TMI Blog2019 (1) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... n and its distribution. Since the authorities below have not disputed any other parameters of eligibility criteria, we are of the considered opinion that the assessee is eligible to claim deduction under section 80IA(4)(iv) of the Act. The orders of authorities below and direct the Assessing Officer to allow the deduction claimed by the assessee. Thus, the ground raised by the assessee is allowed. Disallowance of infrastructure development charges and erection & commission charges as well as transmission and wheeling charges under section 40(a)(ia) - Held that:- As per the remand report dated 08.09.2016, the AO has clarified that the impugned payments were prior to commissioning of the windmill and the amounts have been capitalized. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and on facts by disallowing the transmission and wheeling charges under section 40(a) of the Income-tax Act, 1961. 5. The Ld. AO and Ld. CIT(A) failed to note that the expenditure relating to erection, commissioning and infrastructural charges ( Impugned expenditure ) were not claimed as deduction and had only been capitalized in the accounts. 6. The Ld. AO and Ld. CIT(A) failed to note that the Appellant had not claimed the impugned expenditure as deduction while computing the total income and therefore provisions of section 40(a)(ia) of the Income-tax Act, 1961 would not apply. 7. The Ld. AO and Ld. CIT(A) failed to note that section 40 of the Income-tax Act, 1961 applies only to those items of the expenses which are co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctricity Board made at Tirunelveli on 15.10.2007 in favour of Khivraj Motors P. Ltd. Since the partnership firm is neither a company nor consortium of companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act as required under clause (i) of section 80IA(4) of the Act, the deduction claimed by the assessee was rejected, which was confirmed by the ld. CIT(A). While confirming the addition, the ld. CIT(A) relied on the decision of the Tribunal in the case of Eahwarnath Constructions v. ACIT [2013] 32 taxmann.com 130 (Chennai-Trib), wherein, it was held as under: In our opinion, an assessee while claiming deduction has to satisfy all conditions in sub-section 4(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent case because of the specific substitution of applicability clause (iv) to section 80IA(4) of the Act, which reads as under: (iv) an [undertaking] which,- (a) is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on the 1st day of April, 1993 and ending on the 31st day of March, 2017; (b) starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on the 1st day of April, 1999 and ending on the 31st day of March, 2017; Provided that the deduction under this section to an undertaking under sub-clause (b) shall be allowed only in relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of authorities below and direct the Assessing Officer to allow the deduction claimed by the assessee. Thus, the ground raised by the assessee is allowed. 4. The next ground raised in the appeal of the assessee relates to confirmation of disallowances of infrastructure development charges and erection commission charges as well as transmission and wheeling charges under section 40(a)(ia) of the Act. 4.1 On verification of the details submitted by the assessee, the Assessing Officer noticed that during the financial year 2010-11, the assessee has paid Infrastructure Development charges at ₹.17,25,000/- each to TANGEDCO Ltd. in respect of two WTG (600KWT) commissioned and ₹.18,00,000/- towards erection and commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer has clarified that the impugned payments were prior to commissioning of the windmill and the amounts have been capitalized. Further, in the remand report, the Assessing Officer has stated that a perusal of the Profit and Loss statement shows that the impugned payment has not been claimed as revenue expenditure by assessee, but capitalized as evident from the depreciation schedule. The provisions of section 40(a)(ia) of the Act is applicable only when the assessee has claimed an expenditure and no disallowance can be made under section 40(a)(ia) of the Act, if the payments were not claimed as an expenditure. In view of the above, both the disallowances made by the Assessing Officer under section 40(a)(ia) of the Act and co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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