2011 (3) TMI 1674 - AT - Income Tax

Summary

Issues involved: Appeal against CIT(A)'s order for AY 2006-07 - Disallowance u/s 40(a)(ia) - Disallowance u/s 80IB(10) without completion certificate.

Issue 1: Disallowance u/s 40(a)(ia)
The Revenue appealed against CIT(A)'s order deleting the disallowance of `7,23,081/- u/s 40(a)(ia) for failure to deduct tax at source. CIT(A) acknowledged the liability to deduct tax and upheld the disallowance. However, CIT(A) directed AO to allow deduction u/s 80IB(10) on the disallowed amount, as the assessee qualified for it due to deriving income from eligible business. The appeal by Revenue was rejected, noting the absence of appeal by the assessee against the disallowance under Section 40(a)(ia).

Issue 2: Disallowance u/s 80IB(10) without completion certificate
The AO disallowed the assessee's claim u/s 80IB(10) due to lack of completion certificate. The assessee later provided the certificate to CIT(A), who directed AO to allow the claim, suggesting rectification u/s 154 for the assessment order. The AO did not rectify the order based on the certificate. The Tribunal decided to send the matter back to AO for examining and verifying the completion certificate to decide on the deduction u/s 80IB(10), providing the assessee with a reasonable opportunity to be heard. The appeal by Revenue was partly allowed for statistical purposes.