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2012 (8) TMI 1010 - ITAT HYDERABADAllowability of deduction u/s. 80IA(4)(i) - Held that:- In the case of GVPR Engineers Ltd. v. ACIT (2012 (4) TMI 149 - ITAT HYDERABAD) wherein held that deduction u/s. 80IA is available to developers who undertake entrepreneurial investment risk and not for the contractors, who undertake only business risk. Without any doubt, the assessee clearly demonstrated that the plant and machinery, technical know-how, expertise and financial resources. Therefore, if the contracts involve design, development, operation & maintenance, financial involvement and defect correction and liability period, then such contracts cannot be called as simple works contract, to deny the deduction under section 80IA. The contracts which contain above features to be segregated have to be granted deduction under section 80IA and the other agreements which are pure works contracts hit by the Explanation to section 80IA(13) are not entitled for deduction under section 80IA. The profit from the contracts which involve design, development, operating & maintenance, financial involvement and defect correction and liability period is to be computed by the Assessing Officer on pro rata basis of turnover. The Assessing Officer is directed to examine the records, accordingly, and grant deduction on eligible turnover. Disallowance of claim of bad debt by enhancement of assessment by the CIT(A)- Held that:- As noticed by the CIT(A), there was a dispute regarding this issue and the dispute is pending before the Madras High Court. Further, it is not possible to claim the debt as bad debt in this assessment year 2002-03 on the basis of Tribunal award dated 10.1.2000 which is relevant to the assessment year 2000-01. Being so, we do not find any infirmity in the order of the CIT(A) and the same is confirmed on this issue. Penalty 271(1)(c) - Held that:- The issue relating to allowability of deduction u/s. 80IA we have remitted back the issue relating to allowability of deduction u/s. 80IA to the file of the Assessing Officer for fresh consideration. Hence, at this stage levy of penalty u/s. 271(1)(c) is premature. Accordingly, we are of the opinion that levy of penalty at this stage is not justified.
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