2018 (3) TMI 43 - AT - Income Tax

Disallowance of deduction by the assessee u/s 80IA on rolling stock - Held that - The above issue is squarely covered in favour of the assessee by the decision of coordinate bench for Assessment Year 2003-04 to 2005-06 2009 (2) TMI 499 - ITAT DELHI Disallowance of extra deprecation claimed by assessee on computer peripherals - Held that - The above issue has been decided by the Hon ble jurisdictional High Court in CIT Vs. BSES Yamuna Power Ltd 2010 (8) TMI 58 - DELHI HIGH COURT holding that computer accessories and peripherals are part of the computers and are entitled to depreciation @60%. Disallowance u/s 80IA in respect of income from inland container depots and container freight stations - Held that - The above issue is squarely covered in favour of the assessee in earlier years in the decision of Hon ble Delhi High Court in Container Corporation of India Ltd. Versus ACIT 2012 (5) TMI 260 - DELHI HIGH COURT wherein, it has been held that inland container depots and inland ports i.e. CFS are inland ports within the meaning of section 80IA(4) as eligible infrastructure undertaking for deduction. The ld DR could not show us any change in the facts and circumstances of the case. Disallowance of productivity linked incentive - Held that - AR has submitted that in AY 2005- 06 the above issue was considered by the ld CIT, wherein, u/s 263 of the Act vide para No. 4 this issue is accepted that productivity linked payments are allowable to the assessee as liability is in present, quantifiable and not contingent. In view of this we allow the ground No. 4 of the appeal of the assessee. Disallowance u/s 40a(ia) - Held that - It is admittedly the appeal for Assessment Year 2006-07 is pending before us whereas the disallowance was made in AY 2050-06. Undoubtedly, there is an amendment which is held by the Hon ble Delhi High Court as retrospective in nature. However, we are duty bound to give direction with respect to the year for which the appeal is pending before us. Accordingly we direct the ld AO that if the tax has been deducted and deposited on the above disallowance in this year or has been paid after the due date of filing of the return for Assessment Year 2005-06 the claim may be allowed to that extent in AY 2006-07

Summary

Issues Involved:
1. Condonation of delay in filing appeals by the revenue.
2. Deduction under Section 80IA for rolling stock.
3. Extra depreciation on computer peripherals.
4. Deduction under Section 80IA for income from inland container depots and container freight stations.
5. Disallowance of productivity linked incentive.
6. Disallowance under Section 40(a)(ia).
7. Charging of interest under Sections 234A and 234B.
8. Deletion of penalty under Section 271(1)(c).

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing Appeals by the Revenue:
The revenue filed appeals for AY 2006-07 and AY 2007-08, delayed by 585 and 502 days respectively. The delay was attributed to the need for Committee on Disputes (COD) approval, which was later deemed unnecessary by the Supreme Court in Electronics Corporation of India Vs. Union of India. The revenue argued that the delay was due to "sufficient cause" and not due to negligence or inaction. The Tribunal, considering the detailed chronology of events and the principle that substantial justice should be preferred over technicalities, condoned the delay.

2. Deduction under Section 80IA for Rolling Stock:
The revenue contested the deduction under Section 80IA for rolling stock, arguing that only Indian Railways could operate a railway system. The Tribunal referred to a prior decision (110 TTJ 728) which held that rolling stock qualifies as infrastructure under Section 80IA(4)(c). The Tribunal dismissed the revenue's appeal, upholding the deduction.

3. Extra Depreciation on Computer Peripherals:
The revenue challenged the 60% depreciation claimed on computer peripherals, arguing it should be 25%. The Tribunal cited the Delhi High Court decision in CIT Vs. BSES Yamuna Power Ltd, which held that computer peripherals are part of computers and eligible for 60% depreciation. The Tribunal dismissed the revenue's appeal.

4. Deduction under Section 80IA for Income from Inland Container Depots and Container Freight Stations:
The assessee appealed against the disallowance of deduction under Section 80IA for income from inland container depots and container freight stations. The Tribunal referenced the Delhi High Court decision in the assessee's own case (346 ITR 140), which recognized these facilities as eligible for deduction under Section 80IA(4). The Tribunal allowed the assessee's appeal.

5. Disallowance of Productivity Linked Incentive:
The assessee contested the disallowance of ?24,619,447 for productivity linked incentive, arguing the provision was made on an ascertainable basis and the actual payment was close to the provision. The Tribunal noted that in AY 2005-06, a similar issue was accepted as allowable. The Tribunal allowed the assessee's appeal.

6. Disallowance under Section 40(a)(ia):
The assessee argued that the disallowance under Section 40(a)(ia) for AY 2005-06 should be allowed in AY 2006-07 due to retrospective amendment. The Tribunal directed the AO to allow the claim in AY 2006-07 if the tax was deducted and deposited accordingly.

7. Charging of Interest under Sections 234A and 234B:
The Tribunal found the issue of charging interest under Sections 234A and 234B to be consequential and dismissed the ground in the absence of specific arguments.

8. Deletion of Penalty under Section 271(1)(c):
The revenue appealed against the deletion of penalty under Section 271(1)(c) related to disallowances under Section 80IA and productivity linked incentive. Since the Tribunal had allowed the deductions on merits, it found no basis for the penalty and dismissed the revenue's appeal.

Conclusion:
The Tribunal condoned the delay in filing the appeals by the revenue, upheld the deductions under Section 80IA for rolling stock and income from inland container depots and container freight stations, allowed higher depreciation on computer peripherals, and directed appropriate action regarding disallowance under Section 40(a)(ia). The Tribunal also upheld the deletion of penalty under Section 271(1)(c) and found the issue of charging interest under Sections 234A and 234B to be consequential.