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2022 (2) TMI 1135 - AT - Income TaxDeduction u/s. 80IA - Addition on the other income received from contractors at 5 production units - as submitted that this other income consists of electricity recovery from the contractors for the power consumed and other recoveries from the contractors - HELD THAT - As relying on own case 2019 (8) TMI 345 - ITAT DELHI making disallowance by the AO and confirmed by the ld. CIT(A) while computing the deduction allowable u/s. 80IA is not sustainable and all the items of income qua which deduction has been sought by the assessee u/s. 80IA are allowable deduction and order passed by the AO and ld. CIT(A) is not sustainable. So, the order passed by the lower authorities is set side directing the AO to recompute the deduction allowable to the assessee u/s. 80IA without excluding amount disallowed by the AO. Consequently, ground determined in favour of the assessee. Since, the issue before us is similar to the issue adjudicated by the Tribunal, in the absence any material change in the factual contents and the legal proposition, we are of the considered view that the disallowance made by the AO while computing the deduction is allowable u/s. 80-IA - Decided in favour of assessee.
Issues Involved:
1. Disallowance of Section 80IA claim on other income received from contractors. Detailed Analysis: Issue 1: Disallowance of Section 80IA Claim on Other Income Received from Contractors The primary issue in this appeal is whether the disallowance of the deduction claimed under Section 80IA of the Income Tax Act, 1961, on other income received from contractors is justified. The assessee, a Government of India enterprise engaged in the business of electricity generation, construction contracts, and consultancy services, filed a return declaring a total income of ?73,19,81,030/-. The dispute revolves around the disallowance of a deduction amounting to ?5,98,71,388/- claimed under Section 80IA. The assessee argued that the other income, which includes electricity recovery from contractors and other recoveries, is eligible for deduction under Section 80IA. Both parties acknowledged that this issue had been adjudicated by a Co-ordinate Bench of the ITAT in the assessee's favor for earlier years, specifically for the Assessment Year (AY) 2011-12. The ITAT referred to its previous order dated 26.07.2019, where the appeal of the assessee was allowed. The relevant part of the order highlighted that the Assessing Officer (AO) had disallowed an amount of ?2,99,54,875/- on the grounds that only profit from the generation and distribution of power is eligible for deduction under Section 80IA, not other income. The CIT(A) upheld this view, but the ITAT had set aside the CIT(A)'s order for AY 2010-11, indicating that the issue was fully covered. The Revenue's representative argued that only income directly derived from industrial undertakings is eligible under Section 80IA, citing various judicial precedents. However, the ITAT noted that the coordinate Bench had already decided in favor of the assessee, stating that the expenses incurred to earn these other incomes should be excluded from the debit side of the profit and loss account for computing the deduction under Section 80IA. The ITAT also referred to several judicial precedents, including the Hon'ble Delhi High Court's decision in Pr. CIT vs. Bharat Sanchar Nigam Ltd. and the Hon'ble Gujarat High Court's decision in Nirma Industries Ltd. vs. DCIT. These cases clarified that certain types of income, although not directly derived from the core business, could still be considered for deductions under Section 80IA. Following these precedents, the ITAT concluded that the disallowance made by the AO and confirmed by the CIT(A) was not sustainable. The ITAT directed the AO to recompute the deduction allowable to the assessee under Section 80IA without excluding the disputed amount. In summary, the ITAT allowed the appeal of the assessee, setting aside the orders of the lower authorities and directing the AO to recompute the deduction under Section 80IA, thereby allowing the deduction on the other income received from contractors. The judgment was pronounced in the open court on 15/02/2022.
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