ITAT upholds CIT(A)'s decision on highway project deduction under section 80IA

The ITAT Delhi upheld the CIT(A)'s decision, allowing the deduction under section 80IA for the rehabilitation, strengthening, and widening of a highway project. The ITAT dismissed the Department's appeal, affirming the eligibility of the assessee for the deduction under section 80IA(4)(i) of the Income Tax Act, 1961, based on the CBDT Circular and previous ITAT rulings.

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Issues:
1. Deletion of addition of depreciation under section 80IA(4)(i) of the Income Tax Act, 1961.
2. Eligibility of deduction under section 80IA for rehabilitation, strengthening, and widening of a highway project.

Analysis:

Issue 1: Deletion of addition of depreciation under section 80IA(4)(i)
The Department appealed against the CIT(A)'s order deleting the addition of depreciation under section 80IA(4)(i) of the Income Tax Act, 1961. The Department argued that the scope of work included rehabilitation, strengthening, and widening of a highway, making the deduction under section 80IA unavailable as per CBDT Circular No. 4/2010. However, the assessee contended that road widening constituted a substantial improvement of existing infrastructure, qualifying for the deduction. The ITAT 'D' Bench, Mumbai, and ITAT Pune had previously ruled in favor of the assessee in similar cases. The ITAT Delhi upheld the CIT(A)'s decision, stating that road widening fell under the definition of new infrastructure facility for section 80IA(4)(i) deduction, as clarified by CBDT Circular No. 4/2010. The ITAT found no reason to interfere with the CIT(A)'s order and dismissed the Department's appeal.

Issue 2: Eligibility of deduction under section 80IA for rehabilitation, strengthening, and widening of a highway project
The Department contended that the project's scope, including rehabilitation, strengthening, and widening of a highway, did not qualify for deduction under section 80IA. The Department argued that only new infrastructure facilities were eligible under section 80IA(4). In contrast, the assessee relied on the CBDT Circular and previous ITAT decisions to support the claim that widening roads constituted development of infrastructure facility, making it eligible for the deduction. The ITAT held that the CBDT Circular clarified that widening roads fell under the development of infrastructure facility, making it eligible for section 80IA deduction. The ITAT referred to the decisions of ITAT Pune and ITAT Mumbai in similar cases to support its conclusion. Consequently, the ITAT dismissed the Department's appeal, upholding the CIT(A)'s decision to grant the deduction under section 80IA for the rehabilitation, strengthening, and widening of the highway project.

In conclusion, the ITAT Delhi upheld the CIT(A)'s decision to allow the deduction under section 80IA for the rehabilitation, strengthening, and widening of the highway project, citing the CBDT Circular and previous ITAT rulings. The Department's appeal was dismissed, and the ITAT affirmed the eligibility of the assessee for the deduction under section 80IA(4)(i) of the Income Tax Act, 1961.

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