2010 (3) TMI 1212 - AT - Income Tax

Summary

Issues involved: Revenue's appeal against Ld CIT(A)'s order for assessment year 2005-06 regarding deduction u/s 80IA on bonus and compensation received by the assessee company.

Deduction u/s 80IA - Bonus and Compensation:
The dispute centered around whether the bonus of &8377; 4,65,20,000 and compensation of &8377; 6,20,00,000 received by the assessee company were eligible for deduction u/s 80IA. The Assessing Officer contended that these receipts did not qualify as eligible business receipts as they were not derived from the business. The assessee argued that both receipts were earned from the project and hence eligible for deduction u/s 80IA. Ld CIT(A) ruled in favor of the assessee, allowing the deduction. The Tribunal noted that the bonus and compensation should be reduced from the cost of the project, impacting depreciation claims. Citing the judgment in CIT v. Bokaro Steel Ltd., it held that the receipts were capital in nature and should reduce the cost of construction. Consequently, the total cost of the project would decrease, affecting depreciation and gross income. The Tribunal set aside Ld CIT(A)'s order and remanded the matter to the Assessing Officer for recalculating the income eligible for deduction u/s 80IA based on the adjusted figures. It was clarified that the book profit declared by the assessee should be assessed as per the return of income under MAT provision u/s 115JB. The Tribunal allowed the revenue's appeal for statistical purposes, with the order pronounced on 26th March, 2010.