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TMI Blog2013 (10) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... . The CIT(A) has erred in law and facts and circumstances of the case holding the assessee as eligible for deduction u/s.80IA(4) of the Act. 2. The CIT(A) has erred by deviating from his own order in the same case for earlier years wherein he has upheld the order of AO rejecting claim of deduction. 3. The CIT(A) has erred in facts considering "Developer" and "Contractor" as synonyms. 4. The CIT(A) has erred in facts relying on a decision in the case of ABG Heavy Engineering which is not applicable in the present case. 5. The CIT(A) has erred in facts in ignoring the instruction No.3 of 2008 giving clarification in respect of the provisions of the Finance Act, 2007 wherein clarification in respect of "developer and contractor" is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07 being ITA Nos. 766/PN/2009, 254/PN/2008, 431/PN/2007 and 435/PN/2007. The Ld. CIT(A) also relied on the decision of the Hon'ble High Court of Bombay in the case of ABG Heavy Engg. Ltd. Vs. CIT (2010) 37 DTR (Bom) 233. The operative part of the order of Ld. CIT(A) is as under: I have perused the submission of the appellant and relevant order of the Hon'ble Tribunal. I find that the disallowance of deduction u/s. 80IA(4) of the Act made by the A.O. for A. Y, 2003- 04 to 2006-07, which was confirmed by CIT(A), was allowed by Hon'ble ITAT, Pune Bench, Pune in favour of the appellant in the above referred order of the Hon'ble Tribunal. While deciding the issue, the Hon'ble Tribunal relied on the judgment of Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ground Nos. 1 to 5. 4. So far as Ground No. 6 is concerned, the grievance of the assessee is deleting the addition made by the Assessing Officer by invoking the provisions of Sec. 14A of the Income-tax Act to the extent of Rs. 3,00,558/-. The Assessing Officer has noted that the assessee company has invested Rs. 90,00,000/- in the shares of M/s. Dimension Construction Pvt. Ltd. The Assessing Officer sought the explanation of the assessee. The assessee stated that the said company is a subsidiary of the assessee company and the investment made by the assessee company is for the purpose of business and hence, will not come within the purview of Sec. 14A. The assessee also contended that the investment to the extent of Rs. 90,00,000/- is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon'ble Court that "the provisions of Rule 8D of the I. T. Rules have been inserted by IT (Fifth Amendment) Rules 2008, which were notified to come in to force on 24.3.2008. Law which would apply to an assessment year is the law prevailing on the first day of April. Consequently, Rule 8 D is applicable w.e.f. the assessment year 2008-09 and not retrospective." In view of the above decision of Hon'ble Bombay High Court, it is crystal clear that while working out the disallowance u/s 14A of the I. T. Act, Rule 8D cannot be made applicable for the A. Y.2007-08 and earlier assessment years. In the present case, the assessment year involved is A. Y. 2007-08, and therefore, the A. O. was not justified in applying the Rule 8D of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur 2,40,53,975/- 4,50,000/- 3 Materials 24,90,97,890/- 1,50,000/- Total 10,50,000/- 8. The disallowance was made by the Assessing Officer on the reason that the assessee could not justify the said claim of expenditure in full. The assessee carried the issue before the Ld. CIT(A) but without success. 9. We have heard the parties and perused the order of the Ld. CIT(A). Ld. CIT(A) confirmed the additions by giving following reasons: "I find that though the addition made by the A.O. was on ad hoc basis, without specifying any defects in the books of account, it is also seen that the appellant admitted that he could not substantiate each & every vouchers/bills made by A.O. on test check basis and the appellant has agreed to a disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from export for the purpose determined the exemption u/s. 10A. In the said case, disallowance of the PF/ESIC payments had been made because of the statutory provisions i.e. Sec. 43B which was in respect of employer's contribution and Sec.36(1)(v) r.w.s. 2(24) (x) in the case of employee's contribution which have been deemed to be the assessee's income. The Hon'ble High Court held that the disallowance was added back by the Assessing Officer which has increased in the business profits of the assessee and exemption u/s. 10A is allowable with reference to such enhanced income. We, therefore, following the principles laid down by the jurisdictional High Court in the case of Gem Plus Jewellery India Ltd. (supra) allow the plea of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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