2008 (4) TMI 755 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the issues of disallowance of deduction u/s 80IA of the Income Tax Act and the disallowance of deduction claimed for expenses incurred in connection with issuing shares to employees under the Employees Stock Option Scheme (ESOPS).

Disallowance of Deduction u/s 80IA:
The assessee, engaged in works contracts and civil contracts, contested the disallowance of deduction u/s 80IA for the assessment year 2001-02. The CIT (A) refused to admit additional evidence related to the deduction, citing that the audit reports required for the claim should have been filed before the Assessing Officer. The CIT (A) concluded that the assessee failed to demonstrate eligibility for the deduction as it did not operate any infrastructural facility. The Special Bench decided to admit the additional evidence and directed the matter to be reconsidered by the Assessing Officer, allowing the assessee to present further evidence.

Admission of Additional Evidence and Legal Issues:
The Special Bench considered the legal issues arising from the CIT (A) order, including whether merely having a development agreement was sufficient for deduction u/s 80IA, the requirement for ownership to transfer the facility to the Government, and the definition of a developer in the context of infrastructure projects. The Special Bench acknowledged the complexity of the case and the need to examine the facts in detail. Ultimately, the Special Bench admitted the additional evidence and remanded the entire issue back to the Assessing Officer for fresh consideration, allowing the assessee to present any additional material.

Conclusion:
The Special Bench allowed the appeal of the assessee for statistical purposes, directing a fresh consideration of the disallowance of deduction u/s 80IA and the expenses on ESOPs by the Assessing Officer. The judgment was pronounced on 25-4-2008.