ACIT, CIRCLE-10(1), NEW DELHI V. IRCON INTERNATIONAL LTD, NEW DELHI

ITA 1104/DEL/2023

AI Insights

The appeals by the Revenue for the Assessment Years 2017-18 and 2018-19 challenged the orders of the CIT(A) which had deleted several additions and disallowances made by the Assessing Officer. The main issues revolved around the denial of deduction under section 80IA, disallowances related to provisions for maintenance, and adjustments under section 14A read with rule 8D among others. The Tribunal found that the issues were covered by earlier decisions in the assessee's own case and thus upheld the CIT(A)'s decisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708791 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2018-2019
• Other Referred Cases: Mysore Sugar Co. Ltd vs. ITR, Harsad J Choksi vs. 25 taxmann.com567, Badri Das Daga vs. 34 ITR 10
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Assessee Lawyers: RAKESH GUPTA; OBSERVING
• Keywords: Set aside; Search and seizure; Earning of tax free income; Double taxation relief; Rule 8D
• Section: 14A; 115JB

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.1108/Del/2023, A.Y. 2017-18 ITA No.1104/Del/2023, A.Y. 2018-19 Assistant Commissioner of Income Tax, Circle-10(1), C R Building, I P Estate, New Delhi Ircon International Limited C-4, District Centre Saket, New Delhi-110017 PAN: AAACI0684H (Appellant) (Respondent) Appellant by Sh. Daya Inder Singh Sidhu, CIT-DR Respondent by Dr. Rakesh Gupta, Advocate Sh. Deepesh Garg, Advocate Date of Hearing 22/04/2025 Date of Pronouncement 18/07/2025 ORDER PER AVDHESH KUMAR MISHRA, AM Common facts and grounds arise in the above captioned appeals of the Revenue; therefore, these appeals were heard together and are being disposed off by this common order. 2. The above captioned appeals of the Revenue for the Assessment Year (‘AY’) 2017-18 and 2018-19 are directed against orders dated 24.02.2023 and 17.02.2023 of the Commissioner of Income Tax (Appeals), NFAC, New Delhi [‘CIT(A)’]. ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 2 3. The Revenue has raised following grounds in the ITA 1108/Del/2023: - “1. The CIT(A) has erred in law and on facts in deleting the addition made by the Assessing Officer denying the benefit of deduction of Rs.11,09,05,324/- claimed by assessee u/s 80IA. 2. The CIT(A) has erred in law and on facts in deleting the addition made by the Assessing Officer of making disallowance of Rs.9,89,3 8,544/- on account of provision for maintenance. 3. The CIT(A) has erred in law and on facts in making deletion of disallowance of Rs.1,99,31,448/- on account of advances written off made by the Assessing Officer. 4. That the department craves to add or amend the grounds of appeal before Hon'ble ITAT is finally heard or disposed off.” 3.1 The Revenue has raised following grounds in the ITA 1104/Del/2023: - “1. Whether Ld. CIT(A) has erred in law and on facts of deleting the addition made by the Assessing Officer denying the benefit of deduction of Rs.17,82,63,908/- claimed by the assessee u/s 80IA. 2. Whether Ld. CIT(A) has erred in facts and circumstances of the case for deleting the disallowance made by the Assessing Officer on account of provision for maintenance of Rs.16,80,01,189/-. 3. Whether Ld. CIT(A) has erred in facts and circumstances for restricting the disallowance to Rs.6,53,02,979/- u/s 14A r.w. rule 8D made by the Assessing Officer. 4. Whether Ld. CIT(A) has erred in facts and circumstance for deleting the disallowance made by the Assessing Officer on account of unwinding of provisions against maintenance and demobilization of Rs.1,36,65,459/-. 5. Whether Ld. CIT (A) has erred in facts and circumstances for deleting the addition of MAT of Rs.31,57,16,297/-. 6. That the department craves to add or amend the grounds of appeal before Hon'ble ITAT is finally heard or disposed off.” ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 3 3.2 Following effective issues require adjudication in these appeals: - (i) Deduction under section 80IA of the Income Tax Act, 1961 (‘Act’) (both appeals), (ii) Disallowance of provision for maintenance (both appeals), (iii) Disallowance of advances written off (ITA 1108), (iv) Disallowance under section 14A r.w. Rule 8D (ITA 1104), (v) Disallowance of unwinding of provisions against maintenance and demobilization (ITA 1104) and (vi) Addition of Rs.31,57,16,297/- for computing book profit for/under MAT/115JB of the Act (ITA 1104). 