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2016 (9) TMI 1306 - AT - Income TaxContribution to State Renewable Fund - allowable expenditure - Held that:- In the earlier year also similar issue arose before the Tribunal and the Tribunal was pleased to delete the disallowance pertaining to assessment year 2007-08 stating that the amount was set apart not for shareholder but it was provided for the benefits of the employees. Addition of prior period expenses - Held that:- The ld. CIT (A) has given a finding of fact that with respect to the Head Office an amount of ₹ 96,08,000/- pertains to reversal of double income booked in F.Y. 2002-03 with respect to maintenance charges. The ld.CIT (A) has given further finding of fact that an amount of ₹ 2,94,25,000/- with respect to the Head Office pertains to wrong entry of interest income in FY 2002-03 & 2003-04 with respect to toll projects on capital deployed by the appellant. This finding of fact is not controverted by the ld. D/R by placing any material on record. We are in agreement with the observations of the ld. CIT (A) that reversal of income wrongly declared in earlier years, is allowable. Hence this ground of the revenue is dismissed. Disallowance of deduction u/s 80IA - Held that:- The assessee has considered only direct operation and maintenance expenses for working out the profits of road and bridge projects for claiming deduction u/s 80IA, as if these projects were automatically set up and running without any strategic planning, management, directions, supervision, marketing support, regular contract awarding, works tendering, control etc. by the head office/branch offices. The administrative, head office and other expenses have a direct nexus with the running of road/bridge projects of the assessee situated at various places and, therefore, the same are deductible on proportionate basis in computing the profits and gains from the eligible business for the purpose of sub-section (1) of Sec. 80IA of the Act. Therefore, the AO observed that a sum of ₹ 13,75,43,459/- is required to be apportioned to 80IA units, accordingly this will be deducted for the purpose of working out deduction under section 80IA of the Act. Thus the AO reduced the allowable deduction accordingly. However, the ld. CIT (A) after considering the submissions of the assessee, restricted the disallowance to ₹ 6,98,93,301/- against ₹ 8,20,34,909/-.The assessee has demonstrated that the authorities below have taken incorrect figure of turnover. Another contention of the assessee is that the amount related to Head Office is already apportioned and, therefore, there was no need for apportionment of the same. We find merit in the contention of the ld. Counsel for the assessee. Therefore, the ground raised in the appeal of the revenue is dismissed. Confirmation of prior period expenses - Held that:- The factum of the contention that the amount is not a prior period expenditure requires verification at the end of the AO whether this income was wrongly booked in earlier years is to be verified by making further enquiry. Therefore, we set aside the order of ld. CIT (A) and restore the matter to the file of the AO for verifying the contention of the assessee that the amount represents reversal of income. In case the AO finds that it is a reversal of income wrongly booked in earlier years, in that event he would delete the disallowance. This ground of the assessee is allowed for statistical purposes. Disallowance of deduction under section 80IA - Held that:- Firstly, the turnover as taken by the AO and the ld. CIT (A) is incorrect. Secondly, the assessee himself has considered the expenditure against the income eligible for deduction under section 80IA. Thirdly, the allocation of head office expenditure as done by the lower authorities is not correct. Therefore, the authorities below were not justified in disallowing the claim of deduction under section 80IA. We find merit in the contention of the ld. Counsel for the assessee. However, the figures are required to be verified from the accounts of the assessee. Therefore, the orders of the authorities below are set aside on this issue. The issue of claim of deduction under section 80IA is restored back to the file of the AO to verify the contention of the assessee as made in the written brief. In case the AO finds that the figures as given in the written brief matches with the books of account of the assessee, he would accordingly recompute the deduction allowable to the assessee. Needless to say that the AO would give sufficient opportunity to the assessee for furnishing the evidences in support of its claim. These grounds of the assessee are allowed for statistical purposes.
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