TMI Blog2010 (1) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount. By accepting the statement of learned AR given at Bar with regard to the approval accorded by COD in respect of all the grounds raised in appeal memo, with reference to the amount disputed in various grounds which corresponds to total amount indicated in COD approval, we proceed further to decide the appeals filed by assessee in respect of AY 1997-98, 1998-99 and 1999-2000. 3. As common issues are involved in all these appeals, we have heard the learned DR and learned AR with respect to all the years involved and are now deciding the same by this consolidated order. 4. In all the years, common grounds have been raised by the assessee with regard to disallowance of claim of deduction u/s 80HH, 80-I and 80-IA of the IT Act. Learned AR placed on record the order of the Tribunal in assessee s own case for the AY 1996-97, 1992-93 1993-94 which has dealt with the very same issue of deduction u/s 80HH/80I/80IA of the IT Act. Contention of learned AR was that the Tribunal has restored the issue for deciding afresh to the file of the AO, therefore issue in respect of deductions claimed during the years under consideration may also be restored to the file of the AO for cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any other evidence to support its case before him. The AO shall examine the entire process of manufacture in relation to this in the light of entire relevant material including the evidence adduced by the assessee. It may be pointed out that both the parties have agreed for adopting this course. 9. In view of the above, in the interest of justice, we set aside the order of the learned CIT(Appeals) and restore the matter back to the file of AO for deciding the claim of deduction u/s 80-HH, 80-I and 80-IA in the light of observations made above and after duly considering the entire material on record including the other evidence to be filed by the assessee before him. Ground Nos.1 2 are therefore decided accordingly. 7. We found that the issue with regard to claim of deduction u/s 80HH/80I/80IA has been restored to the file of the AO, respectfully following the order of the Tribunal, the matter is restored back to the file of the AO for deciding afresh assessee s claim of allowability of deduction u/s 80HH/80I/80IA of the IT Act. 8. Next grievance of the assessee relates to disallowance of expenditure incurred on horticulture. The allegation of the AO was that these ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. On perusal of Note 4 to the computation of income, the assessee has submitted that Spie Capag was the supplier of its HBJ pipeline system. On perusal of the order u/s 143(3) for AY 1994-95, it was seen that the investment allowance claimed by the assessee had been disallowed on the grounds that the provisions of Section 32A are not applicable to enhanced cost of the asset, after its installation. By the impugned order, CIT(A) confirmed AO s action against which assessee is in further appeal before us. 11. Rival contentions have been heard and record perused. Contention of learned AR was that in respect of plant machinery installed in the year 1989-90, bill for additional cost has been raised by the supplier equivalent to approximate value of ₹ 400 crores and which was settled after great deal of negotiations at ₹ 99 crores. This additional cost has increased the original cost of plant machinery and since the same was eligible for investment allowance, the additional cost so incurred was also stated to be eligible for investment allowance. He further contended that even though in the earlier years the eligible amount of investment allowance on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnish details of the additional cost so finally settled between the supplier for deciding the actual additional cost so incurred. AO is to recompute the eligible amount of investment allowance. AO is to verify the other conditions for eligibility of claim of investment allowance before allowing the same. Assessee is directed to furnish the required documents as per provisions of Section 32A of IT Act. We direct accordingly. 15. Ground Nos.7, 8 11 were not pressed by the learned AR, therefore same are dismissed in-limine. 16. In AY 1997-98, the assessee has alleged disallowance of ₹ 1,70,09,450/- u/s 43B. 17. Facts in brief are that assessee has paid incentive to the workers which was linked to the productivity achieved by the workers as per MoU target fixed by the government. However, the AO treated the same as in the nature of bonus, therefore disallowed the same u/s 43B. The AO observed that as per Annexure 15 of the tax audit report, these amounts were not paid during the previous year. Contention of learned AR was that the amount so paid was in the nature of incentive based on higher productivity achieved by workers, therefore not hit by provisions of Section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied the proposition of law laid down in the case of Tuticorin Alkali Chemicals (supra) wherein it was held that surplus funds which were not immediately required for deployment during the phase of setting up of plant and deposited in fixed deposits, interest income out of such fixed deposits was held to be chargeable to tax under the head income from other sources. However, in the instant case before us, it is not the case of the AO that assessee company was having surplus funds which were deposited into the bank account and on which interest income had been generated. Proposition with regard to the income earned on account of interest and miscellaneous income during the implementation of the project has been considered by the Hon'ble Supreme Court in the case of Bokaro Steels 236 ITR 315 and Karnal Cooperative Sugar Mills 243 ITR 2. In the case of Bokaro Steels (supra), the company earned interest from advance to the contractors by the assessee for the purpose of facilitating the work of construction and it was held by the Hon'ble Supreme Court that such receipt was directly connected with or incidental to the work of construction of plan undertaken by the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee which pertains to the projects under implementation will go to reduce the capital work in progress and the same cannot be assessed as income from other sources. Agreeing with the learned AR, we are inclined to reverse the findings and conclusions of the lower authorities and direct the AO to allow netting of such income against the project expenditure as claimed by the assessee. We direct accordingly. 24. Next grievance in AY 1997-98 pertains to disallowance of interest expenditure of ₹ 13,07,71,000/- alleged to be pertaining to the prior period. 25. With regard to disallowance of ₹ 13,07,71,000/- alleged to be as interest expenditure pertaining to the prior period, the contention of learned AR was that this income has already been offered by the assessee in AY 2007-08, therefore the department should have allowed the assessee s claim for deduction on account of interest expenditure pertaining to the earlier year. 26. We have considered the rival contentions, from the orders of the lower authorities, we found that no documentary evidence with regard to actual incurring of interest expenditure was placed before the AO. Contention of the assessee be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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