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2022 (1) TMI 580 - AT - Income TaxRevision u/s 154 - AO allowed the deduction under section 80IC on the eligible profit of the industrial undertaking - AO invoked the provisions of section 154 and reduced the deduction under section 80IC by observing that the assessee did not charge interest on the opening balance of the capital contributed by the partners - HELD THAT:- As in the preceding as well as succeeding years no such action was taken by the A.O. and the claim of the assessee was accepted for deduction under section 80IC of the Act, as such this issue pertaining to the charging of interest on the credit balances of the capital of the partners was highly debatable, therefore, the rectification made by the A.O. under section 154 of the Act was not justified and the Ld. CIT(A) wrongly upheld the action of the A.O. On merit also the A.O. accepted the profit of the assessee eligible for deduction under section 80IC of the Act. He himself computed the profit at ₹ 15,21,957/- which was allowable as deduction under section 80IC of the Act. Therefore in the present case the whole of the profit worked out by the A.O. at ₹ 15,21,957/- was to be allowed as deduction under section 80IC of the Act and no addition was called for. As regards to the case law relied by the Ld. CIT(A) in the case of Plastiblends India Ltd.[2017 (10) TMI 423 - SUPREME COURT] is concerned, it was distinguishable on facts. Since in the said case the assessee manipulated the profit by not charging the depreciation under section 32 of the Act and carry forwarded the said depreciation to be adjusted in the subsequent years. However in the present case the interest on the capital of the partners, if any, was not allowed to be carry forward in the subsequent years, if not charged in the year under consideration. Therefore the said case law relied by the Ld. CIT(A) was on different fact. A.O. wrongly treated the income as taxable in the hands of the assessee and the Ld. CIT(A) was not justified in upholding the action of the A.O. Appeal of the assessee is allowed.
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