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TMI Blog2022 (7) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming its deduction against non-80IB(10) projects notwithstanding the fact that there was no revenue from 80IB projects for the year under consideration. Non-availability of profits from 80IB projects would not per se make the assessee entitled to deduction against profits from non-80IB projects. It is, therefore, held that the VAT should be allowed as deduction only in the Profit and loss account of 80IB(10) projects which would lead to the corresponding increase in the closing work-in-progress thereof as there was no revenue under this stream for the year. Thus, the closing figure of work-in-progress in the 80IB(10) projects would increase by the sum on Rs.1.13 crore. However, income for the year under consideration from non-80IB(10) projects, which is otherwise chargeable to tax and not eligible for the deduction, would increase accordingly as the amount of VAT paid and claimed as deduction therein shall get disallowed on moving to the Profit and loss account of 80IB(10) projects. Whether Disallowance u/s.14A cannot be countenanced because deduction is admissible under 80IB(10) projects and the assessee admittedly did not have any income from such projects? - As the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which no benefit of deduction under section 80IB(10) is available [non-80IB(10) projects]. It also made separate Profit and loss accounts and Balance sheets in respect thereof. During the year under consideration, the assessee showed to have paid VAT of Rs.1,13,42,282/- relating to the period 2006 to 2010. Deduction of such an amount was claimed in the Profit and loss account of non-80IB(10) projects. On a specific query, the assessee admitted that the VAT of earlier years paid during the year pertained to 80IB(10) projects. The AO thus observed that the VAT pertaining to 80IB(10) projects was wrongly claimed as deduction in the Profit and loss account of non-80IB(10) project. The Assessing Officer (AO) further held that, in any case, the amount of VAT paid by the assessee relating to the earlier years could not be allowed as deduction in the current year as the same was an expenditure of prior period. Considering all these facts, he made disallowance of Rs.1.13 crore. The AO also invoked section 14A of the Act and made out a case that disallowance u/s.14A was called for as the assessee s income from 80IB(10) projects was eligible for deduction. The assessee s contention that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r non-80IB(10) projects. Admittedly, the VAT paid by the assessee pertains to 80IB(10) projects. As such, there is no question of claiming its deduction against non-80IB(10) projects notwithstanding the fact that there was no revenue from 80IB projects for the year under consideration. Non-availability of profits from 80IB projects would not per se make the assessee entitled to deduction against profits from non-80IB projects. It is, therefore, held that the VAT should be allowed as deduction only in the Profit and loss account of 80IB(10) projects which would lead to the corresponding increase in the closing work-in-progress thereof as there was no revenue under this stream for the year. Thus, the closing figure of work-in-progress in the 80IB(10) projects would increase by the sum on Rs.1.13 crore. However, income for the year under consideration from non-80IB(10) projects, which is otherwise chargeable to tax and not eligible for the deduction, would increase accordingly as the amount of VAT paid and claimed as deduction therein shall get disallowed on moving to the Profit and loss account of 80IB(10) projects. 6. The alternative view point of the AO for making disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- towards negative balance in capital account of Mr. S.K. Kotkar. He further computed the disallowance of interest in respect of advances given to other parties, namely, Anuj Developers; Balasaheb Babab Manmode and Vinayak Mahadev Nimhan. In all, the disallowance of interest was computed at Rs.71.47 crore. Such an amount was accordingly reduced from the work-in-progress of Rs.70.50 crore. The ld. CIT(A) took note of clause 9 of the Partnership deed of the assessee-firm regulating the payment of interest providing that if there is debit balance in the account of any partner, interest at the same rate shall be charged as will be paid on the credit balance of the partners. The ld. CIT(A) changed the complexion of disallowance of interest as made by the AO to the amount of interest income which ought to have been earned by the assessee-firm from Mr. S.K. Kotkar on account of debit balance. In view of the fact that the net interest which ought to have been charged by the assessee from Mr. S.K. Kotkar was at Rs.13.54 lakh, he sustained the disallowance at his level. Aggrieved thereby, the assessee has come up in appeal before the Tribunal. 10. I have heard the rival submissions and p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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