4. The case of AY 2018-19/ITA No.1104/Del/2023 is taken as a lead case. ITA No.1104/Del/2023 5. The relevant facts giving rise to the appeal of AY 2018-19 are that the respondent assessee, a Government of India undertaking, is engaged in the execution of Civil Engineering, Electrical, Communication and Turnkey contract, in India as well as abroad. The assessee filed its Income Tax Return (‘ITR’) of the relevant year on 25.09.2018 declaring income of Rs.458,30,63,770/-. The case was picked up for scrutiny and consequential assessment was completed at income of Rs.524,61,81,030/- under normal provisions of the Act and Rs.483,81,10,179/- under Section 115JB of the Act. The Assessing Officer (‘AO’) made following additions/disallowances in AY 2018-19: - ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 4 S. N. Particulars Amount (Rs.) A. Disallowance of Provision for maintenance 16,80,01,189/- B. Disallowance u/s 14A of the Act read with Rule 8D 13,40,49,649/- C. Unwinding of provisions against maintenance and demobilization 1,36,65,459/- Besides, the AO also disallowed the claim of deduction of Rs.17,82,63,908/- under section 80IA of the Act. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who partly allowed the relief to the assessee. Hence, the Revenue is before us challenging the following reliefs allowed by the Ld. CIT(A): - (i) Disallowance of claim of deduction of Rs.17,82,63,908/- under Section 80IA of the Act. (ii) Disallowance of provision for maintenance of Rs.16,80,01,189/-. (iii) Disallowance of Rs.6,53,02,979/- under section 14A of the act. (iv) Disallowance of unwinding of provisions against maintenance and demonetization Rs.1,36,65,459/- (v) Addition of Rs.31,57,16,297/- for computing income under MAT/115JB of the Act. 6. The Ld. CIT-DR, placing reliance on the assessment order prayed for allowing the appeal by setting aside the impugned order. ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 5 7. At the outset, the Ld. Counsel submitted that the issues of (i) claim of deduction under section 80IA of the Act, (ii) disallowance of provision of maintenance, (iii) disallowance u/s 14A r.w. rule 8D, (iv) unwinding of provisions against maintenance and demobilization and (v) addition under MAT were covered by the decisions of the Co-ordinate Benches in the assessee’s own case in ITA No. 6044/Del/2019 order dated 07.02.2023 and ITA No. 2401/Del/2013 order dated 28.01.2022. He further placed reliance on orders of the Coordinate Bench in the assessee’s own case for AYs 2001- 02, 2004-05, 2005-06-, 2006-07, 2014-15, 2015-16 and 2016-17. 8. We have heard both parties and have perused the material available on record. i. Disallowance of claim of deduction under Section 80IA of the Act: 9. The first issue is in respect of the claim of deduction under section 80IA of the Act. We find that identical issue arose in assessee's own case in AYs 2016-17 and the co-ordinate bench of the Tribunal in ITA No. 1400/Del/2018 and 2062/Del/2018 has decided the issue in favour of the assessee by observing as under: - “7. The same issue stands adjudicated by the Co-ordinate Bench of ITAT in assessee's own case in ITA No.2401/Del/2013 for the A.Y. 2006-07. The operative part of the order is reproduced as under: \"3.1 At the outset, we find that this issue has been adjudicated in favour of the assessee and the deduction has been held to be allowable vide the orders of the Co- ordinate of the ITAT for the A.Ys. 2000-01, 2001-02, ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 6 2003-04, 2005-06. For the sake of ready reference, the relevant portion of the order of the ITAT in the combined order in ITA No. 977/DEL/2010 for AY 2004-05 and 30.01.2020 is reproduced below: \"36. Ground No. 2 relates to the deletion of disallowance of deduction u/s 80IA of the Act amounting to Rs.26.71 crores made by the Assessing Officer. 37. The claim of deduction came up for adjudication for the first time in Assessment Year 2000-01 and the co-ordinate bench in ITA No. 2596/DEL/2004 held as under: \"3.5 Considering the arguments advanced by the parties and after going through the orders and material placed before us, we hold as under\" Regarding the claim of deduction u/s 80IA, it is seen that appellant is a company and has entered into contracts with various Central Government, State Government, State Government and Local Authority and other statutory bodies. A close reading of the agreement (for instance agreement with MSRDC enclosed in the paper book) clearly shows that appellant developed the infrastructure facility and has not acted merely as contractor as sought to be made out by Assessing