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2022 (6) TMI 1516
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....3. We shall be dealing with the cross appeals relating to A.Y. 2013-14 and our decision rendered therein in the assessee's appeal will apply mutatis mundis to the assessee's appeal in A.Y. 2014-15 in ITA No. 950/Ahd/2018. 4 We shall first be taking up Revenue's appeal in ITA No. 542/Ahd/2018. A.Y 2013-14 5. The solitary grievance of the Revenue against the order of the Ld.CIT (A) is against deletion of disallowance of deduction u/s. 80IA of the Act made by the AO, and reads as under: 1. The ld. CIT (A) has erred in law and on facts in deleting the disallowance of Rs. 2,74,60,449/- made by the Assessing officer u/s. 80IA of the Act. 6. Brief facts, as emanate from the orders of the authorities below, is that the assessee company carries on the business of contract work in respect of construction of Water Treatment Plants (WTP), Sewage Treatment Plant (STP) etc. During the impugned year, it had claimed deduction u/s. 80IA(4) of profits amounting to Rs. 2,74,60,449/-, earned from developing and /or operating and maintaining the following infrastructure projects. Sr. No. Name of the Projects Date of Commencement 1st Asst. Year of ....
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....preceding assessment years. Facts remaining the same in the year under consideration, disallowance of deduction u/s. 80IA on these nine (9) projects are deleted. As regards the two (2) new projects, on which the deduction was claimed for the first time in the year under consideration, viz (i) AMC Sanand WTP and (ii) RUSDIP WTP Karauli, it is seen that nature of development work is similar to the other nine (9) projects, on which deduction u/s. 80IA was held to allowable in the preceding para hence the disallowance of deduction u/s 80IA on these two (2) new projects is also deleted. To sum up, AO is directed to allow deduction u/s. 80IA on all these 11 projects. This ground of appeal is allowed. 8. Before us, at the outset Ld. Counsel for the assessee pointed out that the order of the Ld. CIT (A) in the preceding years pertaining to A.Y. 2010-11 to A.Y. 2012-13 had been upheld by the ITAT in its order passed in ITA No. 161/Ahd/2015, 1532/Ahd/2015 and 1183/Ahd/2016 respectively dated 01.11.2018. Our attention was drawn to Para 4 of the order where with respect to each assessment year involved the projects in relation to which Section 80IA(4) had been claimed by the assessee w....
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.... the Infrastructure facility > Operation and Maintenance of the Infrastructure facility for 5 years. 11. Ld. Counsel for the assessee contended that Ld.CIT (A) had found the facts relating to these projects identical to the remaining 9 projects and accordingly allowed the assessee's claim for deduction u/s. 80IA of the Act. 12. Ld. D.R. was unable to point out any distinguishing fact with respect to the projects undertaken by the assessee at serial no. 1 to 9 which had been undertaken in the earlier years and had been held by the ITAT as being eligible for deduction u/s. 80IA of the Act nor to two new projects undertaken by the assessee during the year at serial no. 10 & 11. 13. In view of the above, we see no reason to interfere in the order of the ld. CIT (A) since admittedly the assessee's claim of deduction with respect to projects listed at serial no. 1 to 9 already stand examined and adjudicated upon by the ITAT in the preceding years wherein they were found to be eligible to grant to deduction u/s. 80IA. As for the remaining two new projects undertaken by the assessee during the year since the Ld. D.R. has been unable to distinguish the finding of the L....
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....Copy of the order was placed before us. 19. We have heard both the parties. We have also gone through the order of the Ld.CIT (A) and we find that before him also identical pleadings were made by the assessee that the interest income being earned on FDR's placed with Banks wholly and exclusively for business purposes, the said income was derived from the business of the assessee and hence eligible to deduction u/s 80-IA of the Act. The decision of the jurisdictional High Court In the case of Shah Alloys was also referred to. We find that the CIT (A) noted that he found force in the arguments of the assessee but thereafter went on to follow his decision in the preceding year wherein identical interest was denied deduction u/s 80-IA. This is evident from his findings at para 2.6 of the order as under: 2.6 I have gone through the facts and submission made by the AR. I find force in the arguments raised by the AR regarding inclusion of interest income of Rs, 13,18,599/- in the profits of the projects eligible u/s. 80IA for which I follow the appellate order for AY 2010-11 in appeal no. CIT (A) VI/Wd-1(3)/7/13-14 dt 13-11- 2014 in Appellant's own case wherein it was held....
