Sec. 80-IA:Profit on sub-leasing of land was deductible

Sec. 80-IA: Profit on sub-leasing of land was deductible, being integral part of business of development of toll road

[2015] 57 taxmann.com 397 (Delhi - Trib.)

IN THE ITAT DELHI BENCH 'D'

Jaypee Infratech Ltd.

v.

Commissioner of Income-tax, Noida

Assessee-company was incorporated as a Special Purpose Vehicle (SPV) for developing operating and maintaining toll roads. Assessee entered into a concession agreement with Taj Expressway Development Authority (TEA) in terms of which assessee was to develop, operate and maintain six lane access controlled expressway toll road, it was granted by TEA, rights for land development of 25 million sq. mts. of land along proposed Expressway for commercial amusement, industrial, institutional and residential development. In terms of agreement, assessee could sub-lease developed or undeveloped land to sub-leases or land users. Assessee claimed that profit derived by it from toll road included profit from sale/sub-lease on development of land which formed intrinsic part of infrastructure facility. Thus, question came up for consideration was whether assessee company was eligible for exemption under section 80-IA(4)(i) in respect of its income from sale/sub-lease of land for assessment year under consideration

• Held, that assessee was in business of development of infrastructure facility of 'road including toll road' and its activities fell within ambit of clause (a) of Explanation to sub-section (4)(i) of section 80-IA. Thus, assessee was eligible for deduction on income earned from sub-lease/sale of land which was provided by the TEA to assessee with an absolute right to use it and said right was continuing during assessment year in question.