2011 (3) TMI 1702 - AT - Income Tax

Summary

Issues involved: Assessment of tax amount, eligibility for relief u/s 80IA(4)(I), concept of "principle of mutuality".

Assessment of tax amount:
The appellant contested the tax demand of Rs. 181,820 assessed by the AO for the assessment year 2005-06. The AO noted an excess of income over expenditure of Rs. 47,69,412 disclosed by the appellant, who claimed the entire income as deduction u/s 80IA. However, the AO disallowed the claim and treated the surplus as income.

Eligibility for relief u/s 80IA(4)(I):
The CIT(A) upheld the AO's disallowance of the claim made by the appellant under section 80IA. The appellant argued for relief based on the "principle of mutuality," asserting that as a cooperative society formed by industrial units for effluent treatment, it should be entitled to the deduction.

Concept of "principle of mutuality":
The appellant's representative argued that the issue of "principle of mutuality" was not addressed by the AO or the CIT(A), despite being raised before both authorities. The AO's decision focused solely on the eligibility for deduction u/s 80IA, stating that relief is restricted to enterprises owned by a company or consortium of companies. The CIT(A) also confirmed the disallowance of the deduction u/s 80IA without considering the concept of mutuality.

Judgment:
The ITAT Mumbai set aside the issue of "principle of mutuality" for the AO's reconsideration and adjudication as per law, as it was not addressed by the lower authorities. The appeal of the appellant was allowed for statistical purposes, emphasizing the need for a comprehensive review of the concept of mutuality in relation to the deduction claimed under section 80IA.