ITAT decision on expense disallowances, deduction under section 80IA, and additional depreciation upheld.

The ITAT dismissed the appeals related to disallowances/additions of expenses and the re-working of deduction u/s 80IA, while partly allowing the appeal concerning the disallowance of additional depreciation. The judgment was pronounced on February 19, 2014, in Chennai.

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Issues:
- Disallowances/additions of expenses regarding repair and maintenance of building, development charges of raw material storage yard, and filling, levelling, and development of safety area-III.
- Re-working of deduction u/s 80IA without setting off losses on a notional basis.
- Disallowance made towards the claim of additional depreciation.

Analysis:
1. Issue 1 - Disallowances/Additions of Expenses:
- The Revenue filed appeals against orders of the Commissioner of Income-tax (Appeals) for assessment years 2005-06, 2006-07, and 2008-09. The Assessing Officer disallowed various expenses claimed by the assessee, deeming them as capital in nature or not revenue expenditure. The CIT(A) deleted these disallowances by following a tribunal order for a previous year. The Revenue contended that since the expenses were capital in nature, the CIT(A) erred in deleting them. However, the ITAT upheld the CIT(A)'s findings, stating that the tribunal's decision on the matter was binding for the current assessment year.

2. Issue 2 - Re-Working of Deduction u/s 80IA:
- The Revenue challenged the direction of the CIT(A) to re-work the deduction u/s 80IA without setting off losses on a notional basis. The Assessing Officer had disallowed a notional depreciation amount, invoking section 80IA(5). The CIT(A) relied on a high court decision to delete this disallowance, stating that losses set off in earlier years cannot be set off again for calculating the deduction u/s 80IA(4). The Revenue's contention that the high court decision was under challenge in the apex court was dismissed by the ITAT, upholding the CIT(A)'s order.

3. Issue 3 - Disallowance of Additional Depreciation:
- The Revenue also raised an issue regarding the disallowance of additional depreciation claimed by the assessee. The Assessing Officer disallowed this claim, stating it did not comply with section 32(1)(ii) as it related to an increase in the cost of windmill due to stamp charges paid in a previous year. The CIT(A) deleted this disallowance, but during the hearing, the assessee conceded to the Revenue's plea. Consequently, the ITAT restored the disallowance of additional depreciation, as the assessee did not support the CIT(A)'s findings.

In conclusion, the ITAT dismissed the appeals related to disallowances/additions of expenses and the re-working of deduction u/s 80IA, while partly allowing the appeal concerning the disallowance of additional depreciation. The judgment was pronounced on February 19, 2014, in Chennai.

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