Officer and CIT (Appeals). The Oxford dictionary defines the term developer as a person that designs and crate new products, whereas contractor is a person or a company that has a contract to do work or to provide goods or services. Various clauses of the above referred agreement to which reference has been made by us little below would show that the construction rail over bridge projection (ROB) 23 awarded by MSRDC to the appellant is nothing but development of infrastructure facility, which was to be legally handed over to the Railways and MSRDC after the payment was received. Various clauses of the agreement would show that the jobs done by the appellant were planning, execution, construction and making the infrastructure facility ready for operations. Ld. Assessing Officer has not pointed out any specific clauses of any agreement, which shows that all attributes of development were not present. Making a bald assertion that assessee was a contractor does not serve any purpose. Merely using the terms contractor in the agreement would not make any difference as what has to be seen is the substance. Anybody who ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 7 enters into a contract is closely called a contractor but that does not mean that such person entering into the contract cannot be developer. The other agreement with MSRDC shown to us as one as instance clearly shows mat appellant was engaged in investigation, planning, organizing and construction of road over bridge within the stipulated time. If the activities undertaken by the appellant cannot be termed as development, we are afraid then what can be called development? Therefore, we do not have any hesitation in holding in view of the arguments advanced from the sides of both parties and decisions relied upon that appellant was developing infrastructure facility and claimed deduction u/s 80IA in respect of income derived from the development of infrastructure facilities. Explanation inserted below section 80IA(13) does not prevent developers in claiming deduction u/s 80IA(4). Similarly showing the receipts as work receipts in the books of accounts of the appellant alone cannot determine the character of the appellant which in our opinion was that of development. The argument of revenue that infrastructure facility should be owned by the appellant is also misplaced in view of ITO vs. Cable 24 Constructions 354 ITR 13 (Guj.) and various decisions relied upon by the Ld. Counsel for the appellant. We also note that the Ld. CIT (DR) tried to raise issues which were not even the case of the assessing officer and this in our considered opinion is clearly impressible. Case laws relied by the revenue are clearly misplaced on facts and are clearly distinguishable. Special bench decision in the case of B. T. Patil (Mum.) 126 TTJ 577 was recalled later on as it did not consider the binding decision of Hon'ble Bombay High Court in the case of ABG 322 ITR 323 (Bom). According to the assessment order, copies of all the agreements were before Assessing Officer yet assessing officer chose to make sweeping observation that the assessee is not developer. Such sweeping and bald assertion cannot be approved by us. Therefore, taking into the facts of the present case, we are the considered view that appellant is entitled to claim deduction 80IA, which was wrongly denied. We set aside the order of the ld. CIT (Appeals) and direct the Assessing Officer to allow deduction u/s 80IA has claimed by the appellant. Ground No. 1 is allowed.\" 8. As no new facts have been brought on record for the year under consideration, respectfully following the findings of the co-ordinate ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 8 bench, we direct the Assessing Officer to allow deduction u/s 80IA of the Act.” 10. The CIT-DR has not brought any material on the record to demonstrate any distinguishing feature in the facts of the case in the year under consideration and that of earlier years nor he has placed any material on the record demonstrate that orders of the coordinate bench in assessee's own case for earlier years have been ever been set aside/overruled/stayed by the Hon’ble Supreme court and or by the Hon’ble High Court. In such facts and circumstances, we find no reason to interfere with the order of the Ld. CIT(A) on this issue. Thus, this ground of the Revenue stands dismissed in both years. ii. Disallowance of provision for maintenance: 11. The second issue is in respect of the disallowance of provision for maintenance. We find that