2021 (7) TMI 690 - AT - Income Tax

Disallowance of claim u/s 80IA/80IB - assessee should have adjusted the losses of other units with the profits of the two units - submission of the assessee that losses of the other units were not actual losses and have already been adjusted in the earlier year and therefore do not call for adjustment in the year under consideration, was not found acceptable to AO - HELD THAT - CIT(A) while granting relief to the assessee has given a finding that during the relevant period, profits was derived from only 2 units and the computation of deduction u/s 80IA/IB has made as per the provisions of section 80IA(5). Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. In such a situation, we find no reason to interfere with the order of CIT(A), thus the ground of Revenue is dismissed. Denial of claim u/s 80M - AO was of the view that since no distribution of dividend was made by the assessee, it was not eligible for deduction u/s 80M - HELD THAT - We find that CIT(A) while deciding the issue in favour of the assessee has given a finding that out of the total amount of ₹ 5.09 crore (rounded off) was received by the assessee by way of dividend and ₹ 3.97 crore (rounded off) was distributed as dividend to its share holders by the assessee. To support the contention of the distribution of the dividend, assessee had also filed a certificate to the CA for the relevant period. Before us, no fallacy in the findings of CIT(A) has been pointed by the Revenue - no interference of the CIT(A) is called for and thus the ground of the Revenue is dismissed.

Summary

Issues Involved:
1. Disallowance of claim under section 80IA/80IB of ? 4,32,65,725
2. Disallowance of claim under section 80M of ? 3,97,34,475

Issue 1: Disallowance of claim under section 80IA/80IB of ? 4,32,65,725

The case involved the denial of a deduction claim under section 80IA/80IB of ? 4,32,65,725 by the Assessing Officer (AO). The Assessee, a company with multiple units, claimed the deduction for two units as per Section 80IA(5) of the Act. However, the AO insisted on adjusting losses from other units against profits from these two units, leading to the disallowance. The Commissioner of Income Tax (Appeals) (CIT(A)) ruled in favor of the Assessee, emphasizing that the computation was in line with the Act's provisions. The Tribunal upheld the CIT(A)'s decision, noting that the profits were derived from only two units during the relevant period, and no errors were found in the CIT(A)'s findings. Hence, the Tribunal dismissed the Revenue's appeal.

Issue 2: Disallowance of claim under section 80M of ? 3,97,34,475

The second issue revolved around the denial of a deduction claim under section 80M of ? 3,97,34,475 by the AO due to the Assessee's failure to distribute dividends. The CIT(A) favored the Assessee, highlighting that the Assessee had received dividends and distributed a portion to its shareholders, supported by relevant documentation. The Tribunal, after reviewing the submissions and records, found no fault in the CIT(A)'s decision. As the Revenue failed to point out any errors in the CIT(A)'s order, the Tribunal upheld the decision, resulting in the dismissal of the Revenue's appeal.

In conclusion, the Tribunal upheld the decisions of the CIT(A) in both issues, dismissing the Revenue's appeal. The detailed analysis of each issue highlighted the proper application of the law and factual considerations, leading to the rejection of the Revenue's grounds. The judgment provided clarity on the interpretation and application of relevant tax provisions, ensuring a fair and just resolution of the disputes raised in the appeal.