2024 (9) TMI 1562 - AT - Income Tax

Deduction u/s 80IA - denial of deduction as assessee failed to maintain separate books of account for each of the four projects under Rule 18BB of the Act and failed to furnish the audit report in Form No.10CCB for each project separately - HELD THAT - As relying on case of Chirakkal Services Co-operative Bank vs CIT 2016 (4) TMI 826 - KERALA HIGH COURT denial of exemption claimed by the assessee under section 80IA of the Act for the reason that the assessee has not claimed the deduction in the original return filed but in the revised return, is not justified. We find that the ld. CIT(A) has passed a well-reasoned order allowing the claim of the assessee for deduction under section 80IA of the Act and therefore, no interference is called for in the order of the ld. CIT(A). We find that the books of account of the eligible projects were separately maintained by the assessee and separate audited financial statements for each project . All the four projects were awarded to the assessee by UPPWD for infrastructure development. All the relevant conditions for claim of deduction under section 80IA of the Act are fulfilled. The business activities of all the four projects are covered in the scope of work defined u/s 80IA (4) of the Act and clarified vide CBDT s Circular No.4/2010 where the assessee acted as a developer in these projects. Therefore, the Assessing Officer was not justified to reject the claim of the assessee for deduction under section 80IA of the Act. We, accordingly reject grounds No.1 2 taken by the Revenue. Addition due to unverified credit balance - CIT(A) has deleted the addition, relying on the judgment of Jagdish Tiwari 2013 (10) TMI 85 - ALLAHABAD HIGH COURT observing that where payments are made to creditors through cheque and reflected in books of accounts, then addition cannot be made merely because of non-confirmation. We do not find any error in the order of the ld. CIT(A) on this issue. Disallowances of various expenses and adhoc disallowance of wages/labour charges - We find that the ld. CIT(A) has deleted the ad hoc disallowances made by the Assessing Officer, relying on various decision of the Lucknow Bench of the Tribunal in U.P. Corporative Federation 2011 (3) TMI 1820 - ITAT LUCKNOW , Rajmata Devi, Basti 2011 (7) TMI 1385 - ITAT LUCKNOW and after considering the facts and circumstances of the case. The ld. D.R. could not point out any error in the order of the ld. CIT(A), who has rightly deleted the ad hoc disallowances made by the Assessing Officer. TDS u/s 194H - Addition u/s 40(a)(ia) for non-deduction of TDS - appellant had paid a sum under the head commission but TDS was not deducted u/s 194H - CIT(A) deleted addition - HELD THAT - The observation of the ld. CIT(A) was that since the payments have been made by the assessee to different persons are petty payments and none of the payment exceeds Rs. 5,000/-, the assessee was not under legal obligation to deduct TDS on these payments. We are of the view that the finding of the ld. CIT(A) is in right perspective and no interference is called for. Assessee opted for Direct Tax Vivad se Vishwas Scheme (VSVS) in relation to its cross objection in Form No 1 and Form No 2 - D.R. submitted that since the designated authority has not issued the requisite Form No.5, certifying that the dispute has been resolved for the year under consideration, the same cannot be considered under VSVS - HELD THAT - As against the identified tax settlement, since the assessee has already paid tax thus the excess payment of taxes resulted into refund of Rs. 1,57,00,465/-. We also find from record that the assessee has written letters to the designated authority for issuance of Form No.5, but the same has not yet been issued. As per Form No.3 dated 23.12.2020, the amount payable by the assessee for the year under consideration under VSVS by 31.3.2021 is only Rs. 5,12,370/- and the amount refundable to the assessee is Rs. 1,57,00,465/-. Therefore, considering these facts, we allow the request of the assessee for withdrawal of the Cross Objection. However, we make it clear that the Revenue will be at liberty to approach the Tribunal for restoration of this appeal, in accordance with law, if the dispute is not finally settled under VSVS. In that event, the assessee will also be at liberty to approach the Tribunal for restoration of its Cross Objection.

Summary

Issues Involved:
1. Deletion of addition under Section 80-IA of the Income Tax Act.
2. Deletion of addition due to unverified credit balance.
3. Deletion of ad hoc disallowances of expenses.
4. Deletion of addition under Section 40(a)(ia) for non-deduction of TDS.
5. Cross Objection by the assessee regarding sustained additions.

Detailed Analysis:

1. Deletion of Addition Under Section 80-IA:
The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 4,66,10,927/- under Section 80-IA by ignoring that the assessee did not file the Audit Report in Form 10CCB separately for all projects and did not claim the deduction in the original return. The CIT(A) allowed the deduction, noting that the revised return was filed within the stipulated time under Section 139(5), and the conditions under Section 80-IA were fulfilled. The Tribunal upheld the CIT(A)'s decision, referencing the CBDT's Circular No. 4/2010 and judicial precedents, confirming that the assessee's activities qualified as infrastructure development.

2. Deletion of Addition Due to Unverified Credit Balance:
The Revenue argued that the CIT(A) erred in deleting the addition of Rs. 1,21,000/- due to the assessee's failure to produce evidence for the credit balance in the ledger account of M/s Mallard Holidays. The CIT(A) deleted the addition, relying on the jurisdictional High Court's decision, which held that additions cannot be made merely due to non-confirmation if payments are made through cheques and reflected in the books of accounts. The Tribunal confirmed this deletion.

3. Deletion of Ad Hoc Disallowances of Expenses:
The Revenue challenged the deletion of ad hoc disallowances of Rs. 2,50,000/- and Rs. 7,50,000/-. The CIT(A) noted that the Assessing Officer did not specify which expenses were unverifiable and that the books of accounts were properly maintained and audited. The Tribunal upheld the CIT(A)'s decision, citing various judicial precedents that disallowances without specific defects are unjustified.

4. Deletion of Addition Under Section 40(a)(ia) for Non-Deduction of TDS:
The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 6,75,950/- made under Section 40(a)(ia) for non-deduction of TDS on brokerage/commission payments. The CIT(A) found that the payments were petty and none exceeded Rs. 5,000/-, thus not requiring TDS deduction. The Tribunal agreed with the CIT(A), confirming the deletion.

5. Cross Objection by the Assessee:
The assessee filed a Cross Objection against the CIT(A)'s decision to sustain certain additions. During the hearing, the assessee opted for the Direct Tax Vivad se Vishwas Scheme (VSVS) and sought withdrawal of the Cross Objection. The Tribunal allowed the withdrawal but noted that the Revenue could approach the Tribunal for restoration if the dispute was not settled under VSVS.

Conclusion:
The Tribunal dismissed the Revenue's appeal and the assessee's Cross Objection, upholding the CIT(A)'s decisions on all contested issues. The Tribunal confirmed the deletion of additions under Section 80-IA, for unverified credit balances, ad hoc disallowances, and non-deduction of TDS, and allowed the withdrawal of the assessee's Cross Objection under the VSVS.