Case Law Details
Satern Griha Nirman Pvt. Limited Vs ITO (ITAT Kolkata)
The issue under consideration is that whether the disallowance made by the Assessing Officer on account of assessee’s claim for deduction under section 80IB(10) of the Income Tax Act, 1961 in respect of interest received amounting to Rs.11,10,810/- and other income amounting to Rs. 6,36,746/- is correct or not?
As per the provisions of section 80IB(10), the income derived from the business of developing housing project is eligible for deduction and as held in the various judicial pronouncements, the expression “derived from” in section 80IB(10) envisages a direct or first degree connection of the income eligible for deduction with the corresponding business of the assessee of developing a housing project. If this well settled test is applied in the present case, ITAT find that the interest of Rs.11,10,810/- earned by the assessee during the year under consideration on Bank deposits etc. cannot be held to be eligible for deduction under section 80IB(10) as the immediate source of the said interest income was not the business of the assessee of developing housing project and it was the investment made by the assessee in Bank deposits, etc.
As regards the other income amounting to Rs.6,36,476/-, ITAT find that the income by way of transfer fees received by the assessee for Apartment Booking amounting to Rs.4,10,892/- and interest received for delay in payment against Flat amounting to Rs.1,61,674/- had a direct or first degree connection with the business of the assessee of developing a housing project and the same, therefore, was eligible for deduction under section 80IB(10). The immediate source of the said income, in their opinion, was the business of the assessee of developing a housing project and therefore, the said income was eligible for deduction under section 80IB(10).
Disallowance of deduction under section 80IB(10) in respect of interest income should be restricted to net interest
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