2013 (9) TMI 1133 - AT - Income Tax

Tax Deduction Dispute Resolved: ITAT Precedents Key

The case involved issues related to the disallowance of deduction under section 80-IA of the Income Tax Act and the computation of Income from House ... Deduction u/s 80-IA disallowed - Held that:- The assessee company is eligible for deduction u/s 80IA. However, it would be just and fair that the matter is restored to find out the claim of the assessee that the losses have already been adjusted against the profits of ineligible units of the assessee in earlier years with a direction to the Ld.CIT(A) for adjudicating the issue afresh after giving due opportunity of hearing to the parties. Computation of Income from House property - Held that:- As decided in assessee's own case for the AYs. 2005-06 to 2008-09 the property was let at a monthly rent of ₹ 1,54,843/- (annual rent: ₹ 18,58,116/-) continuously from the year 1997 to 2004. What better proof of the same representing its AV could possibly be? There is nothing on record to show or infer that the property, which, as late as April, 2004, yielded a rent to the tune of ₹ 18 lakhs p.a., became incapable of fetching as much and, rather, plummeted to about 1% thereof. That is, an erosion in rental capacity by nearly 99%, and almost overnight. The AO in the instant case has kept the AV (at ₹ 13,00,681/-), i.e., net of standard deduction at 30%, constant fro all the years, i.e., up to A.Y. 2008-09, and which we consider as reasonable, satisfying the only condition placed by law on an otherwise totally factual matter. We decide accordingly, upholding the Revenue’s action Issues:1. Disallowance of deduction under section 80-IA of the Income Tax Act.2. Computation of Income from House property.Issue 1: Disallowance of deduction under section 80-IA of the Income Tax Act:The appellant, engaged in manufacturing and power generation, claimed deduction under section 80-IA for power generation from windmill plants. The AO disallowed the deduction, citing unabsorbed depreciation from earlier years exceeding the income for the current year. The Ld.CIT(A) upheld this decision, referencing past cases and denying the set off of business loss against other income. However, the ITAT in earlier cases ruled in favor of the assessee, allowing deduction under section 80-IA without reducing unabsorbed depreciation. Consequently, the matter was remanded to the Ld.CIT(A) for fresh adjudication, following the ITAT's precedent.Issue 2: Computation of Income from House property:The AO computed Income from House property at a lower value, resulting in an addition, which was confirmed by the Ld.CIT(A). The ITAT, in a previous case concerning the same assessee, found that the property's annual rent history contradicted the reduced valuation, upholding the Revenue's action. Consequently, the ITAT decided against the assessee on this ground as well, in line with the previous ruling. The appeal was partly allowed for statistical purposes.In summary, the judgment addressed the disallowance of deduction under section 80-IA and the computation of Income from House property. The decision highlighted the importance of precedent set by the ITAT in similar cases involving the same assessee, ultimately impacting the outcome of the appeal.