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2018 (7) TMI 209 - ITAT DELHIDeduction under section 80IB in respect of the Jammu unit - Held that:- Since, the entire basis for adverse inference by the Assessing Officer as well as of ld. CIT (A) is upon the assessment order and first appellate order given in the Assessment Year 2006-07, which the Tribunal has reversed by holding that assessee has rightly shown the payment of licence fee/royalty under the corporate unit; therefore, respectfully, following the precedence of the earlier year (2016 (5) TMI 1443 - ITAT DELHI) we also give the same direction that the licence fee, royalty payment of ₹ 6 crore has rightly been shown under the Corporate Division and accordingly, the finding of the ld. CIT(A) is reversed. Disallowance of claim for deduction on account of ‘Self Cenvat Credit Availment’ u/s.80IB - challenging the finding that Excise refund is a capital receipt in nature and not liable to tax - Held that:- Assessee besides relying upon the decision of Hon'ble Delhi High Court in the case of Dharampal Prem Chand [2008 (11) TMI 231 - DELHI HIGH COURT]wherein distinction has been made between the treatment given to the excise duty and the duty draw back in the DEPB in the context of which various judgments have been rendered which has been cited by the Assessing Officer. The Hon'ble Delhi High Court has held that Excise duty refund is a profit derived from the industrial undertaking while computing the eligible deduction u/s.80IB. We find that in the case of Balaji Alloys as confirmed by SC [2016 (4) TMI 1161 - SUPREME COURT] that Excise duty refund as granted by the State of Jammu and Kashmir is a capital subsidy. When the excise duty refund has been treated as capital subsidy not part of taxable receipts, then entire controversy sets at rest and accordingly, the finding of the ld. CIT (A) that excise refund is a capital in nature stands confirmed MAT computation - whether such capital receipt in the form of excise duty refund should be treated as part income while computing book profit u/s.115JB - Held that:- The amount being capital in nature, cannot be part of book profit. Disallowance u/s 14A - Held that:- Once assessee has produced all the relevant books of account, explained the nature of expenses debited and has explained that none of the expenditure can be said to be attributable to earning of exempt income, then onus shifts upon the Assessing Officer to examine the books of account and nature of expenditure debited and after recording his ‘satisfaction’ as per the mandatory requirement given in Section 14A(2) and (3) r.w.s. Rule 8D(1), then only he can proceed to make disallowance under Rule 8D - Thus, in the absence of any recording of mandatory satisfaction as per Section 14A (2) r.w.s. Rule 8D (1) Assessing Officer cannot mechanically apply Rule 8D for the purpose of disallowance. Accordingly, disallowance made u/s.14 by Assessing Officer is hereby deleted.
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