identical issue arose in assessee's own case in AYs 2016-17 and the co-ordinate bench of the Tribunal in ITA No. 6044/Del/2019 has decided the issue in favour of the assessee by observing as under: - “44. During the course of assessment proceedings AO noted that the assessee has debited of Rs.33,73,74,583/- towards provision for maintenance. The assessee was asked to file the details of expenditure and also explain as to why the amount not be disallowed. Assessee inter alia submitted that the provision for maintenance expenses related to the projects executed in India and abroad and it was provided to cover the expenditure of liability towards defect rectification/or maintenance cost to be incurred by the assessee after completion of the ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 9 contract. It was further submitted that as per the agreement with the clients the assessee was liable to maintain the works executed by it even after the projects are completed and handed over to the clients for a period of 12 to 24 months from the date of completion. It was thus submitted that provision was an allowable expenditure. The submissions of the assessee was not found acceptable to AO. AO noted that assessee had not provided any details regarding the basis on which the provision of maintenance was being created and thus failed to substantiate the provision made. He further noted the identical issue arose in A.Ys. 2013-14 & 2014-15 wherein CIT(A) had deleted the addition and decided the issue in favour of the assessee but however Revenue had filed appeal before the ITAT. He therefore held that the provision of maintenance expenses was not allowable and according disallowed of Rs.33,73,74,583/-. 45. Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A). 46. CIT(A) noted that identical issue arose in assessee's own case in A.Ys. 2012-13, 2013-14, 2014-15 & 2015-16, and the issue was decided in the favour of the assessee. He following the decision in assessee's own case for earlier years deleted the disallowance made by AO and further held that the addition made cannot be added for the purpose of working out book profit under MAT. He accordingly decided the issue in assessee's favour. 47. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us. 48. Before us, learned DR supported order of AO, learned AR on the other hand reiterated the submissions made before AO and CIT(A) and further submitted that identical issue arose in assessee's own case for 2014-15 and the co-ordinate bench of the Tribunal has decided the issue in favour of the assessee by dismissing the ground of Revenue. He pointed to para 11 to 14 at page no. 261 of the paper book. He therefore submitted that no interference to the order of CIT(A) is called for. 49. We have heard the rival submissions and perused the material on record. The issue in the present ground is w.r.t disallowance of provision for maintenance made by AO that deleted by CIT(A). We find that on ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 10 identical issue the co-ordinate Bench of Tribunal in A.Y. 2014-15 has decided the issue by observing as under: - “9. The assessee has challenged disallowance of provision for maintenance for the project executed by the assessee amounting to Rs.105,96,46,297/- The Assessing Officer has held that this provision has been made on estimated basis and unascertained liability. The assessee submitted that it has to maintain or repair the defects in the projects executed by it during the defect liability period as specified in the contract agreement. The assessee claimed that these are mandatory expenses and provision has been made on the basis of its past experience and on scientific basis, therefore, such provision is an allowable expenditure. 10. It was submitted that the provision for maintenance expenditure is provided to cover the company's expenditure to liability towards defect rectification and/or maintenance incurred by the company after completion of the contract. Such provision is made taking into account contractual provisions, operating turnover for the year, type of project, period of maintenance, contractual obligations of the subcontractors and other relevant factors, if any. As per the agreement with the client, the company is liable to maintain the works executed by it even after the projects are completed and handed over to the clients, for a period of 12 or 24 months from the date of completion. During this period, all the defects are to be rectified free of cost even though the Company has already handed over completed project to the client. The total project cost i.e. contract receipts, have already been received from the client in respect of the said projects before handing over the same to the client and no separate consideration is receivable During the year an amount of Rs.2,27,42,328/- has been provided for non- DTAA project and Rs.7,18,000/- for DTAA projects. 