Itxa/1413/2016 Of Principal Commissioner Of Income Tax (Central)-1 v. Hiranandani Builders

Priya Soparkar IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1413 OF 2016 Principal Commissioner of Income Tax(Central)-1 … Appellant V/s. Hiranandani Builders … Respondent --- Mr.Suresh Kumar for the Appellant.Mr.K.Gopal with Mr.Tanmay Phadke for the Respondent. --- CORAM : AKIL KURESHI AND M.S.SANKLECHA, JJ. DATE : JANUARY 10, 2019. P.C.:- 1.The appeal is filed by the revenue challenging the judgmentof the Income Tax Appellate Tribunal. 2.Following question has been presented for our consideration: “Whether on the facts and in the circumstances ofthe case and in law, the ITAT was justified inupholding the Ld. CIT(A) decision that interestreceived has a direct nexus with the developmentactivities and hence eligible for deduction u/s.80IA ignoring the fact that it is an interest receivedon excess payment of tax which has no nexus with 25 itxa 1413 of 2016-o the business activity and it has not been derivedfrom the I.T. Parks/S.E.Z. undertaking?” 3. The issue concerns the respondent-assessee for theassessment year 2009-10 and revolves around the assessee'sclaim of deduction under Section 80IA of Income Tax Act, 1961(“the Act” for short). The respondent-assessee is engaged in thebusiness of developing I.T.Parks and S.E.Z. and derives itsincome from leasing out such properties. Undisputedly, suchincome qualifies for deduction under Section 80IA of the Act.The revenue however contests the assessee's claim of suchdeduction for various other receipts such as interest on incometax refund, interest on FDRs etc. 4.CIT (Appeals) and the Tribunal concurrently hold thatsuch income was also derived from the assessee's principalbusiness of leasing out the premises in I.T. Parks and S.E.Z.areas. We are broadly in agreement with the view of theTribunal. The assessee having paid excess income tax, receivedrefund with interest. Further, the assessee had obtained depositsfrom the lessees for performance guarantee which would not Priya Soparkar invite any interest. The assessee parked such fund in bankdeposits which earned interest. The entire transaction of leasingout the property at specified lease rent upon the lessees agreeingto offer deposit without claiming interest thereon is integral partof the assessee's principal business of leasing out the premises inI.T. Parks and S.E.Z. and therefore, Tribunal correctly concludedthat such income can be stated to have been derived from theassessee's eligible business. No question of law arises. TaxAppeal is therefore, dismissed. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.)….