2019 (10) TMI 1000 - AT - Income Tax

Claim of deduction u/s 80IA - profits derived from the eligible power generation business through Wind Mill unit of the appellant - HELD THAT - We do not agree with the reasoning given by the CIT(A) that the assessee himself had offered the impugned claim of deduction for taxation rendered in the case of CIT Vs. Mahalakshmi Sugar Mills Ltd. 1986 (7) TMI 83 - SUPREME COURT . CIT(A) ought to have examined the issue of taxability if the amount was not taxable by offering the same would not close the doors for the assessee to claim deduction if subsequently it is realised that the assessee was entitled for deduction u/s 80IA - restore the issue of deduction to the file of the A.O. to verify the correctness of the claim if it is found that assessee has rightly claimed deduction u/s 80IA of the Act and has been allowed in subsequent years. Assessing officer would allow deduction as claimed by the assessee u/s 80IA of the Act. This ground of the assessee s appeal is allowed for statistical purposes. Disallowance of the expenses on adhoc basis - A.O. disallowed this expenditure on adhoc basis on the basis that bills and vouchers and supporting documents were not found proper and were not made under the head of these expenses - HELD THAT - We find merit into the contentions of the Ld. Counsel for the assessee that there is a sweeping observation by the authorities below. No specific expenses have been pointed out to demonstrate the particular expenditure was not supported with evidence. Therefore, we direct the A.O. to delete this addition.

Summary

Issues:
1. Rejection of deduction claim under section 80IA
2. Disallowance of expenses on adhoc basis

Issue 1: Rejection of deduction claim under section 80IA:
The appeal was against the order of the Ld. CIT(A) pertaining to the assessment year 2012-13. The Assessing Officer (A.O.) disallowed the claim of deduction under section 80IA of the Income Tax Act, 1961, amounting to ?30,60,276 derived from the eligible power generation business through a Wind Mill unit. The A.O. also made other disallowances, resulting in an assessed income higher than the declared income. The Ld. CIT(A) upheld the A.O.'s decision. The assessee contended that the claim for deduction was made during the assessment proceedings and had been allowed in subsequent years. The Tribunal found that the claim of deduction had been allowed in subsequent years and disagreed with the reasoning of the Ld. CIT(A) for rejecting the claim. The Tribunal referred to relevant case laws and directed the A.O. to verify the correctness of the claim, allowing the deduction if found appropriate. The ground of the assessee's appeal was allowed for statistical purposes.

Issue 2: Disallowance of expenses on adhoc basis:
The A.O. had disallowed expenses amounting to ?1,50,000 on an adhoc basis due to improper bills and vouchers. The Ld. CIT(A) confirmed this disallowance stating that the bills and vouchers were not properly maintained. The Tribunal noted that the authorities had not pointed out specific expenses lacking proper evidence and directed the A.O. to delete this addition. As a result, the appeal filed by the assessee was partly allowed for statistical purposes.

In conclusion, the Tribunal allowed the appeal in part, directing the A.O. to verify the deduction claim under section 80IA and delete the disallowed expenses made on an adhoc basis due to lack of specific evidence.