M/S. APCO INFRATECH PVT. LTD.,,LUCKNOW vs. ACIT-I, LUCKNOW

ITA 357/LKW/2020Status: DisposedITAT Lucknow02 April 2025AY 2017-1870 pages
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What did the Tribunal hold?

The Tribunal decided the issues as follows: Regarding the eligibility of interest income for deduction under Section 80IA(4) (Issue 1), the Tribunal found no infirmity in the CIT(A)'s order and declined to interfere, deciding the issue in favor of the assessee. This applied to AY 2016-17 and was extended to AY 2018-19, as no distinguishing facts or precedents were presented by either side. The appeals of the Revenue (ITA No. 623/Lkw/2024) and the Cross Objection of the assessee (C.O. No. 01/Lkw/2025) were treated as dismissed for statistical purposes, while the appeals of the assessee (ITA No. 356/Lkw/2020 and 357/Lkw/2020) were treated as allowed. Regarding the issue of bogus purchases (Issue 9), the Tribunal noted that purchases from M/s Vishwambhar Enterprises Ltd. were supported by bills, payments were made through banking channels, and royalty was paid. The Tribunal relied on the Gujarat High Court's decision in Principal Commissioner of Income Tax, Surat-1 v. Tejua Rohitkumar Kapadia, holding that the AO was not justified in treating the purchases as bogus. Consequently, the addition of Rs. 9,03,52,576/- was deleted, and the grounds of appeal were allowed. The Tribunal also noted that as it decided the issues on merits, the technical and other remaining grounds (Issues 2, 3, 4, 5, 6, 7, 8, 10) became academic and did not require a decision. The appeals of the Revenue (ITA No. 454/Lkw/2020 and 453/Lkw/2020) were treated as dismissed. The appeal of the assessee (ITA No. 17/Lkw/2024) was treated as partly allowed. The operative directions were to allow the assessee's appeals ITA No. 356/Lkw/2020 and 357/Lkw/2020, partly allow ITA No. 17/Lkw/2024, dismiss the Revenue's appeals ITA No. 453/Lkw/2020 and 454/Lkw/2020, and dismiss the Cross Objection C.O. No. 01/Lkw/2025 for statistical purposes.

What were the facts?

The appeals and cross-objection concern M/s APCO Infratech Pvt. Ltd. (the assessee) and the Dy./A.C.I.T. (the revenue) for assessment years 2016-17, 2017-18, and 2018-19. The appeals challenge orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The primary disputes revolve around the eligibility of interest income for deduction under Section 80IA(4), additions made under Section 143(3), issues of limitation, validity of notices under Section 143(2), and disallowances under Section 14A read with Rule 8D. One appeal also concerns the deletion of additions for alleged bogus purchases amounting to Rs. 9,03,52,576/-.

What were the issues?

