial unit. The Assessing Officer also held that the incomes shown under other heads are not from eligible business. It is in this back-ground, that the profits/losses from the different units have been gross up and eligible profit for deduction under sect.80IA worked out at NIL as given in the Chart reproduced again for the sake of clarity.

Particulars Amount(Rs.) Total Profit as per the Income and 201019284.98 Expenditure Account Less: Incomes disallowed not being receipt derived from development activity e) Hire Charges for Tools and Plants 138120.00 f) Recovery of fine from contractors 247059.00 g) Other source 2,84,365 h) Interest income from Banks 113020369.33

3 ITA No.1467/14 West Bengal Industrial Infrastructure Dev.Corp Total income for 80-IA 8,73,29,372 Less: Total Expenses 13,47,56,143 Net Income/Loss (4,74,26,771)

As regards the issue whether interest income is to be separated for deduction under sec. 80lA it has been held in Jt. ClT \/s. Beta Nepthol Ltd. (2006) 6 IT J 135 (Tribunal: Indore) that in view of various decision which are against the assessee, the issue is decided in favour of the revenue. For similar reason, I am of the view that the interest income from banks would not constitute income of the eligible business. As regards the miscellaneous income under various heads the same cannot be attributed to the eligible activity of infrastructure development. Therefore, in my view the Assessing Officer was justified in holding that those incomes do not form part of the undertaking. Coming to the grossing up of total income for deduction under sec.80IA in respect of eligible and non-eligible units in Synco Industries ltd. Vs. AO (2008) 299 ITR 444; (2008) 215 CTR 385 (SC), where the Gross total income after set-off of brought forward losses was nil, and the assessee claimed deduction u/s.80I for unit in profit without set-off of losses from eligible unit, the AO held that deduction u/s.80I is allowed only after set-off of losses of eligible unit, and deduction under sec.80I cannot exceed gross total income, the AO disallowed the deductor under sec.80I, the Hon’ble Apex Court has held that under sec.80A, deduction under Chapter VIA cannot exceed Gross total income. Section 80I(6) which states that the income shall be computed treating the unit as independent unit, deals only with computation-Same does not restrict the scope of section 80A-Deduction under sec.80I shall be allowed only after set off of losses of non-eligible unit with eligible unit and if gross total income is nil, no deduction shall be allowed. The sample principle of law has been laid down by the Hon’ble MP High Court in the case of CIT Vs. Shree Synthetics Ltd. (2010) 228 CTR 228 : (2010) 188 Taxman 197. However, in my view, there is merit in the submission of the appellant company that in the event of holding that WBIIDC would not be eligible for deduction u/s.80-IA for Rs.5,06,33,236, the Assessing Officer may be directed to allocate the expenses including Interest as debited in the individual Income and Expenditure Accounts of all the -Units of WBIIDC against WBIIDC's Gross Income. from business of Infrastructure Development and Other sources comprising of Interest, Hire Charges for Tools of Plants. Recovery of Fines from Contractors and Other sources and to allow deduction u/s 80-lA in respect of the resultant profit relating to WBIIDC's business of Infrastructure Development. Operation and Maintenance. The Assessing Officer is directed to work out the eligible profit/loss in respect of each unit, then gross up the income/loss of the individual units and allow admissible deduction, if any, in accordance with law while giving effect to this order. These grounds of appeal are decided accordingly. 5.3 Ground No.7 This ground of appeal of the appellant is directed against the action of the AO in not allowing Credit for TDS for an aggregate sum of Rs.1,70,951/- as reflected in Form No.26AS. The AO is directed to allow the credit for TDS as claimed by the appellant after due verification and diligence.

