Assessee gets section 80IA deduction for infrastructure projects despite revised return filing

ITAT Lucknow upheld CIT(A)'s decision allowing section 80IA deduction for infrastructure projects. The assessee maintained separate books for four UPPWD projects and met all statutory requirements. Revenue's denial based on revised return filing was unjustified per Kerala HC precedent. CIT(A) correctly deleted additions for unverified credits, adhoc expense disallowances, and TDS non-deduction on petty payments below Rs. 5,000. Cross objection was withdrawn as assessee opted for VSVS scheme, with liberty to restore if settlement fails.

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Issues Involved:
1. Deletion of addition under Section 80-IA of the Income Tax Act.
2. Deletion of addition due to unverified credit balance.
3. Deletion of ad hoc disallowances of expenses.
4. Deletion of addition under Section 40(a)(ia) for non-deduction of TDS.
5. Cross Objection by the assessee regarding sustained additions.

Detailed Analysis:

1. Deletion of Addition Under Section 80-IA:
The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 4,66,10,927/- under Section 80-IA by ignoring that the assessee did not file the Audit Report in Form 10CCB separately for all projects and did not claim the deduction in the original return. The CIT(A) allowed the deduction, noting that the revised return was filed within the stipulated time under Section 139(5), and the conditions under Section 80-IA were fulfilled. The Tribunal upheld the CIT(A)'s decision, referencing the CBDT's Circular No. 4/2010 and judicial precedents, confirming that the assessee's activities qualified as infrastructure development.

2. Deletion of Addition Due to Unverified Credit Balance:
The Revenue argued that the CIT(A) erred in deleting the addition of Rs. 1,21,000/- due to the assessee's failure to produce evidence for the credit balance in the ledger account of M/s Mallard Holidays. The CIT(A) deleted the addition, relying on the jurisdictional High Court's decision, which held that additions cannot be made merely due to non-confirmation if payments are made through cheques and reflected in the books of accounts. The Tribunal confirmed this deletion.

3. Deletion of Ad Hoc Disallowances of Expenses:
The Revenue challenged the deletion of ad hoc disallowances of Rs. 2,50,000/- and Rs. 7,50,000/-. The CIT(A) noted that the Assessing Officer did not specify which expenses were unverifiable and that the books of accounts were properly maintained and audited. The Tribunal upheld the CIT(A)'s decision, citing various judicial precedents that disallowances without specific defects are unjustified.

4. Deletion of Addition Under Section 40(a)(ia) for Non-Deduction of TDS:
The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 6,75,950/- made under Section 40(a)(ia) for non-deduction of TDS on brokerage/commission payments. The CIT(A) found that the payments were petty and none exceeded Rs. 5,000/-, thus not requiring TDS deduction. The Tribunal agreed with the CIT(A), confirming the deletion.

5. Cross Objection by the Assessee:
The assessee filed a Cross Objection against the CIT(A)'s decision to sustain certain additions. During the hearing, the assessee opted for the Direct Tax Vivad se Vishwas Scheme (VSVS) and sought withdrawal of the Cross Objection. The Tribunal allowed the withdrawal but noted that the Revenue could approach the Tribunal for restoration if the dispute was not settled under VSVS.

Conclusion:
The Tribunal dismissed the Revenue's appeal and the assessee's Cross Objection, upholding the CIT(A)'s decisions on all contested issues. The Tribunal confirmed the deletion of additions under Section 80-IA, for unverified credit balances, ad hoc disallowances, and non-deduction of TDS, and allowed the withdrawal of the assessee's Cross Objection under the VSVS.

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