Tribunal Upholds CIT(A) Orders Allowing Deduction Under Section 80-IA for Assessment Years

The Tribunal upheld the CIT(A) orders, dismissing Revenue's appeals for assessment years 2005-06 and 2006-07. The deduction under section 80-IA was allowed for the assessee based on the High Court's decision. The Tribunal emphasized the binding nature of the High Court's ruling and the absence of a stay by the apex court, affirming the deduction eligibility.

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Issues involved:
Appeals filed by Revenue against CIT(A) order allowing deduction under section 80-IA of the Act, Disallowance of deduction under section 80-IA by AO, Interpretation of High Court judgment on deduction eligibility.

Analysis:

1. Appeals by Revenue against CIT(A) order:
The Revenue filed two appeals against the separate orders of the CIT(A) for the assessment years 2005-06 and 2006-07. The core issue was the allowance of deduction under section 80-IA of the Income Tax Act. The Revenue contended that the CIT(A) erred in allowing the deduction based on the decision of the jurisdictional High Court. The appeals were clubbed and heard together for convenience.

2. Disallowance of deduction under section 80-IA by AO:
The AO disallowed the deduction claimed by the assessee under section 80-IA for the windmill division at the Palladam unit. The AO justified this disallowance by citing the pendency of the Revenue's appeal before the apex court against the High Court's decision. The disallowed amounts were &8377; 58,35,842 for 2005-06 and &8377; 52,30,118 for 2006-07.

3. Interpretation of High Court judgment on deduction eligibility:
The CIT(A) ruled in favor of the assessee, following the High Court's decision in a similar case and a Tribunal decision in the assessee's favor for the assessment year 2005-06. The Tribunal noted that the AO's cautious approach due to the pending appeal before the apex court was not justified. The Tribunal emphasized that the absence of a stay by the apex court meant lower authorities were bound by the High Court's decision. As the CIT(A) correctly applied the High Court's decision, the Tribunal upheld the CIT(A) orders, dismissing the Revenue's appeals for both assessment years.

In conclusion, the Tribunal confirmed the CIT(A) orders, emphasizing the binding nature of the High Court's decision and the lack of a stay by the apex court. The appeals by the Revenue were dismissed for both assessment years, affirming the allowance of deduction under section 80-IA for the assessee.

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