The Tribunal had to decide the following issues: 1. Whether interest income to the extent of Rs. 31,64,147/- (for AY 2018-19), Rs. 14,61,685/- (for AY 2016-17), and Rs. 30,89,939/- (for AY 2017-18) is an eligible receipt for deduction under Section 80IA(4) of the Income Tax Act, 1961. - Assessee's contention: The CIT(A) erred in law and facts by deciding the issue of interest income as eligible for deduction under Section 80IA(4), relying on inapplicable Supreme Court judgments, while other judgments favored the assessee. - Revenue's contention: Not recorded. 2. Whether additions under Section 143(3) could be made against returned income when glaring mistakes in Section 143(1) adjustments were brought to the Assessing Officer's (AO) notice. - Assessee's contention: The CIT(A) erred in law and facts by not dealing with this issue. - Revenue's contention: Not recorded. 3. Whether the assessment orders were bad in law due to being barred by limitation. - Assessee's contention: The CIT(A) erred in failing to appreciate that the assessment orders were barred by limitation. - Revenue's contention: Not recorded. 4. Whether the assessment orders were illegal and bad in law due to jurisdictional notices under Section 143(2) not being issued by a competent officer or being time-barred. - Assessee's contention: The CIT(A) erred in law by failing to appreciate that the notices under Section 143(2) were not issued by a competent officer or were time-barred. - Revenue's contention: Not recorded. 5. Whether the CIT(A) passed orders without providing the assessee with a due and proper opportunity of hearing. - Assessee's contention: The CIT(A) passed orders without providing a proper opportunity of hearing, making the impugned orders bad in law. - Revenue's contention: Not recorded. 6. Whether the CIT(A) erred in law and facts by accepting the claim of deduction under Section 80IA(4) which included provisions of sub-section (7) when the claim was not made at the time of filing the return of income. - Revenue's contention: The CIT(A) erred by accepting the claim, as it was not made at the time of filing the return. - Assessee's contention: Not recorded. 7. Whether the CIT(A) exceeded powers under Section 251 by directing the AO to verify the claim under Section 80IA, which amounts to setting aside the issue. - Revenue's contention: The CIT(A) exceeded powers by directing verification, which is not permissible. - Assessee's contention: Not recorded. 8. Whether the CIT(A) erred in law and facts by deleting the disallowance of Rs. 2,56,56,447/- (for AY 2016-17) and Rs. 1,71,63,491/- (for AY 2017-18) under Section 14A read with Rule 8D, as the assessee invested substantial amounts in group companies/sister concerns. - Revenue's contention: The CIT(A) erred in deleting the disallowance, as the investments in group companies warrant disallowance under Section 14A read with Rule 8D, citing Maxopp Investment Ltd. vs. CIT. - Assessee's contention: Not recorded. 9. Whether the addition of Rs. 9,03,52,576/- for alleged bogus purchases from M/s Vishwambhar Enterprises Ltd. was justified. - Assessee's contention: The purchases were supported by bills, payments were through banking channels, and the AO was not justified in treating them as bogus. - Revenue's contention: Not recorded. 10. Whether the AO erred by making additions without providing sufficient opportunity or correlating additions with seized documents/incriminating material. - Assessee's contention: Additions were made without sufficient opportunity and without correlating with seized material. - Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 143(1),Section 143(2),Section 80IA(4),Section 251,Section 14A,Section 8D,Section 69C,Section 194Q

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Cases cited in this judgment(30)Show list

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Heard together (3 matters)

I.T.A. No.17/Lkw/2024
I.T.A. No.623/Lkw/2024
C.O.No.01/Lkw/2025

Read from the judgment's own cause title. This page is filed under one of them.

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH 'A', LUCKNOW

BEFORE SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER AND SHRI SUBHASH MALGURIA, JUDICIAL MEMBER Assessment Years:2018-19

M/s APCO Infratech Pvt. Ltd., B-9, Vibhuti Khand, Gomti Nagar, Lucknow. PAN:AADCA5639H (Appellant) Vs. Dy./A.C.I.T.-1, (Central-1), Lucknow (Respondent)

I.T.A. No.356 & 357/Lkw/2020

Assessment Years:2016-17 & 17-18

M/s APCO Infratech Pvt. Ltd., B-9, Vibhuti Khand, Gomti Nagar, Lucknow. PAN:AADCA5639H (Appellant) Vs. A.C.I.T.-1, (Central-1), Lucknow (Respondent)

I.T.A. No.453 & 454/Lkw/2020

Assessment Years:2016-17 & 17-18

A.C.I.T.-1, (Central-1), Lucknow (Appellant) Vs. M/s APCO Infratech Pvt. Ltd., B-9, Vibhuti Khand, Gomti Nagar, Lucknow. PAN:AADCA5639H (Respondent) Assessment Years:2018-19

A.C.I.T.-1, (Central-1), Lucknow (Appellant) Vs. M/s APCO Infratech Pvt. Ltd., B-9, Vibhuti Khand, Gomti Nagar, Lucknow. PAN:AADCA5639H (Respondent)

C.O.No.01/Lkw/2025 ( in I.T.A. No.623/Lkw/2024

Assessment Years:2018-19

M/s APCO Infratech Pvt. Ltd., B-9, Vibhuti Khand, Gomti Nagar, Lucknow. PAN:AADCA5639H (Appellant) Vs. Dy./A.C.I.T.-1, (Central-1), Luc

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