2009 (7) TMI 904 - AT - Income Tax

Deductions - Profits and gains from industrial undertakings, etc., after certain dates/infrastructure undertakings

Summary

Issues:
1. Disallowance of deductions claimed under section 80-IA of the Income-tax Act, 1961.
2. Disallowance and addition of expenditure incidental to business into income.

Analysis:

Issue 1 - Disallowance of deductions under section 80-IA:
The assessee, engaged in infrastructure development, claimed exemption under section 80-IA for a specific amount. The Assessing Officer disallowed the claim, stating that the work undertaken did not qualify as developing a new infrastructure facility as required by the Act. The CIT(A) upheld this decision, emphasizing that the activity was merely improving an existing facility, not creating a new one. The tribunal found that the agreement with the West Bengal Government focused on strengthening an existing road, leading to the conclusion that it did not constitute a new infrastructure facility. However, the tribunal highlighted that the term 'new' could also imply 'renewed' and referenced legal precedents to support a broader interpretation. Consequently, the tribunal remitted the matter to the Assessing Officer for a fresh decision, instructing a detailed examination of the work carried out under the contract to determine if it met the criteria for a new infrastructure facility.

Issue 2 - Disallowance and addition of incidental expenditure:
The second ground of disallowance and addition of expenditure incidental to business was not pressed by the assessee and was rejected. As this issue was not pursued, no further analysis or decision was provided by the tribunal.

In a separate appeal regarding the concealment penalty, the tribunal remitted the matter back to the Assessing Officer in line with the decision on the assessment proceedings. Both appeals filed by the assessee were treated as allowed for statistical purposes, pending further assessment and decision by the tax authorities.