TMI Blog2022 (1) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... gible for deduction u/s 80IA as it is not directly linked to the eligible business but only comes into operation due to statutory provision. He relied on the decision of the Hon ble Supreme Court in the case of Liberty India Vs. CIT [ 2009 (8) TMI 63 - SUPREME COURT] - Therefore, we find no reason to interfere with the decision and CIT(A) and upholding the same, we dismiss the grounds raised by the assessee on this count. - ITA Nos. 608 And 609/Hyd/2020 And ITA Nos. 635 And 636/Hyd/2020 - - - Dated:- 11-1-2022 - Shri Satbeer Singh Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Assessee : Shri P. Murali Mohan Rao For the Revenue : Shri Rajendra Kumar ORDER PER L.P. SAHU, A.M.: These are the cross appeals filed by the assessee as well as revenue are directed against CIT(A) - 12, Hyderabad s separate orders dated 31/08/2020 for AYs 2012-13 2013-14 involving proceedings u/s 143(3) r.w.s. 153A of the Income Tax Act, 1961 ; in short the Act. ITA No. 608/Hyd/2020 for AY 2012-13 2. Briefly the facts of the case are that the assessee filed its return of income for the AY 2012-13 on 29/09/2012 declaring total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tractors are treated as inflation of expenditure by the assessee in the name of subcontractors. The total of such cash withdrawals comes to ₹ 5,45,60,000/- which is treated as inflated expenditure in the hands of the assessee and added to the total income of the assessee, 6. The CIT(A) upheld the addition made by the AO by holding that the modus operandi of inflating expenses by way of bogus sub-contract payments was detected and the assessee used its confidante persons and other concerns to make inflated sub-contract payments and withdrawing the surplus funds made through its trusted employees. 7. Before us, the ld. AR of the assessee submitted that the AO has made the addition on the ground that the assessee has inflated its expenditure by way of payments to sub-contractors and, therefore, the same was disallowed u/s 37(1) of the Act. He submitted that the addition made under the head profits and gains from business or profession . He, therefore, submitted that the addition made by the AO is covered by the CBDT Circular No. 37/2016, dated 2nd November, 2016 that the assessee is eligible for deduction u/s 80 IA of the Act. He, therefore, contended that the CIT(A) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serve that search was conducted on the assessee and its group cases on 04/03/2011 and further search was conducted on 07/03/2011 as per para No. 6 of the assessment order and the statements recorded by the search team, which have been recorded by the AO in his order. For deciding the issue before us, first we have to see the assessment order on the basis of which the additions made by the AO as per para 11, which is reproduced below for the sake of clarity: 11. During the previous year relevant to the AY 2007-08, it is observed that an amount of ₹ 50 lakhs was withdrawn from the bank account of M/s Maa Highways maintained at Axis Bank, Begumpet, Greenlands by Sri Raju Magrulkar vide Instrument No. 914303. In light of the detailed narrations in the preceding paragraphs, this amount of ₹ 50 lakhs is treated as inflated expenditure by way of subcontract payments. Accordingly, the same is added. 9.1 The basis for making the addition as noted above, the AO has made the addition only on the basis of inflated expenditure by way of subcontract payments, which is in the nature of disallowance u/s 37(1) of the Act. On the above order of the AO, we find that nowhere me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ualify for deduction under section 80-IB of the Act. This view was taken by the courts in the following cases: 1 Income-tax Officer-Ward 5(1) v. Keval Construction [2013] 33 taxmann.com 277 (Guj.) 2 Commissioner of Income-tax-IV, Nagpur v. Sunil Vishwambharnath Tiwari [2016] 63 taxmann.com 241 (Bom.) (ii) If deduction under section 40A(3) of the Act is not allowed, the same would have to be added to the profits of the undertaking on which the assessee would be entitled for deduction under section 80-IB of the Act. This view was taken by the court in the following case: Principal CIT, Kanpur v. Surya Merchants Ltd. [2016] 72 taxmann.com 16 (All.). The above views have attained finality as these judgments of the High Courts of Bombay, Gujarat and Allahabad have been accepted by the Department. 3. In view of the above, the Board has accepted the settled position that the disallowances made under sections 32, 40(a)(ia), 40A(3), 43B, etc. of the Act and other specific disallowances, related t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to the issue of disallowance u/s 14A, which is raised as ground No. 11, the AO noticed from the balance sheet of the assessee that the assessee had made investments in equity shares for an amount of ₹ 1,14,423.26 lakhs in the subsidiary companies. Further, he noticed that the assessee had given long term loans/advances to group companies which total upto ₹ 14,543.59 lakhs. Further, the assessee had given another loan of ₹ 2385.39 lakhs to M/s madhucon Granites Ltd. From the details submitted by the assessee, the AO observed that most of the loans/advances given to the group companies are interest free loans, against interest bearing loans of ₹ 384151.93 lakhs taken from various banks and non banking financial institutions. Besides there were short term borrowings from various banks amounting to ₹ 38227.18 lakhs. Considering all the facts, the AO asked the assessee to explain as to why the provisions of section 14A should not applicable to the assessee. After considering the assessee s reply and relying on various case laws, the AO disallowed an amount of ₹ 50,26,69,200/- u/s 14A of the Act. 11. The CIT(A) after relying on various cases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80lA of the Act. (c) Without prejudice, CIT(A) ought to have appreciated the fact that MAT credit of ₹ 2,48,96,334/- cannot be added to the total income of the assessee. 3. Tne appellant may, add or alter or amend or modify or substitute or delete and / or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal. ` 17. The CIT(A) confirmed the addition by observing as under: 5.14 Other income of ₹ 25,394,320/-: It is seen that the same comprises of two elements. One is of MAT credit for A.Y. 2012-13of ₹ 2,48,96,334/- and second is of sundry incomes that are part of contractual obligations amounting to ₹ 4,97,986/-. These sundry incomes are in the nature of income received from the sales, loading charges and comprises large number of small incomes which are directly linked to the execution of eligible projects. Therefore the other incomes of ₹ 4,97,986/- is held to be eligible for deduction u/s. 8OIA. However, MAT credit is held not to be eligible for deduction u/s. 80lA as it is not directly linked to the eligible business but only comes into operation due to statutory provision. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s. 80lA of the Act. The facts of the case for the appeal under consideration are identical to the preceding years and the claim of deduction u/s. 80lA of the Act is made on the same infrastructural projects which were claimed and allowed in the preceding and succeeding years. Nothing has been brought on record to establish that the projects undertaken by the appellant during the AY under consideration were different from the projects undertaken in preceding or succeeding years. Nothing to this effect has been brought out by the AO during remand proceedings also. 23. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The CIT(A) allowed the claim of the assessee following the decision of his predecessor in assessee s own case for earlier AYs. Before us, the ld. DR has not brought any contrary decision in this regard. Therefore, we uphold the order of CIT(A) and dismiss the ground raised by the revenue on this issue in both the appeals under consideration. 24. In the result, both the appeals of the revenue are dismissed. 25. To sum up, appeal in ITA No. 608/Hyd/2020 is partly al ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
