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2020 (3) TMI 683 - ITAT MUMBAIProfit eligible for deduction u/s 80IA(4) - increased eligible profit due to disallowance of bogus purchase - HELD THAT:- It is not necessary for the assessee to engage in taking accommodate entry to the value of ₹ 40 lakhs in order to reduce the eligible profit. Considering the volume of the business of the assessee, the disallowance made by the AO has no impact on the profit nor it is necessary for the assessee to reduce any profit, which is eligible to be claimed u/s 80IA(4) of the Act. It is on record that assessee has already submitted the relevant documents in support of the purchases. Further, we notice that Ld. CIT(A) has not verified any of the above aspects and at the same time, we notice that Ld. CIT(A) allowed the increase in eligible profit because of sustaining the disallowance made by the AO u/s 80IA(4) of the Act. Since, there is no impact on sustaining the bogus purchases on the taxable income, Ld. CIT(A) might not have given importance to verify the relevant documents submitted by the assessee before him as well as AO and since, assessee has already got the benefit from the order of Ld. CIT(A), therefore we choose not to disturb the findings of Ld. CIT(A). We notice that assessee has not carried on any other business other than business of infrastructure and we draw strength from the findings of Coordinate Bench in assessee’s own case for AY 2009-10 that the assessee’s business is eligible to claim deduction u/s 80IA(4) of the Act. Since there is no change in the activities of the assessee during this assessment year in reference to earlier assessment years. All the activities carried on by the assessee are eligible to claim deduction u/s 80IA(4) of the Act. Therefore, we are inclined to accept the findings of Ld. CIT(A). Accordingly, ground raised by the revenue is dismissed. Disallowance of expenses in the eligible business will increase the eligible profit - This profit if it is proved that it is earned only from eligible business, then such profit is eligible to be claimed u/s 80IA(4) of the Act. In the given case, assessee does not have any other business other than the eligible business u/s 80IA(4) of the Act and the chart below show that the assessee was already claiming deduction u/s 80IA(4) of the Act over the past assessment year Chart status shows that the assessee is into carrying eligible business and does not have any other activities, therefore the profit earned by assessee is eligible to be claimed u/s 80IA(4) of the Act and any increase in such profit due to disallowance will also be treated as eligible profit to be claimed deduction u/s 80IA(4) of the Act. The courts have held in the following cases that the increased profit due to disallowance is very much available for claiming deduction u/s 80IA(A) in Sheth Developers [2012 (8) TMI 159 - BOMBAY HIGH COURT] & ACIT vrs. Mahalaxmi Infraprojects Pvt. Ltd. [2018 (1) TMI 1103 - ITAT PUNE] Respectfully following the above decision, we are inclined to accept the findings of Ld. CIT(A) and the revenue has not brought on record any information relating to the activities of the assessee that it has carried on any other activities, which are not covered u/s 80IA(4) of the Act during this assessment year. Accordingly, ground raised by the revenue is dismissed. Reopening of assessment - bogus purchases - HELD THAT:- Reopening of assessment is bad in law. After considering the material on record, the assessment was reopened with the fresh material on record and this aspect was not considered during assessment proceedings u/s 143(3) r.w.s 153A of the Act. Therefore, there is no mistake in reopening the assessment. Disallowance of bogus purchase - we notice from the order passed by Ld. CIT(A) that Ld. CIT(A) accepted the findings of AO that assessee has made purchases from Lakhan Traders Pvt. Ltd. and Gorhan Traders Pvt. Ltd. as bogus purchases without verifying the documents submitted by the assessee and not verified whether it is necessity for the assessee to take such bogus purchase, even though its business is eligible to claim deduction u/s 80IA(4) of the Act. Since Ld. CIT(A) accepted the alternate plea of the assessee that it is eligible to claim deduction u/s 80IA(4) of the Act on increased profit due to disallowance of purchase. Since assessee has already got the benefit by availing deduction u/s 80IA(4) of the Act on the difference of profit disallowed by the AO as deduction u/s 80IA(4) of the Act and similar to discussion in para 27 & 28. Therefore, adjudication on the grounds raised by the assessee will have no affect rather it is academic in nature. Therefore, appeal filed by the assessee is accordingly dismissed as infructuous.
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