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2022 (5) TMI 1570 - AT - Income TaxDisallowance of deduction u/s 80IC - interest income earned on fixed deposits - profits and gains derived from manufacture/production of any article or things - HELD THAT:- In case of Liberty India Ltd.[2009 (8) TMI 63 - SUPREME COURT] while reiterating identical view has observed that the income qualifying for deduction must have a first degree relationship with the eligible business. In the facts of the present appeal, admittedly, the interest income which the assessee has claimed as deduction u/s 80IC was earned on fixed deposits kept in bank for the purpose of securing the entry tax which was under dispute. However, it cannot be said that such interest income has any direct nexus with profits and gains derived from manufacture/production of article or things. In our view, the dispute relating to entry tax would not have any impact on the manufacturing activity of the assessee, since in the worst case the assessee would have brought the raw materials/goods on payment of entry tax. Thus, payment or nonpayment of entry tax would not have stalled the manufacturing activity of the assessee. Thus it cannot be said that the interest income earned by the assessee is part of profits and gains “derived from” manufacture or production of article or things. Therefore, in our humble opinion, the interest income earned by the assessee would not qualify for deduction u/s 80IC of the Act. Disallowance made u/s 14A r.w.r. 8D. - HELD THAT:- Insofar as assessment year 2013-14 as before us, the assessee has submitted that it had sufficient interest refund available to take care of the investment made. In this regard, we must observe, neither before the departmental authorities nor before us the assessee has furnished any working computing the disallowance u/s 14A r.w.r. 8D. Therefore, in absence of any such computation/working by the assessee, we are unable to record any conclusive finding regarding assessee’s claim. Necessity of recording satisfaction - For assessment year 2014-15 submission of learned counsel for the assessee that the AO has not recorded any valid satisfaction is unsustainable. Recording of satisfaction by the AO regarding correctness of assessee’s claim would arise when the assessee itself has computed disallowance u/s 14A r.w.r. 8D on its own in the return of income furnished to the department. When the assessee has not made any such claim in the return of income, AO cannot record satisfaction in vacuum. Having held so, it is necessary to observe, before us, assessee has submitted that the assessee had sufficient interest free refund with it to take care of the investment. Since, the aforesaid claim of the assessee has not been examined factually by the departmental authorities with reference to availability of funds in the books of account; we deem it appropriate to restore this issue to the AO for factual verification of assessee’s claim. Disallowance of administrative expenses under Rule 8D(2)(iii), AO has to compute the disallowance by considering only those investments, which have yielded exempt during the year. With the aforesaid observations, the issue is restored back to the Assessing Officer for fresh adjudication. Deduction u/s 80G - deduction was disallowed due to non-furnishing of supporting evidence - HELD THAT:- Commissioner (Appeals) has observed that the assessee not only failed to furnish the receipt issued by the donee but also could not furnish the eligibility certificate of the donee. In our view, for claiming deduction under section 80G assessee is required to furnish the supporting evidence, if called upon to do so by the AO. In absence of such supporting evidence, assessee’s claim of deduction could not have been allowed. To enable the assessee to furnish the supporting evidences to prove the claim of deduction u/s 80G we restore this issue to the AO for fresh adjudication after due opportunity of being heard to the assessee.
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