Tax Tribunal Upholds State PSU's Deductions Despite Late Filing, Reverses Interest Disallowance

The Tribunal dismissed the Revenue's appeals for A.Ys 2009-10 and 2010-11. It held that the revised return of income by the State Public Sector Undertaking was valid for claiming deduction u/s 80IAB, despite late Form 10CCB submission. The disallowance of interest expenditure u/s 40(a)(ia) was overturned due to retrospective effect of amended provisions. While separate books of accounts were not maintained, deductions could be computed reasonably under section 80IA(10). The Tribunal emphasized the importance of proper verification and compliance with statutory requirements.

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Issues:
1. Disallowance of deduction u/s 80IAB for failure to make the claim in the original return of income, and not filing Form 10CCB along with the return.
2. Disallowance of interest expenditure u/s 40(a)(ia) for non-deduction of tax at source.
3. Maintenance of separate books of accounts for eligible units for claiming deductions.

Analysis:

Issue 1: Disallowance of deduction u/s 80IAB
The assessee, a State Public Sector Undertaking, filed a revised return of income claiming a deduction u/s 80IAB for income from SEZ. The AO disallowed the claim citing non-filing in the original return and lack of Form 10CCB submission. The CIT (A) granted relief, but the Revenue contended that the claim was not valid due to technicalities. The Tribunal held that the revised return was accepted by the AO, making the claim valid. While Form 10CCB was filed late, it was deemed acceptable if submitted before completion of assessment. The issue was remanded to the AO for verification.

Issue 2: Disallowance of interest expenditure u/s 40(a)(ia)
The AO disallowed interest paid to NTPC under section 40(a)(ia) for non-deduction of tax at source. The CIT (A) granted relief based on retrospective effect of the amended provisions. The Tribunal upheld the decision, considering the payee's tax payment and retrospective applicability of the amendment.

Issue 3: Maintenance of separate books of accounts
The AO raised concerns about the lack of separate books of accounts for eligible units. The Tribunal noted that while separate books were not maintained, the AO could compute deductions reasonably under section 80IA(10). The issue was remanded to verify compliance with conditions under the Act.

In conclusion, the Tribunal dismissed the Revenue's appeals for A.Ys 2009-10 and 2010-11 based on the above analyses, emphasizing the validity of the revised return, retrospective application of tax provisions, and the need for proper verification of claims and compliance with statutory requirements.

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