2023 (7) TMI 330 - AT - Income Tax

Deduction u/s 80IA - CIT(A) justification allowing more deduction in the set aside proceedings than that was claimed by the assessee in its original return of income as assessed u/s 143(3) - HELD THAT -There was no restriction to the CIT(A) to restrict the deduction to the extent it was originally claimed in the return of income. CIT(A) was justified to examine all the details furnished by the assessee to determine the eligible claim of deduction to the assessee. As in the cases of Ahmedabad Electricity Company Ltd and Godavari Sugar Mills Ltd. 1992 (4) TMI 29 - BOMBAY HIGH COURT has observed that the basic purpose of an appeal procedure in an income tax matter is to ascertain the correct tax liability of the assessee in accordance with law. Therefore, at both the stages, either by the Appellate Assistant Commissioner or before the Appellate Tribunal, the appellate authority can consider the proceedings before it and the material on record before it for the purpose of determining the correct tax liability of the assessee. They can consider the entire proceedings to determine the tax liability of the assessee. No infirmity in the order of the CIT(A) in considering the claim of the assessee for deduction u/s 80IA in the set aside proceedings, even if the same was more than the originally claimed in the return of income. Computation of deduction - We find force in the contention of the ld. DR that as per the provisions of section 80A(2) of the Act, the claim of deduction under Chapter VIA shall not in any case exceed the gross total income of the assessee. As directed that the claim of deduction u/s 80IA will be allowed to the assessee to the extent of gross total income of the assessee and the assessee will not be entitled to any claim of carry forward of loss resulting from the allowance of claim of deduction u/s 80IA of the Act by the CIT(A) more than the originally claimed. With the above observation, the appeal of the assessee is treated as partly allowed.

Summary

Issues:
The issues involved in this judgment are related to the deduction claimed under section 80IA of the Income Tax Act and the permissible limits of deduction under Chapter VIA in relation to the gross total income of the assessee.

Deduction u/s 80IA Claim:
The Appellate Tribunal heard both appeals together as they involved common issues. The original assessment disallowed the deduction u/s 80IA(4) as conditions were not fulfilled. The Tribunal directed the matter back to the CIT(A) for fresh determination of the claim u/s 80IA. The CIT(A) allowed a higher deduction than originally claimed by the assessee, leading to a loss. The Tribunal had not restricted the deduction to the original claim amount, allowing the CIT(A) to examine all details furnished by the assessee for determining the eligible deduction.

Legal Precedents:
The judgment referred to legal precedents emphasizing that the purpose of an appeal procedure is to ascertain the correct tax liability of the assessee in accordance with law. Appellate authorities have the jurisdiction to consider all proceedings and material on record to determine tax liability. The Bombay High Court held that appellate authorities can entertain additional claims and grounds, even if not raised before the Assessing Officer, to ensure correct tax liability determination.

Limitation on Deduction:
While the CIT(A) was justified in considering the claim for deduction u/s 80IA, it was directed that the deduction should not exceed the gross total income of the assessee as per section 80A(2) of the Act. The assessee would not be entitled to carry forward any loss resulting from a higher deduction allowed by the CIT(A) beyond the originally claimed amount. The judgment applied mutatis mutandis to another identical appeal.

In conclusion, the Appellate Tribunal upheld the CIT(A)'s decision to allow a higher deduction u/s 80IA, subject to the limitation that the deduction should not exceed the gross total income of the assessee. The judgment highlighted the importance of correct tax liability determination and the authority of appellate bodies to consider additional claims for ensuring fairness in tax assessments.