Case Number: ITA 1507/DEL/2019
Appellant: Addl. CIT, Special Range-4, New Delhi
Respondent: IRCON International Ltd., New Delhi
Assessment Year: 2015-16
Result: 2015-16
Case Filed On: 2019-02-22
Order Type: Final Tribunal Order
Date of Order: 2023-04-20
Pronounced On: 2023-04-20
Bench: Delhi Bench ‘C’, New Delhi
Members: Shri Shamim Yahya (Accountant Member) and Shri Anubhav Sharma (Judicial Member)
This case involves the appeal filed by Addl. CIT, Special Range-4, New Delhi against the order of the Commissioner of Income-Tax (Appeals), New Delhi, for the assessment year 2015-16. The primary issue is the dispute over disallowance of deductions and additions made by the Assessing Officer.
The appellant, IRCON International Ltd., New Delhi, is a Government of India undertaking engaged in the execution of civil engineering and electrical turnkey contracts in India and abroad. The company filed its return of income declaring an income of Rs. 341,15,89,440 on 18/11/2015. The case was selected for scrutiny based on the Manual Compulsory Guidelines of CBDT, and a notice under Section 143(2) of the Income Tax Act, 1961 was issued.
The Assessing Officer (AO) made several disallowances and additions, including disallowance of deduction under Section 80IA of the Act, disallowance of provision for maintenance, and addition of global income earned from Malaysia and Sri Lanka. The AO also made a disallowance under Section 14A read with Rule 8D and an addition on account of delay in deposit of provident fund contribution of employees.
During the hearing on 25/01/2023, both the assessee and the Revenue presented their arguments. The Tribunal examined the case details and previous judgments in similar cases involving the assessee.
The AO disallowed the deduction claimed under Section 80IA, arguing that the agreement with the Rail Coach Factory, Rae Bareli, was merely for work contracts and not for the development of infrastructure facilities. The CIT(A) deleted the addition, following the Tribunal’s order in the assessee’s own case for AY 2000-01. The Tribunal upheld the CIT(A)’s decision, stating that the assessee is entitled to the deduction under Section 80IA.
The AO disallowed the provision for maintenance expenses, considering it an unascertained liability. The CIT(A) deleted the addition, noting that the provision was made based on past experience and contractual obligations. The Tribunal upheld the CIT(A)’s decision, citing previous Tribunal orders in favor of the assessee.
The AO added the global income earned from Malaysia and Sri Lanka, arguing that under the existing DTAA, India has adopted the credit method. The CIT(A) sustained the addition under normal provisions but deleted it under MAT provisions. The Tribunal upheld the CIT(A)’s decision, following previous Tribunal orders in the assessee’s favor.
The AO made a disallowance under Section 14A read with Rule 8D, which was partially sustained by the CIT(A). The Tribunal reduced the disallowance to Rs. 1.50 crores, following the Delhi High Court judgment in the case of M/s ACB India Vs. ACIT.
The AO added the amount of provident fund contribution deposited beyond the due date. The CIT(A) deleted the addition, following the Delhi High Court judgment in CIT vs. AIMIL Ltd. The Tribunal upheld the CIT(A)’s decision.
The AO disallowed the advances written off, arguing that they were not booked as revenue in any earlier year. The CIT(A) partly allowed the ground, deleting the disallowance to the extent of Rs. 29.23 lakhs and confirming Rs. 67.72 lakhs. The Tribunal upheld the CIT(A)’s decision.
In view of the above, the Tribunal accepted the CIT(A)’s decisions on all grounds, with minor modifications. The Tribunal emphasized the acceptance of the previous Tribunal orders and High Court judgments in similar cases.
In the result, the appeals filed by Addl. CIT, Special Range-4, New Delhi, and IRCON International Ltd., New Delhi, were partly allowed. The Tribunal upheld the CIT(A)’s decisions, providing clarity on the disputed deductions and additions.
Decision: Appeal partly allowed.
Signed by: Shri Shamim Yahya (Accountant Member) and Shri Anubhav Sharma (Judicial Member)
Date: 20.04.2023
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