2014 (6) TMI 372 - AT - Income Tax

ITAT Mumbai: Deduction u/s 80IA upheld, disallowance u/s 14A confirmed, repair expenses treatment clarified for AY 2009-10.

The ITAT Mumbai considered cross-appeals regarding deduction u/s 80IA, disallowance u/s 14A, and repair expenses for the assessment year 2009-10. The ITAT ... Non-allowability of deduction u/s 80IA of the Act – Held that:- This is not the claim which is made for the first time before the Tribunal – the FAA has followed the decision rendered by the Tribunal in the assessee’s own case with the understanding that the Tribunal has confirmed the disallowance of claim made u/s 80IA of the Act - the disallowance made u/s 80IA only in respect of the projects undertaken in the earlier years - the matter of claim for deduction u/s 80IA was restored back to the file of the CIT(A) for fresh examination – thus, the matter is liable to be remitted back to the CIT(A) for fresh consideration - Decided in favour of Assessee. Deletion of disallowance u/s 14A of the Act – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that the assessee has got sufficient interest free funds and the investments were made out of interest free funds only - there is no reason to interfere with the order passed by CIT(A) - the investments have been made out of interest free funds and further the investments continue in the year also – there is no reason to take a contradictory stand – thus, the order of the CIT(A) is upheld. Expenses claimed on repair of New Sand bins – Held that:- The AO has disallowed the claim on the reasoning that it was capital expenditure - the Sand bins were already in existence and they were in dilapidated condition - the assessee incurred above said expenses in repairing the Sand bins and it is in the nature of Current repairs - CIT(A) has accepted the contentions of the assessee by considering the facts and circumstances – thus, there was no reason to interfere in the order – Decided against Revenue. Issues:1. Deduction u/s 80IA of the Act claimed by the assessee.2. Disallowance made u/s 14A of the Act.3. Expenses claimed on repair of New Sand bins.Deduction u/s 80IA of the Act:The judgment pertains to cross-appeals against the order of the Ld CIT(A) for the assessment year 2009-10. The assessee contested the disallowance of deduction u/s 80IA of the Act. The assessee argued that a similar claim in the previous year was considered by the Tribunal, which set aside the matter for fresh examination. The Revenue contended that fresh claims require a revised return of income based on a Supreme Court decision. The ITAT rejected the Revenue's argument, citing the limited scope of the Supreme Court's decision and the Tribunal's authority under section 254 of the Act. The ITAT noted that the issue was previously raised before the CIT(A) and restored the matter to the CIT(A) for reevaluation based on Tribunal observations from earlier years.Disallowance made u/s 14A of the Act:The second issue involved the disallowance made under section 14A of the Act. The assessing officer computed the disallowance per Rule 8D of the IT Rules. The CIT(A) ruled against interest disallowance but sustained the disallowance of administrative expenses. The Revenue challenged the relief granted by the CIT(A). The ITAT considered the Tribunal's decision on a similar disallowance for the assessment year 2008-09 and upheld the CIT(A)'s order based on the sufficiency of interest-free funds for investments. The ITAT concurred with the CIT(A) that the investments were made from interest-free funds, leading to the dismissal of the Revenue's appeal on this issue.Expenses claimed on repair of New Sand bins:The final issue concerned the disallowance of expenses on the repair of New Sand bins. The AO treated the expenditure as capital, leading to disallowance. The assessee argued that the expenses were for repairing existing Sand bins, not new construction. The CIT(A) accepted the assessee's explanation, considering the repairs as current expenses. The ITAT upheld the CIT(A)'s decision, emphasizing that the repairs were necessary for existing infrastructure. Consequently, the assessee's appeal was partly allowed for statistical purposes, while the Revenue's appeal was dismissed.This detailed analysis of the judgment covers the three main issues addressed in the ITAT Mumbai's decision for the assessment year 2009-10.