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2022 (8) TMI 596 - AT - Income TaxAddition u/s 80IB - Claim denied as assessee deemed not carrying on the manufacturing operations - AR submitted that the assessee is an SSI Unit engaged in the manufacture of forgings, tractor and auto part - HELD THAT:- We find that nothing has been brought on record by the Revenue either during the course of proceedings before the lower authorities or before us that there has been any change in the nature of manufacturing activities being carried out by the assessee in the earlier years and in the year under consideration. The assessee has been claiming deduction u/s 80IB in the earlier years in respect of its own sales as well as labour income and which has been allowed by the AO in terms of order passed u/s 143(3) r/w 153A - There is nothing on record that the claim of deduction so allowed in the earlier years has subsequently been withdrawn. Therefore, following the principle of consistency where there are no changes in the facts and circumstances of the case as well as following the legal proposition so laid down in the aforesaid decision by the Hon’ble High Court, the assessee shall be eligible for grant of deduction u/s 80IB for the impugned assessment year. The order so passed by the ld CIT(A) is thus set-aside and the ground of appeal taken by the assessee is allowed. Addition u/s 36(1)(iii) - AO worked out disallowance on the entire investment made during the preceding year @12% p.a. and after deducting the interest already disallowed by the assessee, disallowed a sum on the ground that the assessee is paying huge amount of interest and other borrowings - HELD THAT:- Assessee has contended that besides the loan of Rs 15 lacs, rest all payments towards the purchase of machinery has been funded through internal accruals however it has failed to support and demonstrate the same through its financials and/or documentation either before the lower authorities and even before us, nothing has been brought on record to support the said contention. Regarding other contention of the assessee that where the borrowed funds were raised and utilized, it enters the common pool of funds available with the assessee, in such a scenario, average rate of interest should be applied instead of rate of interest in respect of particular borrowing, we find merit in the said contention and remand the matter to the file of the AO to verify the average rate of interest prevailing on borrowings done by the assessee during the year under consideration and determine the amount of interest so determined for the purposes of making the disallowance under section 36(1)(iii). Needless to say, the assessee be given credit for interest already capitalized in the books of accounts. In the result, the ground of appeal is allowed for statistical purposes.
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