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TMI Blog2019 (12) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... smissed - we are of the opinion that the directions should be given to the CIT(A) to go by the said order of the Tribunal. AO shall grant an opportunity of being heard. Accordingly, Ground Nos. 1 to 4 are allowed for statistical purposes. Disallowance u/s.14A - HELD THAT:- There is no dispute about the earning of the dividend income of ₹ 4.5 Lakhs. It is also a fact that the finance charges were incurred by the assessee as seen from the Profit Loss A/c. Considering the exempt nature of the dividend income, the onus of the assessee is to demonstrate that none of the finance charges were incurred for investments, which yielded the dividend income to the assessee in the year under consideration. The orders of the AO and CIT(A) are not clear about the extent of investments made by the assessee out of the interest bearing borrowed funds. It is also not emanating from the orders about the facts on the sufficiency of non-interest free funds for explaining the dividend yielding investments. Therefore, in all fairness, we are of the opinion that this issue should also be remanded to the file of AO for fresh consideration. Hence, this ground of assessee is treated as allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated as return filed in response to notice u/s.148 of the Act. After that, assessment was completed by the AO. In the re-assessment order, the AO quantified the income at ₹ 24.34 Crores (rounded-off). AO disallowed deductions claimed u/s.80-IA of the Act. 4.1. Aggrieved, the assessee is in appeal before the CIT(A). 5. CIT(A) partly allowed the appeal of assessee. Aggrieved with the same, the assessee filed an appeal before the Tribunal with the following Grounds: 1. The CIT(A) erred in law and facts of the case in not allowing deduction under section 80IA(4)(iv)(b) of the Income Tax Act, 1961. 2. Your Appellant submits that setting up of new transmission or distribution lines is also development of infrastructure and is eligible for deduction under section 80IA of the Income Tax Act, 1961. 3. Your Appellant submits that setting up of new transmission or distribution lines on turnkey basis is not mere works contract, therefore the Explanation to sub-section 13 of section 80IA are not applicable and is eligible for deduction under section 80IA(4)(iv)(b) of the Income Tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e features to be segregated on this deduction u/s 80IA has to be granted and the other agreements which are pure works contracts hit by the explanation section 80IA(13), those works are not entitle for deduction u/s 80IA of the Act. The Profit from the contracts which involves design, development, operating maintenance, financial involvement and defect correction and liability period is to be computed by assessing Officer on pro-rata basis of turnover. The assessing officer is directed to examine the records accordingly and grant deduction on eligible turnover as directed above. . In view of the above directions of the ITAT both irrigation projects as well as Electrical projects are eligible for deduction under section 80IA(4)(i)(c) and 80IA(4)(iv) of the Income Tax Act, 1961. For the Assessment year 2010-11 the CIT(A) as well as the ITAT have denied deduction under section 80IA (4) (vi) (b) the relevant para are: CIT(A) Order pages 9 para 6.5 reads as under: Thus, as far as these two electrical works are concerned, the appellant is not eligible for deduction u/s 80IA(4)(iv)(b), since the appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rojects are extracted and the direction of the ITAT is at 44 8th line reads as under: Therefore, in our considered view, the assessee should not be denied the deduction under section 811A of the Act if the contracts involves design, development, operating maintenance, financial involvement and defect correction and liability period then such contracts cannot be called a simple works contracts to deny the deduction u/s 80IA of Act. in our opinion the contracts which contain above features to be segregated on this deduction u/s 80IA has to be granted and the other agreements which are pure works contracts hit by the explanation section 80IA(13), those works are not entitle for deduction u/s 80IA of the Act. The Profit from the contracts which involves design, development, operating maintenance, financial involvement and defect correction and liability period is to be computed by assessing Officer on pro-rata basis of turnover. The assessing officer is directed to examine the records accordingly and grant deduction on eligible turnover as directed above. . For the Assessment year 2010-11 the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the said decision is honoured by the AO. Further, referring to the allowability of deduction u/s.80IA(4)(i)(c) of the Act, Ld.Counsel for the assessee submitted that the ITAT already taken a view in this regard and consequently, the appeals of the Revenue are dismissed. 7. After hearing both the sides and also considering the decision of the Co-ordinate Bench of the Tribunal in assessee s own case cited supra, we are of the opinion that the directions should be given to the CIT(A) to go by the said order of the Tribunal. AO shall grant an opportunity of being heard. Accordingly, Ground Nos. 1 to 4 are allowed for statistical purposes. 8. Ground No.5 relates to disallowance u/s.14A of the Act. The relevant facts includes that the assessee earned dividend income of ₹ 4.5 Lakhs, which is claimed as exempt. During the re GVPR assessment proceedings, AO noted the claim of interest debit and invoked the provisions of Section 14A of the Act. The assessee relied on the decision of Hon'ble High Court of Gujarat in the case of CIT Vs. Gujarat Industrial Development Corporation Ltd., [128 Taxmann 142] (Guj). Rejecting the same, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, in all fairness, we are of the opinion that this issue should also be remanded to the file of AO for fresh consideration. Hence, this ground of assessee is treated as allowed for statistical purposes. 8.5. In the result, the appeal of assessee for the AY.2011-12 is treated as allowed for statistical purposes. Appeal of assessee for the AY.2012-13: 9. Since the facts of the present case are identical to one as decided by us in ITA No.1017/Hyd/2016, AY.2011-12 (supra) and therefore our findings in the said appeal, mutatis mutandis , would apply to this appeal as well. Hence, this appeal of assessee is also treated as allowed for statistical purposes. Appeals of Revenue for the AYs.2011-12 2012-13: 10. At the time of hearing, both the counsels mentioned that the issue raised in Ground No.2 in both the appeals of Revenue are covered by the common written note given by the assessee in connection with the Ground Nos.1 to 4, raised in assessee s appeals. While dealing with the issues raised in assessee s appeals, we remitted the entire issue to the file of AO only to comply with the existing or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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