SIDC eligible for S. 80IA Deduction in respect of Interest on Land Premium on Industrial Parks: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Dehradun bench has held that State Infrastructure & Industrial Development Corporation of Uttarakhand Ltd. (SIDC) is eligible for deduction under section 80IA of the Income Tax Act, 1961.

The assessee company is a Govt, of Uttarakhand Enterprises acting as a nodal agency of the State Govt, which was incorporated as a Public Ltd. Company in the year 2002, in order to promote industrial and infrastructure development in the State, to provide the financial assistance in the shape of debt, equity, venture capital, to develop infrastructure and assist the private initiative in industry and infrastructure and to implement and manage projects and provide specialized financial consultancy and construction and all such other activities to promote industries and develop industrial infrastructure in the state of Uttarakhand.

During the course of assessment proceedings, the AO noticed that the assessee’s profit consisted of interest on amounts which were due from persons to whom areas had been allotted in the industrial estate. The assessee was therefore required to justify the claim of deduction u/s 80IA on the interest income on land premium of Rs. 17,60,12,522/-.

On appeal, the first appellate authority found that the interest income was directly attributable to the financing activity, which in turn, may be called incidental to the main activity, of development/operation/ maintenance of industrial parks. Hence, he was of the opinion that the interest income was liable to be treated as income from other sources.

The Tribunal bench comprising Dr. B.R.R. Kumar, Accountant Member and Sh. Yogesh Kumar Us, Judicial Member has observed that “the issue boils down to as to whether the receipts from the clients of the assessee who choose to make lumpsum upfront payment and who choose to make deferred installment payments along with interest are to be treated alike or not. We hold that since the receipt of interest is intrinsically linked to the primary activity of allotment of plots in the industrial park, it is hereby held that the interest is derived from the eligible business and thus, eligible for the purpose of direction u/s. 80 IA of the Act. Ergo, we hereby affirm the decision of Ld. CIT(A).”

Sh. Saurab Gupta, CA appeared for the assessee.

To Read the full text of the Order CLICK HERE

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