11. The ld. CIT(A) deleted the addition holding that the assessee has been claiming that provision for maintenance has been made taking into account contractual provision, operating turnover of the y ear, type of project period of maintenance and other relevant factors. It was held by the ld. CIT(A) that as per contract agreement the assessee is liable to provide free of cost maintenance to the clients for the period mentioned in the agreement. At the time of completion of the contract, liability arises in the hands of the assessee company to ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 11 provide free maintenance to the various contractees for the period specified in the agreement. This liability arises at the time of the completion of the project itself and obviously the expenditure required can only be estimated on the basis of past experience, nature of the contract, type of the project and turnover of the assessee in that particular year. The ld. CIT(A) held that the assessee claimed that estimate has been made on best estimated basis based upon the experience in the construction industry and therefore, the objection of the Assessing Officer that the liability has not arisen during the year as it has been quantified on estimated basis is not correct. 12. It is also a fact not disputed by the Assessing Officer in the assessment order that all along the provision for maintenance of expenses have been allowed to the assessee company except the disallowances made in A.Y. 1985-86 and 1995-96. 13. We find that the same matter of provision for maintenance stands adjudicated by the Co-ordinate Bench of the Tribunal The assessee has been providing for expenses to be incurred on demobilization, maintenance and other expenses since by inception of the Company. The same has been allowed by the Department all along excep t in the Assessment Years 1985-86, 1995-96 & 2001-02, 2002-03, 2003-04, 2004- 05 and 2005-06. In these years, the A.O. disallowed the aforesaid provisions. Further, in appeal before the Ld. C IT(A), in the assessment year 1985-86, 1995-96 and 2001-02 and 2002-03, these were allowed on the basis of the aforesaid judicial analysis. 14. Since, the decision of the ld. CIT(A) is based on the decision of the earlier years which stands upheld, we decline to interfere with the order of the ld. CIT(A) on this issue.” 12. The CIT-DR has not brought any material on the record to demonstrate any distinguishing feature in the facts of the case in the year under consideration and that of earlier years nor he has placed any material on the record demonstrate that orders of the coordinate bench in assessee's own case for earlier years have been ever been set aside/overruled/stayed by ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 12 the Hon’ble Supreme court and or by the Hon’ble High Court. In such facts and circumstances, we find no reason to interfere with the order of the Ld. CIT(A) on this issue. Thus, this ground of the Revenue stands dismissed in both years. iii. Disallowance under section 14A of the Act: 13. The assessee has shown exempt income of Rs.52,98,51,875/- in its ITR. The assessee has computed the disallowance of Rs.4,00,086/- under section 14A of the Act whereas the AO worked out the disallowance of Rs.13,40,49,649/- under section 14A of the Act read with the Rule 8D of the Income Tax Rules. The relevant finding of the AO is as under: - “6.12. The submission made by the assessee has been duly considered and is discussed as under: i. The assessee has considered investment in Mutual Fund and tax free Bonds for computation of annual average of investment. In the Balance Sheet, opening and closing balance of investment in equity instruments (unlisted equities) has been reported at Rs. 681,79,17,000 and Rs. 693,14,17.000/- respectively. However, the assessee has not furnished annual average of monthly average in respect of investment made in equity instruments. ii. The assessee has in its return of income reported to have earned exempt income of Rs. 529851875/- comprising Share of income from AOP/ BOI of Rs. 169007849/-, Interest on Tax Fee Bonds of Rs. 22,07,53,492/- and Dividend Income of Rs.14,00,90,534/-, In respect of earning said exempt income, the assessee has submitted to have incurred expenses of Rs. Rs.4.00.086/- on an estimate basis. It is apparent that such large exempt income of Rs.52.98 crore cannot be earned by incurring expenses of such minuscule expenses of Rs.4,00,086/- when, as discussed above. maintaining of investment is a very dynamic activity requiring expertise of expert professional. ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 13 iii. The assessee has, in response to SCN issued, failed to furnish any submission to explain as to why disallowance u/s14A should not be made in this case as per Rule 8D. This shows that the assessee has no submission/explanation to furnish against application of provisions of section 14A read with Rule 8D. 6.13 Accordingly, it is held that disallowance of expenses u/s14A of the Act in relation to earning of exempt income is required to be computed in this case as per rule 8D. The assessee has reported Aggregate value of Annual Average of Monthly Average of Rs. 6,57,03,06,506/- in respect of investment made by it in the mutual fund and the tax-free bonds. In respect of investment made in equity instruments (unlisted equities), no details of annual average of monthly average have been furnished Therefore, in respect of investment in equity instruments, average value of investment is considered for the purpose of computation of disallowance of expenses u/s14A read with Rule 8D. 6.14 The assessee has reported opening and closing balance of investment in equity at Rs. 681,79,17,000 and Rs. 693,14,17,000/- respectively. Therefore, average value of investment in equity is worked out to be Rs. 687,46,67,000/-. Accordingly, the disallowance of expenses u/s14A as per Rule 8D is computed as under: Particulars Amount (Rs.) Annual Average of Monthly Average of investment in Mutual Fund and Tax-free Bonds 6570306506 Average value of investment in equity instruments 687,46,67,000 Total Average Value of Investment 1344,49,73,506 1% of Average Value of Investment 13,44,49,735 6.15 The disallowance of expenses in relation to earning of exempt income is computed at Rs. 13,44,49,735/- as per section 14A of the Act read with Rule 8D. However, the assessee has in its return of income made disallowance of Rs. 4,00,086/- u/s 14A of the Act. Therefore, a net disallowance of Rs. 13,40,49,649/- is made and added to the total income of the assessee u/s 14A read with Rule 8D. ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 14 Penalty proceedings u/s 270A of the Act are hereby initiated separately for under reporting of the income in consequence of misreporting thereof.” 14. The disallowance under section 14A of the Act was restricted to Rs.6,53,02,979/- by the Ld. CIT(A), who had worked out the annual average and monthly average value of investment in mutual funds and tax-free bonds at Rs.657,03,06,506/-, and accordingly, he disallowed 1% of the sum of Rs.657,03,06,506/-. Since, the assessee has already made a suo moto disallowance of Rs.4,00,086/-, the disallowance of Rs.6,53,02,979/- was upheld by the Ld. CIT(A). Before us, the Ld. CIT-DR is not able to demonstrate any anomaly in facts mentioned by the Ld. CIT(A) in the impugned order with respect to disallowance under section 14A of the Act, whereas the Ld. Counsel placed reliance on the findings of the coordinate bench, on this issue, in preceding years. 15. We have heard both parties and have perused the material available on record. We are of the considered view that the issue of disallowance under section 14A of the act is squarely covered by the decision of the Co-ordinate bench in the ITA No. 6044 & 6488/Del/2019 for AY 2016-17. We therefore, respectfully following the decision of the Coordinate bench in the ITA No. 6044 & 6488/Del/2019 for AY 2016-17, decline to interfere with the order of the Ld. CIT(A) on this issue. The respective ground raised in this regard by the Revenue thus stands dismissed accordingly. ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 15 iv. Disallowance of unwinding of provisions against maintenance and demonetization: 16. The next issue is in respect of the disallowance of unwinding of provisions against maintenance and demonetization Rs.1,36,65,459/-. The Tax Auditor has pointed out increase in profit of Rs.1,80,80,198/- on account of provisions. However, the assessee has offered income of Rs.44,14,738/- out of Rs.1,80,80,198/-. The difference thereof; Rs.1,36,65,459/- (Rs.1,80,80,198/- minus Rs.44,14,738/-) had been treated as provision in the books of account by the assessee. The sum of Rs.1,36,65,459/- was disallowed by the AO on the reasoning that the claimed provision of Rs.1,36,65,459/- in the books of account was in the nature undeterminable contingent liability as the same is not based on any scientific principle/reasoning and in accordance with the provisions of the Act. However, the same was allowed by the Ld. CIT(A) treating the provision similar to the above-mentioned issue of “Disallowance of provision for maintenance”. The Ld. CIT-DR contented that the Ld. CIT(A)’s finding did not demonstrate that the AO’s reasoning was unjustified. He contended that the income could be worked out in accordance with the provisions of the Act and the accounting principles followed by the assessee. On the other hand, the Ld. Counsel argued that the said provision was in the nature of warranty and the same had been worked out based on the scientific formula and any surplus provision of the warranty had been offered for tax. It was further ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 16 submitted that the provision of Rs.44,14,738/- out of Rs.1,80,80,198/- as mentioned above had already been offered for tax in the relevant year. 17. We have heard both parties and have perused the material available on record. The CIT-DR has not brought any material on the record to contradict the finding of the Ld. CIT(A) on this score. We are of the considered view that this issue is similar to the above-mentioned issue of “Disallowance of provision for maintenance”. We therefore, respectfully following the decision of the Coordinate bench in the ITA No. 6044 & 6488/Del/2019 for AY 2016- 17, decline to interfere with the order of the Ld. CIT(A) on this issue also. The respective ground raised in this regard by the Revenue thus stands dismissed accordingly. v. Addition of Rs.31,57,16,297/- for computing book profit for/under MAT/115JB of the Act: 18. The next issue is that whether the above disallowances aggregating to Rs.31,57,16,297/- has to be considered for computing book profit under 115JB of the Act. We have heard both parties and have perused the material available on record. We are of the considered view that this issue is squarely covered by the decision of the Co-ordinate bench in the ITA No. 6044 & 6488/Del/2019 for AY 2016-17. We therefore, respectfully following the decision of the Coordinate bench in the ITA No. 6044 & 6488/Del/2019 for AY 2016-17, decline to interfere with the order of the Ld. CIT(A) on this ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 17 issue. Since the finding of the Ld. CIT(A) deleting the disallowances aggregating to Rs.31,57,16,297/- has already been upheld by us; therefore, alternatively also the same cannot be added back to compute the book profit under 115JB of the Act. The respective ground raised in this regard by the Revenue thus stands dismissed accordingly. ITA No. 1108/Del/2023 for AY 2017-18: 19. The above finding with respect to the issues of (i) deduction under section 80IA of the Act and (ii) the disallowance of provisions for maintenance will apply mutatis mutandis in this appeal also. 20. The last issue is in respect of the disallowance of advances of Rs.1,99,31,448/- written off. The AO disallowed the advances of Rs.1,99,31,448/- on the reasoning that the same had never been offered as income in preceding years and the nature of advances were capital. However, the same, placing reliance on the case laws; Mysore Sugar Co. Ltd. reported in 46 ITR 649 (SC), Harsad J Choksi 25 taxmann.com567 (Bom) and Badri Das Daga 34 ITR 10, was allowed by the Ld. CIT(A) treating the same as business loss. 21. We have heard both parties and have perused the material available on record. The CIT-DR has not brought any material on the record to contradict the finding of the Ld. CIT(A). We find that the advances have been given in the normal course of business, which became unrecoverable. We find merit ITA No. 1108/Del/2023 ITA No. 1104/Del/2023 Ircon International Ltd. 18 in the finding of the Ld. CIT(A) that this loss is in the nature of business loss and is thus allowable. Thus, this ground of the Revenue stands dismissed in both years. 22. In the result, both appeals of the Revenue are dismissed as above. Order pronounced in open Court on 18.07.2025. Sd/- Sd/- (ANUBHAV SHARMA) (AVDHESH KUMAR MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 18/07/2025 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(Appeals) 5. CIT-DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "