‘Other Income’ in nexus with business of the assessee is eligible for deduction u/s 80IA: ITAT

The assessee company filed its return of income electronically for the AY 2013-14 computing a total income of Rs 56,700,030 under the normal provisions of the Act and a book profit of Rs 1,065,483,802 under section 115JB of the Act. The assessee claimed a refund of Rs 398,538,500 in the income tax return. Assessment proceedings were initiated u/s. 143(3) of the Act by issuing a notice u/s. 143(2) of the Act. The AO completed the assessment u/s. 143(3) of the Act in which the taxable income was assessed at Rs 1,057,839,903 and the book profits at Rs 1,065,483,801.

Appeal before CIT(A): On appeal, the CIT(A) gave partial relief to the assessee, and against the same, both the assessee and the revenue appealed before the Tribunal.

Appeal before ITAT: With regards to deduction u/s.80IA of the Act, during the year under consideration the assessee earned income from the tender fee of Rs. 72,80,000 and interest on deposits of Rs. 15,75,09,608 and had accounted the same under the head ‘Other Income’ in the financials. In the return of income, the assessee had included this income for the purpose of claiming deduction u/s.80IA. The ratio emanating from the case of Odisha Power Generation Corporation Ltd is that if there is direct nexus between income earned/expenses incurred to the business of the assessee then the net profits and gains after considering those incomes/expenses are ‘derived from the business of the assessee and therefore would be eligible for deduction u/s. 80IA. The tribunal remanded the issue to the AO for factually verifying the ‘Other Income’ earned by the assessee and its nexus with the business of the assessee in order to decide the eligibility for deduction u/s.80IA of the Act as per law.

As to the disallowance of Rs. 25,42,00,000 as concession fee under Section 43B. The AO stated that the concession fee falls within the words ‘any sum payable by way of tax, duty cess or fee by whatever name called’ and that the same is allowable. The tribunal held that the interpretation of the AO that the words ‘by whatever name called’ would include all payments made is not the right interpretation. These words need to be read in conjuncture with the words preceding viz., tax, duty, cess or fee. The concession fees are paid towards a profit-sharing/recovery for foregoing the operation at the HAL airport by the Government of India and not in the nature of any tax, duty, cess or fee. Therefore, the tribunal held that there cannot be any disallowance u/s.43B of the Act. Hence, the appeal of the assessee was partly allowed, whereas the revenue’s appeal was dismissed.

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