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TMI Blog2017 (11) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of lease expenses Claim of deduction u/s 80IA - Held that:- D.R. had not been able to dislodge the observations of the CIT(A) on the basis of which the claim of deduction raised by the assessee u/s 80IA had been allowed by the CIT(A) subject to certain modifications. We thus not finding any infirmity with the order of the CIT(A), therein uphold the view taken by him as regards the entitlement of the assessee towards claim of deduction u/s 80IA. - ITA No. 3376/Mum/2012 - - - Dated:- 27-10-2017 - SHRI G.S. PANNU, AM AND SHRI RAVISH SOOD, JM For The Revenue : Shri R.P. Meena, D.R For The Assessee : None ORDER PER RAVISH SOOD, JUDICIAL MEMBER: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-5, Mumbai, dated 22.02.2012, which in itself arises from the order passed by the A.O u/s 143(3) of the Income-tax Act,1961 (for short Act ), dated 26.03.2002. The revenue assailing the order passed by the CIT(A) had raised before us the following grounds of appeal:- 1. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in directing the AO to allow the expenditure of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the volumes involved. That pursuant to the aforesaid arrangement as certain time gap would be involved in taking of the ALMS by the assessee on lease from the aforementioned finance companies and sub leasing of the same to the State Electricity Boards, therefore, though the lease rent would be payable by the assessee on the said ALMS, however, the income from sub leasing the same to the State Electricity Boards would accrue only on the installation and commissioning of the said assets. The assessee would though debit the lease rent on the ALMS on the basis of Matching Principal, but would claim the same as an expenditure arising out of contractual liabilities and payments made in its return of income. The assessee during the year on the aforesaid basis claimed in its return of income an amount of ₹ 9,18,23,408/- as deduction on account of lease rent payable/paid, as the said amount had accrued and was payable as per the agreements. The A.O however not finding favor with the aforesaid claim of the assessee disallowed the same by holding a conviction that in view of the provisions of Sec. 145 of the Income Tax Act, 1961, the regular method of accounting followed should be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o those involved in the case of the assessee for A.Y. 1997-98 and A.Y. 1998-99, therefore, following the order of his predecessor, which had been approved by the Tribunal, therein deleted the disallowance of ₹ 9,18,23,408/- made by the A.O. 6. The assessee further assailed the restricting of the entitlement towards deduction u/s 80IA to an amount of ₹ 18,25,79,005/- instead of ₹ 23,00,48,370/- raised by the assessee. It was submitted by the assessee that on the very same basis on which the entitlement of the assessee towards claim of deduction under Sec. 80IA had been restricted by the A.O during the year under consideration, viz. reduction of the eligible profit on account of royalty as well as reduction on account of allocation of expenses, the said claim of deduction raised by the assessee u/s 80IA was reduced by the A.O in its case for A.Y. 1997-98 and A.Y. 1998-99. It was submitted by the assessee that on appeal the CIT(A) had set aside the restricting of the entitlement of the deduction raised by the assessee u/s 80IA while disposing of the appeals for A.Y. 1997-98 and A.Y. 1998-99, as a result whereof the consequential addition was deleted. The CIT(A) af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A) taking cognizance of the fact that a similar disallowance of the lease rent expenditure made by the A.O while framing the assessment in the case of the assessee for A.Y. 1997-98 and A.Y. 1998-99 had been vacated by his predecessor, which thereafter had been approved by the Tribunal, viz. ITAT, Mumbai Bench I , which vide its consolidate order dated 04.04.2008 in ITA No. 3599/Mum/2002 for A.Y. 1997-98 and ITA No. 3600/Mum/2002 for A.Y. 1998-99 had deleted the addition by observing as under : 9. We have duly considered the rival contentions and gone through record carefully. The A.O has not doubted the transaction. His expectation is that assessee should have shown corresponding income to the expenses. According to the assessee it has incurred expenses over the income in the initial years but ultimately it earned profit from this transaction. It is a settled position that for allowing business expenses it is not necessary that the business should have produced corresponding income. The expenses is to be allowed if it is established that they are incurred for the purpose of the business. In this case the object and the incurrence of the expenses is not in doubt. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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