2015 (4) TMI 1342 - HC - Income Tax

Disallowance of deduction being Sales Tax Entitlement - HELD THAT - Tribunal has remanded the matter back to the file of Assessing Officer for re-adjudicating the issue afresh as per the directions of the Tribunal given for A.Y. 2007-2008 in the case of the very assessee. Therefore it cannot be said that the learned Tribunal has committed any error in remanding the matter back to the file of the Assessing Officer even with respect to the year under consideration. No substantial question of law arises and hence the present appeal qua proposed question No.(A) as reproduced hereinabove is hereby dismissed. Disallowance of deduction u/s 80IA in respect of profits derived from generation of electricity from wind mills - HELD THAT - Appeal admitted to consider the following substantial question of law - (B) Whether on the facts and circumstances of the case as well as law the ITAT was justified in deleting the addition made on account of disallowance of deduction u/s 80IA in respect of profits derived from generation of electricity from wind mills? Disallowance u/s 14A - addition made on account of disallowing interest expenditure and restricting the administrative expenses to Rs.900/- which is not in accordance with the method provided by Rule 8D - HELD THAT - As the amount involved/tax effect would be Rs.1, 49, 710/- on the smallness of amount we are not inclined to entertain the present appeal with respect to proposed question No.(C). Under the circumstances present appeal qua proposed question No.(C) is hereby dismissed. However keeping the question of law if any open.

Summary

Issues:
1. Disallowance of deduction of Sales Tax Entitlement
2. Disallowance of deduction u/s 80IA of the Act for windmill profits
3. Disallowance of interest expenditure and administrative expenses

Analysis:
1. The first issue pertains to the disallowance of deduction of Sales Tax Entitlement. The Tribunal remanded the matter back to the Assessing Officer for re-adjudication based on directions given for a previous assessment year. The Court found no error in this decision, dismissing the appeal as no substantial question of law arose in this regard.

2. Moving on to the second issue, concerning the disallowance of deduction under section 80IA of the Act for profits derived from windmills, the Court admitted the appeal for consideration. This was due to similar issues being raised in appeals for previous assessment years by the same assessee. The substantial question of law to be considered was whether the ITAT was justified in deleting the addition made on account of disallowance of the deduction.

3. Lastly, the issue of disallowance of interest expenditure and administrative expenses was addressed. The Court noted that the tax effect involved was minimal at Rs.1,49,710. Due to the smallness of the amount, the Court declined to entertain the appeal regarding this issue. The appeal was dismissed in this regard, but the question of law was kept open for future consideration.