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2021 (12) TMI 1292 - AT - Income TaxDeduction u/s 80IA - Deduction in respect of Land Fill project No.I by holding it as not a new undertaken - HELD THAT - We are of the view that once, the assessee has fulfilled all the conditions as laid down in section 80IA(4) of the Act and was allowed deduction in the earlier assessment years in respect of land fill project No.I in AY 2002-03 that is in the initial year, therefore, deduction under section 80-IA in respect of the infrastructure facility should have been allowed to the assessee. So far as the objection of the Ld. Sr DR for the revenue is concerned that the assessee has made agreement with GIDC only after the claim of the assessee was disallowed by A.O and at the time of establishment of Land fill Project II, no new establishment came in to existence. The nature of work being done by both the project is identical, therefore, the claim of the assessee based on the backdate agreement cannot be considered. We find that the submissions of the Ld. DR for the revenue is based on the finding of Ld. CIT(A). The assessee has entered into a separate agreement dated 16th October 2012 with GIDC with effect from 12th March 2007 and commenced its Land Fill Project-II in FY 2006-2007 and claimed deduction under section 80-IA of the Act from AY 2008-09 since the said unit is a separate infrastructure facility. Thus, Land fill II is a distinct and separate undertaking from Landfill I. In the result, the assessee succeeds on this ground of appeal. Land fill project No. I and land fill project-II are not separate undertaking for deduction under section 80IA(4) - As brought to our notice that the assessee has also entered into a separate agreement dated 16th October 2012 with GIDC with effect from 12thMarch 2007. The assessee had commenced its Land Fill Project-II in FY 2006-2007 and claimed deduction under section 80-IA of the Act from AY 2008-09 since the said unit is a separate infrastructure facility. These facts are not controverted by ld SR DR for the revenue. Moreover, the Land Fill Project-II is set up on the separate land allotted by GIDC in Bharuch District, which was allotted to the assessee and separate agreement was entered with GIDC on 16th October 2012 with effect from 12.03.2007. We find that in appeal for AY 2007-08, the Ld. CIT(A) held that both the unit of the assessee i.e. Land fill Project No. I Land Fill Project-II are different and independent unit by way of process, method, machine and infrastructure. Incinerator is not a separate undertaking eligible for deduction under section 80IA(4) - AO while passing the assessment order allowed deduction under section 80IA in respect of Land Fill I, Land Fill II and Incinerator project by treating the said undertakings as a composite undertaking. The ld CIT(A) held that Incinerator is a new infrastructure facility and hence eligible for deduction under section 80- IA(4) of the Act for 10 years from AY 2007-08. This finding of ld CIT(A) is not challenged by revenue before Tribunal, thus, it has attained finality. So far as finding of the ld CIT(A) with regard to Incinerator-II is concerned it was not a subject matter of appeal before ld. CIT(A) for the year under consideration, therefore, we are in agreement with the submissions of the learned Senior Counsel for the assessee that such finding given by the CIT(A) is totally incorrect and uncalled for while deciding the appeal for AY 2008-09. Disallowance of post closer expense - disallowance of provisions of pit covering expenses - HELD THAT - Considering the consistent decision of the Tribunal on similar set of fact on similar component of income, and following the principle of consistency, we direct the AO to follow the order of Tribunal in AY 2007-08 2017 (2) TMI 1493 - ITAT AHMEDABAD and allow / delete the disallowance of provisions of post closer expenses.
Issues Involved:
1. Deduction under section 80IA for Land Fill Project-I. 2. Separate deduction under section 80IA for Land Fill Project-I and II. 3. Separate deduction under section 80IA for Incinerator Project. 4. Inclusion of interest income from fixed deposits in the computation of deduction under section 80IA. 5. Allowance of 10% of interest income as expenditure for earning such income. 6. Disallowance of provision for post-closure care expenditure. 7. Disallowance of provision for pit covering expenses. 8. Addition of provisions for post-closure and pit covering expenses under book profits under section 115JB. 9. Treatment of advance receipts from customers/members as income. Detailed Analysis: 1. Deduction under section 80IA for Land Fill Project-I: The assessee claimed deduction under section 80IA for its Land Fill Project-I, which commenced operations on 01.04.1998. The CIT(A) held that the project was not a new infrastructure facility as the agreement with GIDC was entered into after the eligibility period. However, the Tribunal found that the assessee had fulfilled all conditions under section 80IA(4) and was allowed the deduction in the initial year (AY 2002-03). The Tribunal ruled that once the deduction is allowed in the initial year, it cannot be re-examined in subsequent years, thereby allowing the deduction for Land Fill Project-I. 2. Separate deduction under section 80IA for Land Fill Project-I and II: The assessee argued that Land Fill Project-II was a separate undertaking, having commenced operations in FY 2006-07 with a separate agreement with GIDC. The CIT(A) had treated both projects as the same infrastructure facility, allowing deduction only till AY 2011-12. The Tribunal, however, found that Land Fill Project-II was set up on separate land with a distinct agreement and technical setup. Therefore, it allowed the deduction for Land Fill Project-II as a separate undertaking. 3. Separate deduction under section 80IA for Incinerator Project: The CIT(A) held that the Incinerator Project was a new infrastructure facility eligible for deduction under section 80IA from AY 2007-08. The Tribunal upheld this finding, noting that the deduction for Incinerator Project-I was not challenged by the Revenue and thus attained finality. However, the Tribunal found that the CIT(A) had incorrectly commented on Incinerator Project-II, which was not a subject matter of the appeal for AY 2008-09, and expunged those observations. 4. Inclusion of interest income from fixed deposits: The assessee earned interest on fixed deposits maintained to comply with GPCB norms. The AO excluded this interest from the computation of deduction under section 80IA. The Tribunal, following its decision in the assessee's case for AY 2007-08, held that such interest income was eligible for deduction under section 80IA, directing the AO to recompute the deduction accordingly. 5. Allowance of 10% of interest income as expenditure: The assessee alternatively claimed that if interest income was to be excluded, 10% of it should be allowed as expenditure for earning such income. However, the assessee did not press this ground during the hearing, and the Tribunal dismissed it as not pressed. 6. Disallowance of provision for post-closure care expenditure: The AO disallowed the provision for post-closure care expenses, considering it an unascertainable liability. The Tribunal, following its decision for AY 2007-08, directed the AO to allow the provision, recognizing it as a legitimate business expenditure. 7. Disallowance of provision for pit covering expenses: The AO disallowed the provision for pit covering expenses, treating it as an uncertain liability. The Tribunal, consistent with its earlier decisions, directed the AO to allow the provision, acknowledging it as a necessary business expense. 8. Addition under book profits under section 115JB: The AO added the disallowed provisions for post-closure and pit covering expenses to the book profits under section 115JB. Given the Tribunal's decision to allow these provisions, this issue became academic and was resolved in favor of the assessee. 9. Treatment of advance receipts from customers/members: The AO treated advance receipts from customers as income. The CIT(A) reversed this, treating them as advances until the waste was processed. The Tribunal, following its decision for AY 2007-08, directed the AO to assess these receipts proportionately over the period they relate to, thereby partially allowing the Revenue's appeal for statistical purposes. Conclusion: The Tribunal allowed the assessee's appeal on most grounds, directing the AO to recompute deductions and allowances as per its findings. The Revenue's appeal was partly allowed for statistical purposes, with directions to reassess advance receipts proportionately.
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