Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (11) TMI 1470 - AT - Income TaxClaim of deduction under section 80-IB(5) and 80-IE - whether manufacturing of poultry feeds amounts to “manufacture” or not? - Held that:- Every year the scrutiny assessment order was passed u/s 143(3) of the Act from AYs 2005-06 to 2010-11. In this search assessment order passed u/s. 143(3) r.w.s. 153A, AO has disallowed the deduction claimed u/s. 80IB(5)/80IE of the Act without bringing on record any evidence or documents found during the search. The search party did not find any incriminating document or any new document during the search action. In the absence of any new document/incriminating document how the assessee can be denied for deduction U/s 80-IB/80IE. The assessee has submitted a synopsis of manufacturing process of poultry feeds which amounts to ‘manufacture’ considering the above cited judicial precedents cited in para 6.3 above. It is also clear from the details filed with the end product that poultry feeds cannot be reversed back to its original content/material. It is clear that the poultry feed is a distinct product and amounts to ‘manufacture’. It is clear that the process of producing poultry feeds involves the process of manufacturing. The assessee's eligible undertaking itself was independently carrying out the complete activity i.e. from mixing, grinding till the pelletisation. The raw materials once consumed cannot be reconverted into the same position. Its utility gets changed. Apart from this, keeping the principle of consistency and the process of manufacturing, the action of the Assessing Officer of making disallowance u/s. 80-IB(5)/80IE of the Act, in respect of manufacturing of poultry feeds is not justified. - Decided in favour of assessee. Disallowance u/s 14A - Held that:- The assessee had in its books of accounts available capital as per schedule ‘A’ of ₹ 40,00,200/- and reserve and surplus as per schedule ‘B’ of ₹ 26,65,12,677/- (totalling ₹ 27,05,12,877/-). Thus, it is clear that the assessee has enough funds of its own and no borrowed fund seems to have been utilised in order to earn exempted income. Regarding Rule 8D(2) (iii), the assessee has given a calculation for average investments as (41,361,527+38,416,565)/2 =Rs.39,889,046/-. As per assessee the disallowance under Rule 8D(2)(iii) comes at (0.5% of ₹ 39,889,046/-) ₹ 1,99,445. Therefore, total disallowance under [Rule 8D(2) (i)+(ii)+(iii) is ₹ 1,99,445/- less amount paid by the assessee ₹ 1,00,000/-,] ₹ 99,445/-. MAT - disallowance u/s 14A on the book profit of the assessee determined U/s 115JB - Held that:- The disallowance made U/s 14A is by the Assessing Officer in the impugned assessment order only. Thus, the conditional stipulation applies. The adjustment cannot be made.The important thing to note here is that for the purpose of applicability of section 14A read with Rule 8D, the computation of total income has to be under some heads in chapter - IV of the I.T. Act, 1961. Section 14A clearly says “for the purpose of computing the total income under this chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act”. Whereas the computation of total income u/s 115JB falls under chapter -XIIB of the I.T. Act,1961. Therefore, it is very clear that the disallowance/computation for section 14A read with rule 8D will not be applicable for the purpose of calculation of income u/s 115JB.
|