The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the deduction under Section 80I of the Income Tax Act 1961 should be construed liberally as the intention of the legislature was the promotion of growth and development of infrastructure.
The assessee,PNP Maritime Services Pvt. Ltd was engaged in the business of operating and maintenance of a port developed by the assessee in Alibaug by the name Dharamtar PNP Jetty. The assessee filed its return of income dated 01.10.2010, declaring total income and book profit under Section 115JB of the Income Tax Act.
The assessee’s case was selected for scrutiny. Later the assessee’s case was reopened under Section 147 of the Income Tax Act vide notice under Section 148 for the reason that the deduction claimed under Section 80IA(4) of the Income Tax Act had escaped assessment.
The A.O. passed the assessment order dated 27.12.2017 under Section 143(3) read with Section 147 of the Income Tax Act by determining the total income and book profit under Section 115JB of the Income Tax Act where the A.O. disallowed the port rent charges on the ground that it does not have a direct and first degree nexus with the business activity of running and maintaining the port.
Neha Patel on behalf of the assessee submitted that the A.O. for earlier years had allowed the said deduction and there was no change in circumstances for this year.
H. M. Bhatt, on behalf of the revenue submitted that the activity of earning port rental charges were not directly related to the activity of running and maintaining of the port.the principle of res judicata was not applicable for income tax proceeding and that the Commissioner of Income Tax Appeals (CIT(A)) had merely relied on the earlier orders where the claim of the assessee had been allowed.
The two-member Bench of PRASHANT MAHARISHI, (Accountant Member) and KAVITHA RAJAGOPAL, (Judicial Member) noted that the CIT(A) had placed reliance on the earlier assessment order of the assessee for about nine years where the said claim of the assessee was allowed by the A.O.
The A.O. had also failed to establish that the claim of the assessee was not eligible for deduction as per the scheme of Section 80IA of the Income Tax . There had also been no change in facts during the impugned year which was brought on record by the A.O.
The Bench dismissed the appeal filed by revenue relied on the decision of the Bombay High Court in the case of CIT vs ABG Heavy Industries Ltd wherein it was held that in case of deduction claimed under Section 80IA of the Income Tax Act the intention of the legislature was to promote growth and development of infrastructure which had to be construed liberally.
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