Shrenuj Gems & Jewellery Ltd, Mumbai vs Ito 8(3)(1), Mumbai on 16 November, 2016
6. Coming to the issue of disallowance of Rs.1,03,000 made by
the A.O. under section 40(a)(ia) in AY 2011-12, it was the contention of
the assessee that these amounts were compensations paid in respect of
demolition of structures, trees and crops which were ready for
harvesting, while laying the infrastructure pipelines as part of the
project. The provisions of TDS are not applicable for a such payments
made for compensation and expenditure is incurred towards
commercial expediency. Ld. CIT(A) while not agreeing with the
contention of the assessee on the disallowance, however accepted the
alternate contention that the amount disallowed in the business
computation would be eligible for deduction under section 80IA,
following the principles laid down by the Hon'ble Bombay High Court in
the case of Gem Plus Jewellery vs. CIT 330 ITR 175 and the decision of
the Hyderabad Bench of ITAT in the case of M/s. Koya and Company
Construction P. Ltd., Hyderabad vs. DCIT, Circle-2(1), Hyderabad
(ITA.Nos.221/Hyd/2009 dated 22.03.2012). As noted above, Assessee
is contesting disallowance under section 40(a)(ia) whereas Revenue is
contesting the direction of the CIT in allowing proportionate deduction
under section 80IA.