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2020 (12) TMI 670 - KARNATAKA HIGH COURTRevision u/s 263 - Deduction u/s 35(2AB) wrongly allowed - also held by the CIT that the assessee had two Export Oriented Units (EOU) and the profits of these EOUs were entitled to 100% deduction under Section 10B of the Act as they were EOUs and the benefits of R & D would accrue to all the manufacturing units of the assessee - HELD THAT:- Assessee has demonstrated that the enquiries contemplated by the CIT in the show cause notice u/s 263 of the Act were not required at all and this fact has also been accepted by the CIT in the impugned order. The CIT has only remanded the issue to the Assessing Officer for verification of an insignificant issue whether of approval of the Naganathapura unit and the Nashik unit continues even during the previous year and which has been demonstrated by the assessee before the CIT with sufficient documentary evidence. Therefore, the Tribunal has concluded that there was no necessity to have remanded the matter. It has further been held by the Tribunal that the CIT has accepted that if R & D activity carried on at the 100% EOUs were different, then there was no need to apportion the R & D expenses of the two EOUs. Certificate of the Chartered Accountant given in Form 56G for both these units clearly mention the nature of activities of these two units for the previous year relevant to Assessment Year 2008-09 are the same activity for which approvals were granted to these 100% EOUs, which has been clearly demonstrated by the assessee before the CIT that the expenditure on R & D had no connection whatsoever with the 100% EOUs at Naganathapura and Nashik. Therefore, there was for no need for the CIT to set aside the order of the Assessing Officer for suitable enquiries and deciding the issue afresh. The Tribunal has therefore, rightly quashed the impugned order under Section 263 - Decided in favour of the assessee.
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