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2014 (1) TMI 1329 - AT - Income TaxDeduction u/s 80IA of the Act Entitlement for deduction for deduction u/s 80IA of the Act Held that - The decision in Goetze (India) Limited Versus Commissioner of Income-Tax 2006 (3) TMI 75 - SUPREME Court followed - no fresh claim can be made before the AO in the form of revised return - he is not competent to adjudicate the issue of deduction of FBT - Though the counsel appearing on behalf of the assessee relied upon the decision of the ITAT (Third Member) Delhi, the learned D.R. could not place before us any decision where a contrary view was taken - the powers of the learned CIT(A) are independent and the CIT(A) can take into consideration any claim made before him for the first time - the CIT(A) committed an error in law in not adjudicating the issue on merits the order of the CIT(A) set aside Decided in favour of Assessee.
Issues:
1. Deduction under section 80IA of the Act for interest income. 2. Entitlement for deduction of Fringe Benefit Tax (FBT) for calculation of book profit. 3. Allowance of provision made for FBT while computing book profit under section 115JB of the Act. Analysis: 1. The appeal pertains to the assessment year 2008-09 where the assessee, a power generation company, declared Nil income initially but later earned interest income of Rs. 6,63,640. The Assessing Officer (AO) considered this interest income for deduction under section 80IA of the Act. The assessee argued that the interest was earned from business profits kept in the bank and should qualify for deduction. However, relying on the decision in the case of Liberty India, the AO rejected this contention. Additionally, the assessee claimed entitlement to deduction of Fringe Benefit Tax (FBT) for calculating book profit, which was also denied by the AO. Consequently, the AO determined a book profit of Rs. 1,06,44,178 under section 115JB of the Act, leading to tax assessment under section 115JB. 2. Before the CIT(A), the assessee contended that the AO erred in not allowing the deduction of the provision made for FBT (Rs. 2,77,656) while computing the book profit under section 115JB. The CIT(A) rejected this contention, stating that since the expenditure was not claimed in the computation of income, it cannot be allowed as it would amount to revising the return of income, which is impermissible. The assessee then appealed this decision. 3. The assessee, during the appeal, cited various decisions of the ITAT and Circular No. 8 dated 29th August, 2004 issued by CBDT to support its claim that FBT is admissible as a deduction while computing book profit. The counsel argued that the CIT(A) should have considered the claim of the assessee, which is permissible under the law. The Departmental Representative (D.R.) supported the CIT(A)'s order, referring to the decision of the Supreme Court in the case of Goetze India, stating that no fresh claim can be made before the AO in the form of a revised return. 4. The Tribunal, after considering the submissions, found that the issue of deduction of FBT was raised before both the AO and the CIT(A), and the powers of the CIT(A) are co-terminus with that of the AO. The Tribunal observed that the CIT(A) erred in not adjudicating the issue on merits, despite the assessee's claim being admissible before law. Referring to a decision of the ITAT (Third Member) Delhi and the Supreme Court's decision in the case of Goetze India, the Tribunal concluded that the CIT(A) should have considered the claim made before him for the first time. Therefore, the Tribunal set aside the issue to the file of the CIT(A) for reconsideration in accordance with the law. 5. Ultimately, the appeal filed by the assessee was treated as allowed for statistical purposes, and the order was pronounced in the open court on 5th August 2013.
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