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2016 (9) TMI 547 - AT - Income TaxEligible for deduction under section 80IA - Held that - We uphold the finding of the learned CIT(A) that the assessee is eligible for deduction under section 80IA of the Act and also the directions of the learned CIT(A) to the AO to verify as to whether the losses have already been set off against the income of non-eligible unit in the earlier years and in case the losses were already set off then the same cannot be notionally carried forward for setting off against for computing the deduction under section 80IA of the Act. Addition u/s 14A - Held that - The facts on record reveal that the interest expenditure of ₹ 39,20,797/- incurred towards term loans taken for purchase of Windmills by the assessee in the earlier years has no direct nexus with the earning of exempt income by the assessee and therefore is not to be considered while working out the disallowance under section 14A r.w. Rule 8D. In this view of the matter we delete the disallowance of ₹ 2,39,342/- made by the authorities below on this account.
Issues Involved:
1. Eligibility for deduction under section 80IA. 2. Disallowance under section 14A. 3. Computation of Income from House Property. Issue-wise Detailed Analysis: 1. Eligibility for Deduction under Section 80IA: The Revenue challenged the CIT(A)'s decision to allow the assessee's deduction under section 80IA of the Income Tax Act. The Revenue argued that the CIT(A) erred in interpreting the provisions regarding the set-off of unabsorbed depreciation. The Tribunal noted that the issue was previously decided in favor of the assessee by the Coordinate Bench in the assessee’s own case for A.Y. 2009-10. The Tribunal upheld the CIT(A)'s decision, confirming the assessee's eligibility for deduction under section 80IA. The Tribunal directed the AO to verify if the losses were already set off against the income of non-eligible units in earlier years and, if so, these losses should not be carried forward for setting off against the deduction under section 80IA. 2. Disallowance under Section 14A: The assessee contested the disallowance of ?2,39,342/- under section 14A read with Rule 8D, which was confirmed by the CIT(A). The AO had disallowed this amount, stating that the assessee's explanation regarding the expenditure incurred for earning exempt income was unsatisfactory. The Tribunal examined the factual matrix and found that the interest expenditure of ?39,20,797/- related to term loans for acquiring Windmills, which had no direct nexus with earning exempt income. Therefore, the Tribunal deleted the disallowance of ?2,39,342/- made by the authorities below. 3. Computation of Income from House Property: The assessee objected to the computation of notional income from house property at ?13,00,681/-, which was upheld by the CIT(A). The Tribunal noted that this issue was previously decided against the assessee by the Coordinate Bench in the assessee’s own case for A.Y. 2009-10 and assessment years 2005-06 to 2008-09. Following these decisions, the Tribunal upheld the computation of income under the head house property at ?13,00,681/-. Conclusion: The Tribunal dismissed the Revenue's appeal for A.Y. 2010-11 and partly allowed the assessee's cross-objection. The Tribunal upheld the CIT(A)'s decision on the eligibility for deduction under section 80IA and deleted the disallowance under section 14A. However, it confirmed the computation of income from house property as determined by the AO.
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