4 ITA No.1467/14 West Bengal Industrial Infrastructure Dev.Corp 5.4 Ground No.8 This ground of appeal relates to the non allowing of Credit for Tax payment of Rs.40,00,000 on 06-04-2010 as claimed by the Appellant in its Return. The AO is directed to verify the claim of the appellant and allow credit for the payment of tax of Rs. 40,00,000/- accordingly as per law. 5.5 Ground Nos.9 & 10 These grounds of appeal relate to the charging of interest of Rs.77,29,196 u/s 234B and Rs.5,57,239 u/s 234C of the Act by the AO . These grounds of appeal being consequential in nature, the AO is directed to recalculate the interest chargeable under these sections while giving effect to this appellate order. 4. Not being satisfied with the order of ld. CIT(A), the Assessee is in appeal before us and has taken the following grounds of appeal :- 1) That the Commissioner of Income-tax (Appeals) was wrong in confirming the action of the Assessing Officer in denying the deduction u/s 80-IA in relation to the appellant's business of Development, Maintenance and Operation of Infrastructure facilities.

2) That the Commissioner of Income-tax/Appeals) erred in not appreciating the fact that the Assessing Officer had wrongly considered the set off of all the expenses against the appellant's income from the appellant's business of Development, Maintenance and Operation of Infrastructure facilities without making any allocation of expenditure against the income from Interest and other sources not considered by the Assessing Officer to be part of the appellant's eligible business u/s 80-1A.

3) That the Commissioner of Income-tax(Appeals) failed to appreciate that the Assessing Officer had been required to check the eligibility of the appellant to the deduction u/s 80-IA separately for each of the Units through which the appellant had carried on the appellant's business of Development, Maintenance and Operation of Infrastructure facilities.

4) That the appellant craves leave to add, alter or withdraw any ground or grounds of appeal before or at the Hearing of the Appeal.

appeal but at the time of hearing the solitary grievance of the

assessee has been confined to the issue that the AO has not given

the appeal effect of the order passed by ld. CIT(A)-XII, Kolkata.

5 ITA No.1467/14 West Bengal Industrial Infrastructure Dev.Corp 5.1 The Ld. CIT(A) has passed an order dated 14-2-2014 in Appeal

No.140/XII/Cir-10/13-14,Kolkata, and the appeal effect of the said order

has not been given yet by the AO. The Ld. CIT(A) in the said order has

given partly relief to the assessee based on certain conditions. The ld.

CIT(A) has directed the AO to verify/examine the claim of the assessee

and after verification and examination, the AO should give relief to the

assessee. Therefore, some of the grounds of appeal have been allowed

by the CIT(A) for statistical purposes. But the ld. AO has not given the

appeal effect till date. The Ld. AR for the assessee has expressed his

willingness that he is not going to press the four grounds raised by him

before the Tribunal, therefore, he requested to treat the four grounds

raised by the assessee before the Tribunal as not pressed.

5.2 Even Ld. DR for the Revenue has also agreed with the proposition

canvassed by the ld. AR for the assessee.

5.3 Having heard the rival submissions, perused the material on record,

we are of the view that the order of CIT(A) has to be confirmed as nothing

has been brought on record to show that the conclusion of the CIT(A) are

incorrect. We are of the view that the AO should be directed to give

appeal effect of the order passed by the CIT(A)-XII, Kolkata in Appeal

No.140/XII/Cir-10/13-14, dated 14.02.2014, and we do so. With the

above observations, we dismiss the appeal of the assessee.

5.4. In the result, the appeal filed by the assessee is dismissed.

6 ITA No.1467/14 West Bengal Industrial Infrastructure Dev.Corp Order pronounced in the open court on this 05/04/2017.

Sd/- Sd/- (N.V.VASUDEVAN) (DR. A.L.SAINI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER कोलकाता /Kolkata; �दनांक Dated 05/04/2017 �काश �म�ा/Prakash Mishra,Sr.PS. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant-West Bengal Industrial Infrastructure Dev.Corp 2. ��यथ� / The Respondent.- DCIT, Cirlce-10, Kolkata-79 3. आयकर आयु�त(अपील) / The CIT(A), Kolkata. 4. आयकर आयु�त / CIT आदेशानुसार/ �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कोलकाता / DR, ITAT, Kolkata 5. BY ORDER, 6. गाड� फाईल / Guard file. स�या�पत ��त //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपील�य अ�धकरण, कोलकाता / ITAT, Kolkata