2017 (6) TMI 823 - AT - Income Tax

Allowability of deduction u/s 80IA(4) - Held that - The issue under consideration is squarely covered by the decision of the coordinate bench of this Tribunal in the case of Annapurna Builders (2012 (11) TMI 1214 - ITAT HYDERABAD). DR neither controverted this fact nor brought any contrary decision in this regard. Therefore, we uphold the order of the CIT(A) in allowing the assessee s claim of deduction u/s80IA(4)(iii) as his decision is in consonance with the decision of the coordinate bench. Disallowance u/s 40(a)(ia) - Held that - Section 40(a)(ia) is applicable only to the expenditure which is payable as on 31st March of every year and cannot be invoked to disallow the amounts which have already been paid during the PY, without deducting the tax at source. Since the assessee has already paid the amount during the PY and no amount is there to be payable as on 31st March, we uphold the order of CIT(A) and dismiss the ground raised by the revenue on this issue.

Summary

Issues:
1. Condonation of delay in filing the appeal before the Tribunal.
2. Disallowance of expenses and undisclosed sales by the Assessing Officer (AO).
3. Allowability of deduction under section 80IA(4) of the Income Tax Act, 1961.
4. Disallowance under section 40(a)(ia) of the Act.

Issue 1: Condonation of Delay
The appeal by the revenue was directed against the order of the Commissioner of Income-tax(A) - 2, Hyderabad, for AY 2006-07. There was a delay of 236 days in filing the appeal before the Tribunal. The delay was attributed to late receipt of the authorization letter due to transfers of Principal CITs and their busy schedules. The delay was condoned, and the appeal was admitted.

Issue 2: Disallowance of Expenses and Undisclosed Sales
The AO made additions to the total income of the assessee, including disallowance of direct/indirect expenses, addition on undisclosed sales, disallowance under sections 40A(3) and 40(a)(ia), and disallowance of deduction under section 80IA(4)(iii). The CIT(A) deleted these disallowances, leading to the revenue's appeal before the ITAT.

Issue 3: Allowability of Deduction under Section 80IA(4)
The assessee claimed deduction under section 80IA(4) for lease income derived from an industrial park. The AO denied the deduction as the assessee had deviated from CBDT's condition that no single unit should occupy more than 50% of the industrial area. The CIT(A) allowed the deduction, citing the notification by the Ministry of Commerce and Industry. The ITAT upheld the CIT(A)'s decision based on a precedent and dismissed the revenue's appeal.

Issue 4: Disallowance under Section 40(a)(ia)
The AO disallowed a claim under section 40(a)(ia) as the department's case against a specific decision was pending. The CIT(A directed the AO to delete the disallowance as the amount had already been paid during the previous year. The ITAT upheld the CIT(A)'s decision, stating that section 40(a)(ia) applies to payable amounts as of March 31 and dismissed the revenue's appeal.

In conclusion, the ITAT upheld the decisions of the CIT(A) regarding the deduction under section 80IA(4) and the disallowance under section 40(a)(ia), leading to the dismissal of the revenue's appeal.