2013 (11) TMI 1768 - AT - Income Tax

Summary

Issues Involved:
1. Deduction u/s 80IA on interest income and miscellaneous receipts.
2. Eligibility for deduction u/s 80IA(4) for infrastructure development.
3. Penalty u/s 271(1)(c) for disallowance of deduction u/s 80IA.

Summary:

1. Deduction u/s 80IA on Interest Income and Miscellaneous Receipts:
The assessee contended that the learned CIT(A) erred in law and on facts by holding that deduction u/s 80IA cannot be allowed on interest income and miscellaneous receipts as they are not derived from industrial undertaking. The assessee argued that interest income should be netted off against interest payment, resulting in a net debit of Rs. 2,19,764/-. The Tribunal directed the AO to reassess whether the interest income and miscellaneous receipts are attributable to the infrastructure project, and if so, allow the deduction u/s 80IA.

2. Eligibility for Deduction u/s 80IA(4) for Infrastructure Development:
The Revenue challenged the CIT(A)'s decision that the assessee is eligible for deduction u/s 80IA(4). The AO had disallowed the deduction on the grounds that the assessee acted only as a contractor and did not "own" any infrastructural project. The Tribunal noted that the AO failed to properly analyze whether the conditions prescribed u/s 80IA(4) were met. The Tribunal emphasized that the term "developer" includes entities that develop infrastructure facilities, not just those that operate and maintain them. The Tribunal directed the AO to reassess whether the assessee qualifies as a "developer" and meets the conditions of section 80IA(4), including whether the project falls under BOT, BOOT, or BOLT schemes.

3. Penalty u/s 271(1)(c) for Disallowance of Deduction u/s 80IA:
The Revenue appealed against the CIT(A)'s decision to delete the penalty levied u/s 271(1)(c) amounting to Rs. 34,63,503/-. The CIT(A) held that the penalty was not justified as the disallowance was based on material facts already on record and did not indicate concealment of income or furnishing of inaccurate particulars. The Tribunal upheld the CIT(A)'s decision, stating that the disallowance was a subject of controversy and did not warrant a penalty.

Conclusion:
The Tribunal partly allowed the appeals for statistical purposes, directing the AO to reassess the eligibility for deduction u/s 80IA and the nature of interest income and miscellaneous receipts. The penalty appeal filed by the Revenue was dismissed.