TMI Blog1998 (6) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... of provisions contained in section 80A(2) of Income-tax Act. For the assessment year 1992-93, the assessee-company filed its original Return on 29-12-92 claiming deduction under section 80-HH amounting to Rs. 12,71,07,137 and similar amount under section 80-I. The assessment under section 143(1)(a) was made on 30-7-92 on the total income of Rs. 49,48,76,950. Subsequently, on 13-8-94 appellant-company filed a revised Return declared total income of Rs. 47,02,12,7 10 after claiming deduction under section 80-HH Rs. 14,11,38,751 and under section 80-I Rs.14,11,38,751 aggregating to Rs. 28,27,77,514. The revised Return was also processed under section 143(1)(a) and fresh intimation under section 143(1)(a) was issued on 13-8-1994. The assessment under section 143(3) was completed on 20-1-1995 at total income of Rs. 56,83,98,690 wherein the Assessing Officer allowed the deduction of Rs. 12,01,137 under section 80-HH and Rs. 12,01,137 under section 80-I of the Income-tax Act, 1961 as claimed in the original Return of Income. Against the assessment made under section 143(3) on 20-1-95, the Assessee-company filed an Appeal before CIT(A), Guwahati, The issue before CLT(A) was that in the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t units on proportion of turnover of the units. 4. Before us, on behalf of Assessee, Shri P.K. Mookherjee, Authorised Representative appeared and filed a paper book containing eight Annexures with written submissions. According to him, the assessee being a company was not required to file audit report in the prescribed Form Nos. 10C and 10-CCB respectively. His main contention is that its accounts are required to be audited as per Companies Act, which nowhere provided that separate statement of A/C's to be maintained for an industrial undertaking for claiming deduction under sections 80-I and 80-HH of the Income tax Act. According to him, the company had fulfilled all the requirement of Companies Act regarding profit and loss account and Balance Sheet, as such provisions contained in section 80HH(5) and 80-I(7) of the Income tax Act were also complied with. After narrating the various events and drawing our attention to directions of learned CIT, N.E.R., Shillong, contained in order under section 263 of Income-tax Act, 1961, he prayed that impugned order is bad in law and contrary to the facts and circumstances of the case and liable to be quashed and set aside. 5. On behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The provisions contained in section 80-HH(5), 80-I(7) and 80-J(6A) of Income-tax Act, 1961 is reproduced hereunder: "Where the assessee is a person other than a company or a Co-operative Society, the deduction under sub-section (1) from profits and gains derived from an industrial undertaking shall not be admissible unless the accounts of the industrial undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such amendment." The Hon'ble Gujarat High Court in the case of Zenith Processing Mills v. CIT[1996] 219 ITR 721, at page 723 observed as under: "From a perusal of sub-section (6A) of section 80-J of the Income-tax Act, 1961, for claiming deduction under section 80-J, it is apparent that compliance in respect of two things is necessary. The first requirement is that the statement of account for the previous year relevant to the assessment year for which deduction is claimed must have been aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act and held that before the assessee could be granted relief under section 32A and 80-I of the Income-tax Act, it was necessary for it to maintain separate books of account and also show that it has set up a new industrial unit. According to the Commissioner, in that case basic conditions for the grant of relief were not satisfied. Accordingly, assessment order was modified and investment allowance under section 32A and deduction under section 80-I was disallowed. 8. The assessee-company was required to maintain separate books of account in respect of petrochemical unit right from the assessment year 1986-87 to 1992-93 is also evident from the provisions contained in section 80-1(6) of the Income-tax Act, 1961. The provisions contained in the section 80-1(6) of Income-tax Act are reproduced hereunder: "(6) Notwithstanding anything contained in any other provisions of this Act, the profits and gains of an industrial undertaking or a ship or the business of an hotel or the business of repairs to ocean-going vessels or other powered craft to which the provisions of sub section (1) apply shall, for the purpose of determining the quantum of deduction under sub-section (1) fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act is claimed. In our opinion, the mere fact that the assessee company is having more than one industrial unit does not mean that it is not required to file audited profit loss A/C and Balance Sheet of Petrochemical unit. As a matter of fact, the company should have prepared Balance Sheet and profit loss A/C for Petro-chemical unit atleast for the purpose of Income-tax ie. for claiming deduction under section 80-HH and 80-I of Income-tax Act. We are, therefore, clearly of the opinion that in so far the present, case is concerned, the assessee-company was required to maintain separate books of account in respect of petrochemical unit for claiming deduction under section 80-HH and 80-I of the Income-tax Act, 1961. These were required to be audited by Statutory Auditors under the Companies Act and only concession given by provision is contained in section 80-HH(5) and 80-I(7) of Income-tax Act is that reports of audit in the prescribed Form No. 10C and 10CCB was not required to be obtained as the assessee being a company. We, therefore, reject the contention of learned Authorised Representative that being a company it was not required to maintain separate books of account, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that assessee-company has not filed separate profit loss A/C and balance sheet of the petrochemical unit in respect of which deduction under section 80-HH and 80-I of Income-tax Act was claimed. Moreover, one of the ground of the assessee company is that learned CIT in order to pass the order under section 263 before it becomes barred had not applied his mind properly. After going through the directions issued by learned CIT, N.E.R., Shillong under section 263 of Income-tax Act, 1961, we are of the opinion that these need modification as there is no provision under section 80-HH and 80-I which authorised him to issue such type of direction unless the case is covered by section 80-HH(6)/(7) and 80-I(8)/(9) of the Income-tax Act, 1961. Nowhere the learned Commissioner in his order under section 263 has stated under which provisions of law direction to bifurcate the profit in proportion to turnover were issued. We, therefore, hereby set aside the order of Id. CIT, NER, Shillong to the limited extent, with a direction to modify the directions issued, which should be in accordance with provisions contained in section 80-HH and 80-I of the Income-tax Act, 1961 after giving ..... X X X X Extracts X X X X X X X X Extracts X X X X
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