Appeal dismissed on deduction, allowed on disallowance under Income-tax Act.

The Tribunal dismissed the appeal regarding the deduction under section 80IA(4) of the Income-tax Act, 1961, as the activities of the assessee did not qualify as infrastructure facilities. However, the Tribunal allowed the appeal on the disallowance under section 43B, directing the deletion of the disallowance since the advertisement tax was not claimed as a deduction. The order was pronounced on January 7, 2020.

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Issues Involved:
1. Denial of deduction under section 80IA(4) of the Income-tax Act, 1961.
2. Disallowance under section 43B of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Denial of Deduction under Section 80IA(4):

The assessee, a firm engaged in the development, maintenance, and operation of infrastructure facilities such as foot over bridges and road signages on a BOT basis, filed its return for AY 2012-13 claiming a deduction of Rs. 1,44,25,090 under section 80IA(4). The Assessing Officer (AO) denied the deduction, asserting that the activities of installing and maintaining signages did not qualify as infrastructure facilities under section 80IA(4). This decision was upheld by the CIT(A), who referenced previous Tribunal decisions in the assessee’s case for AYs 2010-11 and 2011-12, and the case of M/s. Rajdeep Publicity Pvt. Ltd. vs. DCIT.

The Tribunal reiterated that the activities of constructing foot over bridges and installing road signages do not fall within the definition of infrastructure facilities as per section 80IA(4). The Tribunal cited its earlier decision and noted that the assessee had not provided any new evidence or distinguishing facts for the current assessment year. The Tribunal concluded that the assessee is not eligible for the deduction claimed under section 80IA(4).

2. Disallowance under Section 43B:

During the assessment proceedings, the AO observed that an amount of Rs. 16,97,494 was shown as advertisement tax payable to the M.P. State Government but was not paid until the date of audit. The AO disallowed this amount under section 43B, reasoning that the tax was part of gross receipts and its non-payment before the return filing date attracted the provisions of section 43B.

The CIT(A) upheld the AO’s decision. However, the Tribunal, upon reviewing the submissions, noted that the assessee had not debited the advertisement tax in its Profit and Loss Account and had not claimed it as a deduction. The Tribunal referenced the Delhi High Court decision in CIT vs. Noble and Hewitt (I) (P) Ltd., which held that if an amount is not debited as an expenditure nor claimed as a deduction, section 43B disallowance does not apply. Consequently, the Tribunal directed the deletion of the disallowance under section 43B.

Conclusion:

The appeal was partly allowed. The Tribunal dismissed the grounds related to the deduction under section 80IA(4) but allowed the grounds related to the disallowance under section 43B, directing the deletion of the disallowance. The order was pronounced on January 7, 2020.

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