Tribunal Decisions: Deduction Disallowance, Reassessment Validity, Income Accrual, Expenses Disallowance

UP. State Industrial Development Corporation Limited, (UPSIDC) Versus ACIT. -6, Kanpur

UP. State Industrial Development Corporation Limited, (UPSIDC) Versus ACIT. -6, Kanpur - TMI Issues Involved:
1. Disallowance of deduction for waiver of interest.
2. Validity of reassessment proceedings under Section 147.
3. Disallowance of contribution to Group Gratuity Insurance Scheme.
4. Accrual of income from premium received from entrepreneurs.
5. Disallowance under Section 14A.
6. Deduction under Section 80IA.
7. Contribution to Udyog Bandhu.
8. Accrued interest income.
9. Prior period expenses.

Detailed Analysis:

1. Disallowance of Deduction for Waiver of Interest
The assessee claimed a deduction of Rs. 3,78,67,703/- on account of waiver of interest granted by its Board of Directors. The CIT(A) dismissed the appeal based on the Supreme Court decision in Goetze (India) Ltd. vs. CIT, which prohibits new claims at the appellate stage without a revised return. The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court's judgment in Commissioner of Income-tax Vs Sun Engineering Works P. Ltd., which restricts reassessment proceedings to issues related to escaped income.

2. Validity of Reassessment Proceedings under Section 147
The assessee challenged the validity of reassessment proceedings, arguing that no notice under Section 143(2) was issued. The Tribunal referred to the Patna Bench decision in Shyam Bihari Agarwal vs. ACIT, which held that if a return is filed late, it is non est, and no notice under Section 143(2) is required. The Tribunal upheld the reassessment proceedings as valid.

3. Disallowance of Contribution to Group Gratuity Insurance Scheme
The assessee's contribution to LIC's Group Gratuity Insurance Scheme was disallowed due to lack of CIT approval. The Tribunal upheld the disallowance, noting that the scheme was not approved and rejecting the argument of deemed approval. The Tribunal also dismissed the alternative contention that the payment should be allowed as a business expenditure under Section 37.

4. Accrual of Income from Premium Received from Entrepreneurs
The assessee argued that no income accrued from the premium received from entrepreneurs. The Tribunal noted that similar additions were upheld in earlier years and found no reason to deviate from this precedent. The addition was upheld.

5. Disallowance under Section 14A
The CIT(A) restricted the disallowance under Section 14A to Rs. 1,00,000/- for administrative expenses, rejecting any disallowance of interest expenses. The Tribunal upheld this decision, noting that the assessee's own funds exceeded the investments, justifying no interest disallowance.

6. Deduction under Section 80IA
The Tribunal upheld the CIT(A)'s decision to exclude interest income from the eligible business profits for Section 80IA deduction, citing the lack of a direct nexus between the interest income and the eligible business. The Tribunal also directed that receipts from both projects (Tronica City and Greater Noida) should be included in the business profit for computing the deduction.

7. Contribution to Udyog Bandhu
The Tribunal upheld the CIT(A)'s decision to allow the deduction for contributions to Udyog Bandhu, citing the Allahabad High Court's judgment in the assessee's favor. The contribution was deemed incidental to the business and allowable under Section 37.

8. Accrued Interest Income
The Tribunal upheld the CIT(A)'s decision to exclude accrued interest income from non-performing assets, referencing the Tribunal's decision in the assessee's earlier years. The interest was not considered accrued due to weak recovery chances.

9. Prior Period Expenses
The Tribunal upheld the CIT(A)'s decision to allow only the interest written off as a deduction if conditions under Section 36(2) were met. The balance amount was disallowed due to lack of evidence of crystallization in the relevant year.

Conclusion:
The Tribunal's decisions were largely consistent with earlier judgments and statutory provisions, focusing on the applicability of specific sections and precedents. The appeals were decided based on established legal principles and the facts presented.