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.... 2.7 Following the above mentioned order, AO's action of excluding the interest income while computing the deduction u/s. 80IA is upheld in principle. However, the AR contended that out of the total addition of Rs. 41,96,740/-, Rs. 13,48,697/- is excess addition (the Profit and Loss A/c. shows the income at Rs. 28,47,773/-, hence the addition cannot be more than that); the appellant did not claim deduction u/s. 80IA to the tune of Rs. 14,99,076/- ( as the said interest income was allocated to projects not eligible for deduction u/s. QOSA) and R$. 1,45,955/- being profits u/s. 41(1) the appellant has rightly claimed deduction u/s. 80IA on the said income, the question of disallowance of the said sums do not arise. AO is directed to verify this contention. If it is found to be so, disallowance of said sums shall be deleted. Disallowance of the balance interest of Rs. 12,02,742/- is upheld. Thus, subject to verification, this ground of appeal is partly allowed. 20. It is therefore not clear as to how the issue was adjudicated upon by the Ld.CIT(A). Be that so, we however find that there is merit in the contentions of the Ld.Counsel for the assess....
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....ssed. 27. Ground no 3 reads as under: 3. The Id. CIT (A) has grossly erred on facts in confirming the disallowance u/s. 40(a)(ia) of Rs. 49.028/- which is related to reversal of expenses of Rs. 1,74,4287- and thereby outside the scope of section 40(a)(ia). 28. Ld. Counsel for the assessee at the outset itself stated that she did not wish to press this ground considering the smallness of the quantum involved. 29. In view of the above, ground no. 3 is dismissed. 30. Ground no. 4 reads as under: 4. The Id. CIT (A) has grossly erred in law and on facts in confirming the disallowance of professional tax of Rs. 44,320/-, deducted from salary of the employee by treating it as covered u/s. 43B, though the Appellant Company has not claimed the professional tax as deduction in the return of income. 31. Ld. Counsel for the assessee at outset itself stated that she did not wish to press this ground considering the smallness of the quantum involved. 32. In view of the above, ground no. 4 is dismissed. 33. Ground no. 5 reads as under: 5. The Id. CIT (A) has grossly erred in law and on facts in confirming addition of Rs. 30,19,66....
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.... Loan & Advances 40264932 Other Loans & Advances 0 Total 406883718 (L) book value of liabilities shown in the balance sheet but not including the following amounts, namely:- 26059930 Other current liabilities 25103477 Trade payable 132161202 Short Term Borrowing 86801611 Long Term Borrowing 4695075 Short Term provision 10194273 Long term provision 0 Share application Money 0 Deferred liabilities 1643663 Total 260599301 PE Total amount of paid up equity share capita as 11801000 Shown in the balance-sheet: PV the paid up value of such equity shares 1180100 The fair market value of unquoted equity shares = (A-L)/ (PE) X PV 146284417.00 Fair Market value of each shares 123.96 37. The solitary contention of the ld. Counsel for the assessee before us was that as per law, the assessee was at liberty to justify the fair market value of shares either as per the method prescribed in the Income Tax Rules, 1962 (in short "Rules") ....
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....7 39. Referring to the decision of the ITAT in the case of Unnati Inorganics Pvt. Ltd. (supra), copy of which was placed before us at paper book page no. 52 to 66, it was pointed out from Para 8.2 of the order that the ITAT recognized the determination of FMV of shares by two methods and also that as per the Second method, the FMV of all the assets whether recorded or not in the books were to be considered: 8.2 A perusal of Section 56(2)(viib) of the Act quoted above seeks to enable the determination of FMV by two methods: (i) prescribed method as purportedly embedded in Rule 11UA of Income Tax Rules and (ii) FMV based on the intrinsic value of the assets both tangible and intangible on the date of issue of shares. Thus, the FMV of all the assets (tangibles, intangibles, human resources, right of management or control or other rights whatsoever in or in relation to Indian company) whether recorded in the books or not, appearing in the books at their intrinsic value or not, is a sufficient warrant to value the premium on issue of unquoted equity shares by closely held company. Thus, the Explanation (a)(ii) itself implies that book entry for recognition of intrinsic value....