2019 (3) TMI 468 - AT - Income Tax

Tribunal allows deduction under section 80IA but orders reassessment of project expenses

The Tribunal upheld the allowance of deduction under section 80IA of the Income Tax Act, based on previous decisions favoring the assessee. However, the ... Claim of deduction u/s 80IA denied - infrastructure development activity for Windmill - it takes land on lease from MIDC or purchases land on its own and sub–leases them for Windmill - develops other infrastructure for filling roads, fencing and other activities- laying transmission line/network of various windmills to the sub–stations of Maharashtra State Electricity Board (MSEB) - AO alleged that assessee itself was not setting–up windmills - HELD THAT:- Commissioner (Appeals) allowed assessee’s claim following the view taken by the learned Commissioner (Appeals) while deciding assessee’s appeals in assessment year 2002–03, 2006–07 and 2007–08. Disallowance of project expenses - assessee did not furnish the complete details of the project expenses, thus the genuineness of such expenses could not be verified - HELD THAT:- Since the issue relating to claim of various expenditure under the head project expenses is a purely factual issue and has to be decided on the basis of facts involved in each assessment year and the supporting evidences furnished by the assessee, it cannot be allowed without factually verifying the claim of the assessee and by simply relying upon the written submissions and the preceding years orders. Since, in our considered opinion, the deduction claimed by the assessee under the head project expenses has not been factually verified with reference to the supporting evidences justifying such claim, we are inclined to restore the issue to the file of the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee and examining the supporting evidences furnished/to be furnished by the assessee. Issues:1. Challenge to deduction under section 80IA of the Income Tax Act, 1961.2. Disallowance of project expenses amounting to Rs. 10,74,74,321.Analysis:1. The Revenue challenged the allowance of the assessee's claim of deduction under section 80IA of the Income Tax Act. The Assessing Officer disallowed the deduction as the conditions of section 80IA(4)(vi)(b) were deemed unsatisfied. The first appellate authority allowed the deduction based on previous decisions favoring the assessee. The Tribunal upheld the decision of the first appellate authority, citing consistency in decisions for the same issue in previous assessment years. The ground raised by the Revenue was dismissed.2. The Revenue challenged the deletion of disallowance of project expenses amounting to Rs. 10,74,74,321. The Assessing Officer disallowed the expenditure as complete details were not furnished by the assessee. The first appellate authority deleted the addition, citing acceptance of income by the Assessing Officer and the need to allow direct expenditure connected to such income. The Tribunal found that the nature and details of expenditure claimed were not factually verified by the Assessing Officer or the first appellate authority. The Tribunal decided to restore the issue to the file of the Assessing Officer for reevaluation after providing the assessee with an opportunity to present supporting evidence. The ground raised by the Revenue was allowed for statistical purposes.In conclusion, the Tribunal upheld the allowance of deduction under section 80IA of the Income Tax Act based on previous decisions favoring the assessee. However, the Tribunal decided to reevaluate the disallowance of project expenses by restoring the issue to the Assessing Officer for a detailed examination of the supporting evidences furnished by the assessee.