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2018 (3) TMI 44 - AT - Income TaxEligibility to deduction u/s 80IB - profit derived from the activity of manufacture - plea of the Assessee that the process of producing poultry feed involved mechanical, chemical & electrical processes for which the Assessee used sophisticated Plant & Machinery - Held that:- The assessee’s eligible undertaking itself was independently carrying out the complete activity i.e. from mixing, grinding till the pelletisation. The raw materials once consumed could not be reconverted into the same position. Its utility gets changed. The prime raw materials such as maize, soya oil, rice bran, etc. can no more be regarded to be the rice bran, soya oil, maize. We are of the view that the issue in the Revenue’s appeal is squarely covered against the revenue by the decision of the Co-ordinate Bench of this Tribunal in assessee’s own case for the earlier years Interest income exclusion from the profits on which deduction u/s 80IB(5)allowable - Held that:- Interest income and the interest expenses had a direct nexus and therefore netting off interest income against the interest expenses had to be allowed. Since the interest expenses was much more than the interest income no interest income can be excluded from the profits on which deduction u/s 80IB(5) of the Act ought to be allowed. We therefore uphold the order of the Ld. CIT(A) on this issue. We find that this tribunal in assessee’s own case for the Asst Years 2008-09, 2010-11 to 2012-13 vide order dated [2017 (4) TMI 1313 - ITAT KOLKATA] had held in the aforesaid manner. Penalty u/s 271AAB(1)(a) on account of disclosure made u/s 132(4) at the time of search on undisclosed stock - Held that:- There is no escape from the rigor of Sec.271AAB(1) if income of the specified previous year emanates from the material found in the course of search and such income or transaction has not been records in the books of accounts maintained by the Assessee. The legislature has given sanctity to entries made in the Books of accounts maintained in the ordinary course of business on the premise that it is maintained contemporaneously. If there is excess stock physically found than what is recorded in the books of accounts, then Sec.69 of the Act (Unexplained investments not recorded in the books), comes into play. Therefore such income does not have any source as the source is unexplained. It is also undisclosed because it is not recorded in the books of accounts of the Assessee. Hence we have no hesitation in holding that the excess stock in the sum of ₹ 2,73,38,000/- does fall under the definition of ‘undisclosed income’ and consequently penalty u/s 271AAB of the Act is leviable for the same. Accordingly, the grounds raised by the revenue in this regard are allowed. Levy of penalty u/s 271AAB on account of denial of deduction u/s 80IB - Held that:- We find in the facts of the case, that there was absolutely no seizure of any material or documents at the time of search to reach to a different conclusion that assessee is not entitled for deduction u/s 80IB of the Act. Hence the same does not fall within the definition of the expression ‘undisclosed income’ and therefore would be outside the ambit of penalty u/s 271AAB. The assessee has been claiming deduction u/s 80IB of the Act consistently from earlier years. Since the revenue had denied deduction thereon in earlier years, it was denied for the year under appeal also . This has nothing to do with the search proceedings so as to fall within the ambit of undisclosed income and consequential levy of penalty u/s 271AAB of the Act. - Decided against revenue
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