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2. Facts of the case L&T TIL has claimed deduction under section 80-IA of the Income-tax Act, 1961 in respect of the following streams of income from the above-mentioned project:

S No Brief description of income Amount (in Rs) 1 Income from toll collections 172,900,492 2 Income from use of way-side amenities (toilets, 298,476 service stations etc) as per clause 7.4 of the concession agreement 3 Income from putting up advertisements on the 1,902,523 road (hoardings) as per clause 15.12 of the concession agreement 4 Fee for laying optical fiber cable 500,000 5 Others (revenues from sale of scrap, film 99,238 shooting etc) While deduction under section 80-IA in respect of item 1 had been allowed by the AO, deduction in respect of items (2) to (5) had been disallowed by the assessing officer. On appeal the Commissioner of Income-tax (Appeals) was of the view that incomes referred in (2) to (5) above are not "derived from" the business of developing, operating and maintaining the infrastructure facility (being the road / bridge in the instant case) and hence ineligible for deduction under section 80-IA of the Act. The CIT(A) has stated in his order that the income referred to in (2) to (5) above has no nexus with the profits and gains of eligible business and its connection with the business of infrastructure development is only incidental.

From the above, it is apparent that provision of way-side amenities and earning related income is an integral part of the infrastructure facility. Accordingly, the Appellant reiterates that such income is essentially "derived from" the business of infrastructure development and has a close nexus with the infrastructure facility.

4.2.2 Revenues from advertisement Miscellaneous income includes income from advertisements and hoardings; including advertisements on toll tickets. The authority to put up hoardings/ advertisements is any form springs directly from the concession agreement in this regard Clause 15.12 has been reproduced below.

IA (in the instant case infrastructure development). The learned CIT(A) has erred in making the said comparison for the following reasons:

(a) Facts in the case of Pandian Chemicals (supra) are significantly different from the facts in the instant case.
(b) The difference in language employed and scope of deduction in case of section 80HH (subject matter of deduction in the case of Pandian Chemicals) and section 80-IA (subject matter of deduction in the instant case) Particulars Pandian Chemicals Ltd. Current case Deduction claimed under Section 80HH Section 80-IA Deduction can be claimed any profits and gains derived profits and gains derived by ITA.1680 & 1696 /Mds/10 L&T transportation Infrastructure Ltd.
Based on the above, it is submitted that the intention of the Legislature was to give the benefit of the deduction not only to the income derived from the undertaking but to income which is derived from the business of infrastructure development.
In the case of L&T TIL, revenues from provision of way-side amenities on the project facility, revenues from hoardings / advertisement, sale of scrap etc have a direct nexus with the business of infrastructure development. Hence, the said income should be eligible for deduction under section 80-IA being income "derived from the business of development of infrastructure facility.