Tribunal rules for Revenue on deduction u/s 80IA, cites electronic filing & lack of profit.

The Tribunal ruled in favor of the Revenue in an appeal against the CIT(A)'s decision to allow deduction u/s 80IA, citing mandatory electronic filing requirements and lack of profit from infrastructure activities. The Tribunal reversed the CIT(A)'s decision. Regarding a Cross Objection by the assessee-company on toll fee collection and deduction u/s 80IA, the Tribunal partially allowed it, directing the CIT(A) to consider alternative contentions, recognizing the link between toll fee collection and project cost reduction.

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Issues:
1. Appeal filed by Revenue against CIT(A)'s order allowing deduction u/s 80IA.
2. Cross Objection filed by assessee-company regarding toll fee collection and deduction u/s 80IA.

Issue 1: Appeal filed by Revenue against CIT(A)'s order allowing deduction u/s 80IA:
The Revenue appealed against the CIT(A)'s order allowing the assessee's claim of deduction u/s 80IA of the Income Tax Act, 1961. The Revenue contended that the audit report in Form No. 10CCB should have been submitted electronically along with the return of income, as mandated from AY 2014-15. It was argued that the assessee filed the Form No. 10CCB beyond the prescribed due date. The Revenue highlighted Rule 12(2) of the Income Tax Rules and a CBDT notification mandating electronic filing of audit reports. The Revenue also argued that the Supreme Court decision in a specific case was not applicable due to the mandatory electronic filing requirement from AY 2014-15. The Tribunal examined the case where the assessee was awarded a contract for infrastructure development and toll collection rights. The Tribunal found that the assessee had not derived any profits from infrastructure activities, making it ineligible for deduction u/s 80IA. The Tribunal reversed the CIT(A)'s decision, allowing the Revenue's appeal.

Issue 2: Cross Objection filed by assessee-company regarding toll fee collection and deduction u/s 80IA:
The assessee filed a Cross Objection (CO) contending that the toll fee collected should be eligible for deduction u/s 80IA and should only reduce the project cost. The CO argued that the toll collected was in the nature of a capital grant provided by NHAI and should be adjusted against the asset cost as per the Act. The CO also claimed viability gap funding to the extent of 40% of the total project cost, which was supported by a letter from NHAI. The CO further raised issues related to interest costs, total project costs, revenue and maintenance costs, and adjustment of other income against pre-operative expenses. The Tribunal partially allowed the CO, directing the CIT(A) to consider the alternative contentions of the assessee. The CO was partly allowed, acknowledging the connection between toll fee collection and project cost reduction.

In summary, the Tribunal addressed the Revenue's appeal against the CIT(A)'s decision to allow deduction u/s 80IA, emphasizing the mandatory electronic filing requirements and lack of profit derivation from infrastructure activities. The Tribunal ruled in favor of the Revenue, reversing the CIT(A)'s decision. Additionally, the Tribunal reviewed the Cross Objection filed by the assessee-company regarding toll fee collection and deduction u/s 80IA, partially allowing it and directing the CIT(A) to consider the alternative contentions presented.

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