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2019 (5) TMI 12 - AT - Income TaxRejection of accounts and estimation of profit - HELD THAT:- Assessee states of the AO having not followed the directions by the Jt. CIT u/s. 144A, he does not explain as to in what manner, nor has made these directions a part of the paper-book. In fact, the AO himself states of the assessment order of it being in deference to the guidance issued u/s. 144A. We consider it pertinent to mention this as a direction/s u/s. 144A is binding on the AO, so that any action by him inconsistent therewith, cannot hold. Deduction u/s. 80IB - consolidated income from two units, christened Unit I and Unit II - whether the second unit was an extension of the first unit or a separate unit? - HELD THAT:- What is decisive of the matter, and the test therefore of a new unit is its’ independence, i.e., from the first (existing) unit. We say so as this only would distinguish a case of extension – substantial or otherwise, of a unit from establishing a new undertaking. The ld. CIT(A), though appreciates this as the issue (para 3, pg. 4 of the impugned order), does not issue any finding thereon, merely stating that there is no splitting or reconstruction of the existing unit. The assessment, is set-aside back to the file of the AO for proper determination, who shall examine the issue in all its aspects, and decide afresh, taking into account the material deemed relevant, including that the assessee may wish to additionally rely upon. This, then, decides the issue as regards deduction u/s. 80-IB. Capital receipt - The only issue is if the same is, as claimed by the assessee, reduced from the cost of the relevant plant and machinery for claim of depreciation. If so, that is the end of the matter. If not, the same would need to be adjusted for computing the depreciation admissible (refer Explanation 8 to s. 43(1)). - Revenue’s appeal is allowed for statistical purposes.
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