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2016 (8) TMI 1085 - AT - Income TaxEligibility of deduction u/s 80IC - AO has recorded that the assessee has sold one amplifier which was purchased from sister concern namely M/s Saraswati Dynamics, Roorkee and, therefore, the year under which the survey took place the assessee was not engaged in manufacturing activities - Held that:- A.O. has allowed deduction u/s 80IC of the Act in the immediately preceding years. Survey should have been done before allowing deduction u/s 80IC of the Act in the very first year of its claim, but the Revenue has conducted the same in 2008. The survey team failed to collect the evidences during the survey as to how the business was closed for the Assessment Year 2008-09. The operation was closed in November 2008 because of the natural calamities. The production of all the documents were produced by the assessee company before the Assessing Officer related to the business of the assessee to the government organization till September 2006. These documents has categorically revealed that the very foundation of the Assessing Officer’s order was not justified as the Assessing Officer for the Assessment Year 2006-07 has made a clear findings that the assessee has purchased digital powers sub assemblies for which invoice has been raised by M/s Saraswati Dynamics Pvt. Ltd dated 8/3/2006. Thus the sub assemblies cannot be termed as the amplifier as a whole. In the same para, the Assessing Officer mentioned that assessee had sold amplifier to SHAR Centre, Sriharikota for ₹ 1,27,51,250/- for which invoice has been raised dated 06.03.2006. But while computing the total income the Assessing Officer has made disallowance for the receipt for amplifier from the total income amounting to ₹ 1,27,51,250/- and as relates to total expenses has disallowed purchase of amplifiers as to ₹ 57,20,000/-. There was manufacturing activity going on during the relevant assessment years. The disallowance was not proper and the reason for disallowance of the benefit under Section 80IC does not sustain. Thus, the CIT(A) has rightly held that A.O was not correct while disallowing the benefit under Section 80IC of the Act.
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