The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) allowed a deduction under Section 80 IA(4)(iii) of the Income Tax Act in respect of interest income derived from industrial parks and Special Economic Zones ( SEZ ).
Read more… SEZ Developer Not Entitled to Deduction on Sale of Food and Beverages u/s 80IAB of Income Tax Act: ITAT
The assessee company Candor Gurgaon One Realty Projects was engaged in the business of developing and operating Information Technology (IT) / Information Technology Enabled Services (ITES) Special Economic Zone (SEZ) at Tikri Gurgaon. The said SEZ was notified by the Government of India in the official gazette and approval of the authorized services was granted to the assessee company on 10.3.2008.
The assessee submitted that it could not let out such properties without developing car parking areas, food court etc and hence the income derived thereon would have to be part and parcel of the leasing activity carried out by the assessee so as to fall within the ambit of income derived from business.
Further it was submitted that the Board of Approvals (BOA) , being the statutory authority under the SEZ Act, has granted various approvals by a statutory process of law after duly considering and examining all the facts available on record in accordance with relevant provisions of SEZ Act and Rules. The CIT(A) however ignored all these contentions and upheld the action of the AO.
Mr. K.M. Gupta, representing the assessee submitted that the assessee company in order to develop and operate the SEZ had placed bank guarantees in the form of fixed deposit to Department of Industries & Commerce, Government of India of Rs 3.10 crores and president of India, State Pollution Board of Rs 1.25 crores in earlier years. The said fixed deposits had fetched interest income of Rs 43, 64,877/- to the assessee company during the year.
The two member bench of the tribunal comprising Amit Shukla (Judicial member) and M. Balaganesh (Accountant member) found that the Central Board of Direct Taxes (CBDT) had also come out with a Circular No. 16/2017 dated 25.4.2017 to this effect in the context of allowability of deduction under Section 80IA(4)(iii) of the Income Tax Act in respect of income derived from Industrial Parks / SEZ. Accordingly, appeal of the assessee was allowed.
Also read…… Income from Car Parking Rental Eligible for Deduction u/s 80IA of Income Tax Act: ITAT
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