2011 (8) TMI 1362 - AT - Income Tax

Issues Involved:
1. Legality of the assessment order.
2. Disallowance of deduction u/s 80-IA.
3. Re-computation of income from the power plant.
4. Disallowance of peripheral development expenditure u/s 37(1).
5. Disallowance of garden expenditure u/s 37(1).
6. Computation and allowance of depreciation.
7. Consideration of revised computation of income.
8. Computation of income u/s 143(3) vs. u/s 143(1)(a).
9. Proper computation of income and deduction u/s 80-IA.

Summary:

1. Legality of the Assessment Order:
The Assessee contended that the assessment was completed in an arbitrary manner, violating principles of natural justice and ignoring the books of account and documents produced. The Tribunal found no merit in this contention.

2. Disallowance of Deduction u/s 80-IA:
The Assessee claimed a deduction of Rs. 7,59,17,674 u/s 80-IA for income from its power plant. The CIT(A) sustained the disallowance, holding that the Assessee did not comply with the requirements of Section 80-IA(7). The Tribunal upheld this decision, noting that the Assessee did not show the income from the power plant in the gross total income, which is mandatory for claiming the deduction.

3. Re-computation of Income from Power Plant:
The CIT(A) directed the Assessing Officer to recompute the income from the power plant by examining indirect expenses and the rate at which electricity was charged. The Tribunal found this direction justified but ultimately upheld the disallowance of the deduction u/s 80-IA.

4. Disallowance of Peripheral Development Expenditure u/s 37(1):
The Assessee claimed Rs. 10,57,792 as peripheral development expenditure. The CIT(A) disallowed this amount, stating it was not supported by any project approved by the National Committee for Promotion of Social & Economic Welfare. The Tribunal upheld this disallowance, agreeing that the expenses were not connected to any approved project.

5. Disallowance of Garden Expenditure u/s 37(1):
The Assessee claimed Rs. 11,19,048 for garden, park, lake, and vegetable garden expenses. The CIT(A) disallowed Rs. 5,06,276 of this amount. The Tribunal upheld the disallowance, noting that the Assessee did not account for the income from the vegetables grown.

6. Computation and Allowance of Depreciation:
The Assessee argued for the proper computation of depreciation amounting to Rs. 16,92,39,751 and an additional Rs. 36,21,510 for the power plant. The Tribunal found no merit in the Assessee's contentions and upheld the CIT(A)'s decision.

7. Consideration of Revised Computation of Income:
The Assessee's plea for considering the revised computation of income was ignored by the CIT(A). The Tribunal upheld this decision, finding no error in the CIT(A)'s approach.

8. Computation of Income u/s 143(3) vs. u/s 143(1)(a):
The Assessee contended that the CIT(A) erred in computing income based on intimation u/s 143(1) instead of the returned income. The Tribunal upheld the CIT(A)'s method, finding it justified.

9. Proper Computation of Income and Deduction u/s 80-IA:
The Assessee argued that the income from the power plant and other income should be properly computed, and then the deduction u/s 80-IA should be allowed. The Tribunal found no merit in this argument and upheld the CIT(A)'s decision.

Conclusion:
The Tribunal dismissed the appeal of the Assessee, upholding the order of the CIT(A) and finding the issues raised by the Assessee to be devoid of merits.

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