2012 (9) TMI 991 - AT - Income Tax

Summary

Issues involved: Disputes related to the allowability of deduction under section 80IA of the Income Tax Act, 1961 and disallowance of expenses under section 14A of the Act.

Allowability of Deduction u/s 80IA:
- The Appellate Tribunal considered the claim of deduction under section 80IA by the assessee for income earned from infrastructure projects.
- The Assessing Officer (AO) disallowed the claim, stating that the assessee was a Civil Contractor and not eligible for the deduction.
- The CIT(A) upheld the disallowance, citing previous Tribunal decisions against the assessee.
- The Tribunal noted the amendment to section 80IA(4) and previous disallowances, but also considered new projects executed by the assessee in the current year.
- The Tribunal directed a fresh examination by CIT(A) for the new projects, emphasizing that if similar to previous projects, the deduction would be disallowed.

Disallowance of Expenses u/s 14A:
- The AO disallowed expenses related to tax-exempt dividend income under section 14A, calculated as per Rule 8D.
- The assessee contested, stating no borrowing for investments and citing the inapplicability of Rule 8D for prior years.
- CIT(A) directed the AO to disallow expenses based on a reasonable basis as per a High Court judgment.
- The Tribunal upheld CIT(A)'s decision, directing the AO to make disallowances in line with the High Court judgment after hearing the assessee.

Conclusion:
- The Tribunal partly allowed the assessee's appeal and allowed the revenue's appeal for statistical purposes.
- The issues of deduction under section 80IA and expenses under section 14A were addressed, with directions for further examination and decisions based on relevant legal provisions and judgments.