Tribunal allows assessee's rectification plea on deduction eligibility under tax law, remands for fresh review.

The Tribunal allowed the assessee's Miscellaneous Application seeking rectification of the order to address the eligibility for deduction under section 80IA(4)(b) of the Act, remanding the matter to the CIT(A) for fresh adjudication in line with legal precedent. The order was modified to consider the additional ground raised by the assessee, aligning with the decision of the Bombay High Court. Consequently, the assessee's claim for deduction was upheld, and the matter was remanded for further review by the CIT(A), leading to the allowance of the Miscellaneous Application on 3rd June 2021.

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Issues:
Rectification of order regarding deduction u/s. 80IA of the Act for alleged bogus purchases.

Analysis:
The Appellate Tribunal received a Miscellaneous Application from the assessee seeking rectification of the order dated 28-01-2020 passed in ITA No. 13/PUN/2016 for the assessment year 2010-11. The application aimed to address the non-consideration of the alternative argument related to the eligibility for deduction u/s. 80IA of the Act, even if the addition on account of bogus purchase was upheld. The assessee contended that the AO had added an amount for bogus purchases, but the assessee was entitled to claim a deduction under section 80IA(4)(b) of the Act. The Tribunal acknowledged the additional ground raised by the assessee in the main appeal but noted that the claim for deduction was not made by the assessee before the lower authorities. However, the assessee had contested both the additions before the CIT(A), arguing that the alleged bogus purchases should be added to the infrastructural profit eligible for deduction u/s. 80IA(4)(b) of the Act.

The Tribunal was informed that the CIT(A) allowed the deduction under section 80IA(4) of the Act but upheld the disallowance of the alleged bogus purchases. The Revenue challenged the allowance of the claim u/s. 80IA(4)(b) before the Tribunal, which dismissed the appeal due to low tax effect. The assessee relied on the decision of the Bombay High Court in CIT Vs. Gems Plus Jewellery Ltd. and argued that the Tribunal should have allowed the additional ground as the assessee was eligible for the deduction u/s. 80IA(4)(b) of the Act. The Tribunal, without considering this argument, remanded the matter to the AO for fresh consideration.

After hearing both parties, the Tribunal noted that the main contention was the eligibility of the assessee for deduction u/s. 80IA(4)(b) and whether a separate disallowance for alleged bogus purchases was warranted. It was observed that the AO had addressed these issues separately, and the alternative claim made by the assessee was not dealt with by the CIT(A). Citing the decision of the Bombay High Court, the Tribunal concluded that the CIT(A) should examine the alternative claim in light of the legal precedent. Consequently, the Tribunal modified the order to remand the additional ground and original grounds to the CIT(A) for fresh adjudication, aligning with the High Court's ruling. As a result, the Miscellaneous Application filed by the assessee was allowed, and the order was pronounced accordingly on 3rd June 2021.

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